The University of the Thai Chamber of Commerce (UTCC) yesterday downgraded its economic growth forecast to 3.1%, from the 4.2% projection it made in November 2021, largely due to rising global energy prices.
According to Thanavath Phonvichai, UTCC president, the downgrade assumes global trade growth of only 4%, down from the 6.7% outlook in the last projection, with global GDP expected to increase by 2.9%, down from 4.9%.
The number of foreign tourists in Thailand is expected to increase to 6.1 million, up from 5 million in the previous forecast. The foreign exchange rate is likely to average 34.25 baht against the US dollar, up from 32.70 baht in the previous outlook.
Dubai crude oil prices are projected to average $110 per barrel, with Thailand's policy rates expected to reach 1.25%.
Mr Thanavath said the Russia-Ukraine war triggered a surge in the world's energy prices, leading the prices of commodities and raw materials as well as inflation rates in many countries to drastically rise.
He said the sharp rise in global inflation has also prompted many central banks to raise policy rates, consequently widening the gap between Thailand's interest rates and foreign rates. This has resulted in capital outflows and a rapid depreciation of the baht to an average of 35 to the dollar, from 32 baht at the beginning of the year.
Mr Thanavath said the baht's weakness is likely to help Thai exports this year, projecting exports in dollar terms to grow by 6.3% this year, from 5.4% in the earlier projection.
"The Thai economy in the second half is expected to brave a spate of negative factors: the Russia-Ukraine war, which keeps global energy and commodities prices high; persistent Covid-19 outbreaks; a hike in interest rates in many countries; and global supply chain disruptions," he said.
