Thai exports are expected to contract by 0.5% this year because of the global economic slowdown, according to ttb analytics, the research arm of TMBThanachart Bank (ttb).
The most severe contraction is forecast to take place during the first five months of the year, before beginning to recover during the remaining seven months, said Naris Sathapoldeja, head of ttb analytics. He attributed the dip to a cooling of the global economy and the economies of Thailand's trading partners.
The global economic outlook is more favourable than predicted in December last year, said Mr Naris. The International Monetary Fund upgraded its forecast for global economic growth this year from 2.7% to 2.9%.
However, the high base effect from growth of 5.5% in 2022 and the global slowdown are tempering the growth forecast for Thai shipments this year, he said.
On the subject of imports, ttb analytics predicts marginal growth of 1% this year as operators delay raw material imports amid the global slowdown. Importers are also expected to monitor the US and European banking environment before acting, said Mr Naris.
Tourism remains a core engine of the country's economic growth, despite external risk factors that threaten the country's economic expansion this year.
The research house expects foreign tourist arrivals will significantly increase to 29.5 million this year from 11.2 million in 2022. Chinese tourist arrivals are expected to provide a significant boost to the country's tourism sector following China's reopening.
Improving domestic consumption will also facilitate the country's economic growth this year. Under this scenario, ttb analytics forecasts Thailand's GDP growth rate for this year to be 3.4% compared with 2.6% in 2022.
Mr Naris said the United States Federal Reserve (Fed) is expected to increase its policy rate in a bid to rein in the rate of inflation. The Fed Fund terminal rate is expected to increase to around 5.25 to 5.5% this year and remain at a high level for some time. The research arm of ttb does not anticipate the Fed will cut its policy rate within 2023.
Meanwhile, the Bank of Thailand (BoT) is expected to raise its policy rate twice this year by 25 basis points on each occasion. By mid-year, the central bank's policy benchmark rate is predicted to increase to 2%.
The monetary policy direction of central banks worldwide would also put pressure on capital movement across the world. It would cause volatility in terms of the baht's rate of exchange against the US dollar, with ttb analytics predicting that the baht would remain at around 34 to 35 to the dollar by the end of the year.
"The baht ranks among the top five currencies in the region in terms of the greatest volatility and the second-strongest currency on a year-to-date basis. The baht is quite volatile for daily trade, moving in a wide range of 0.7 to 0.8 baht per dollar," he said.
