Kasikorn Research Center (K-Research) anticipates an increased risk of a technical recession in the Thai economy during the second half of this year, though it maintained its GDP growth forecast for 2025 at 1.4%.
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Uncertainty regarding US import tariffs is expected to remain high even after the 90-day pause ends on July 9.
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"As a result, the Thai economy is expected to face rising risks of entering a technical recession in the latter half of the year," said Nattaporn Triratanasirikul, deputy managing director at K-Research.
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"However, if the US maintains a 10% import tariff for all countries for the remainder of the year, Thai exports are expected to grow by 0.5%, which would lift GDP growth to 1.8%."
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According to Ms Nattaporn, in the second half of the year the Thai economy appears increasingly vulnerable, with growth likely to slow from the first half.
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In K-Research's base-case scenario, GDP growth in the third quarter is 0.7% year-on-year, contracting by 0.5% quarter-on-quarter.
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In the fourth quarter, the economy is projected to shrink by 0.4% year-on-year and 0.7% quarter-on-quarter.
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Under an alternative scenario in which US tariffs are held at 10%, Thai GDP in the third quarter is expected to grow 1.5% year-on-year and 0.3% quarter-on-quarter.
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For the fourth quarter, GDP is forecast to expand by 0.3% year-on-year, but decline by 0.8% quarter-on-quarter.
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Ms Nattaporn also noted a growing risk of deflation, though inflation is projected at only 0.3% this year.
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She said deflation has not yet materialised, supported by continued growth in private consumption.
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"We do not see signs of deflation similar to Japan's experience, as domestic consumption is expected to grow by 2% this year," said Ms Nattaporn.
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Kevalin Wangpichayasuk, another deputy managing director at K-Research, said foreign tourist arrivals recorded slower growth during the first eight days of June, which could pose challenges for inbound tourism in the second half of the year amid various risk factors.
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K-Research maintained its foreign arrivals forecast for this year at 34.5 million, down from 35.5 million in 2024, marking the first annual decline in three years.
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The research house also slashed its loan growth forecast for the banking sector, now projecting a 0.6% contraction this year compared with 0.6% growth.
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The downgrade reflects the economic environment and weakening loan demand, noted K-Research.
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Banks also tightened lending criteria in response to the economic conditions.