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Economic Peril Unraveled: Thailand’s Dismal Growth Forecast Sends Shudders Across the Globe! Brace Yourself for the Unsettling Revelation!

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In their latest analysis, KKP Research has adjusted their growth prediction for the current year to 2.8%, a drop from their previous figure of 3.3%. For the coming year, they now propose a growth rate of 3.3%, falling from their earlier estimate of 3.6%.

This reassessment in economic forecasts from KKP Research is a reflection on the unsatisfying performance of the kingdom’s economy throughout the first half of this year. As per their expectation, the incessant slump of the global economy will continue to take its toll on Thailand’s export prospects, and the recovery of incoming international tourists won’t suffice to balance out the adversities.

In their report, the significant growth in private consumption and the undersized expansion in the manufacturing sector takes the spotlight. The staggering 6.7% rise in spending, primarily influenced by growth in private consumption and benefits found in the service sector via a rebound in tourism, marked the first half of the year.

On the contrary, the manufacturing GDP took a nosedive to 1.8%, with industries’ GDP hitting a low of 2.1% and agriculture settling at 0.5%, according to KKP Research.

A prospective downturn in the spending growth flow is predicted for the second half of the year, with the stagnation of exports potentially impacting workers in the industrial sector. Notably, industrial workers make up 16% of total employment, while the tourism sector accounts for 11%.

Signs of decline are already visible as data from large retailers suggest a slowdown in pace, paralleled by a similar decrease in VAT collection. With the country’s household debt exceeding sustainable levels, KKP Research expects banking institutions to put a leash on loan approvals, potentially inflicting a hit on spending in the latter half.

Therefore, KKP Research estimates consumption slowdown to 4.5% for the entire year, down from the 7.8% high in the second quarter. The consumption growth for the coming year is pegged at a lower projection of 3%.

KKP Research links the diminishing GDP growth forecast to three dominant factors:

– An underperforming return of the tourism sector due to a downturn in Chinese tourists.
– The sustained impact on the export sector owing to China’s economic downturn, given that Thai exporters greatly depend on the Chinese market.
– The towering policy interest rate applying consistent pressure on the global financial landscape, perpetuating a tight money situation that bars Thailand from lowering its policy interest rate as a step towards invigorating the economy. Furthermore, this will result in ongoing fluctuations in the baht.

KKP Research cautions that Thailand’s current account balance will persist on the lower end this year and the next, a significant influence that will hinder the baht from gaining strength.

The study concludes with an assumption from KKP Research that the Bank of Thailand will hover the policy interest rate at 2.25% and resist an increase at the upcoming Monetary Policy Committee gathering, given that the inflation rate in Thailand has turned out to be lower than anticipated.

In addition, KKP Research looks towards the new administration led by the Pheu Thai party and the execution of three pivotal policies in its first year set to greatly shape the economic canvas. These policies include a 10,000 baht digital money distribution for the purchase of goods, a debt holiday for farmers, and a policy to cut back on living costs by lowering power bills and diesel oil prices.

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