Panel cuts forecasts again

Panel cuts forecasts again

Export, growth outlooks slashed

The business sector has cut its forecasts for the country's key economic indicators for the third consecutive time this year, as slowdowns among major trade partners persist, resulting in weak demand slashing Thai exports and affecting economic growth.

The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) forecast exports would contract by 2% this year, down from growth of 1%. The JSCCIB also cut its Thai GDP forecast to 3% from 3.5%.

The committee attributed the downgrade to weak demand in Thailand's major trade partners, including the US, the EU and China. Low demand resulted in a sharp drop in exports, which make up over 60% of the country's GDP.

Boontuck Wungcharoen, president of JSCCIB and chairman of the Thai Bankers' Association, said the global economy was unlikely to recover this year. In fact, the global economic outlook could worsen in the second half as the Greek debt crisis may shake the EU and US economies.

"Although the business sector does not expect any direct impact from Greece's debt crisis on the Thai economy because trade between the countries is low, the crisis would affect the dollar and euro, eventually making the baht more volatile," he said, adding the EU is a major Thai trade partner.

The JSCCIB was also concerned about the Chinese economy, which is expected to continue its slower pace in the second half, lowering demand for Thai exports.

"The Chinese economy is unlikely to recover this year," he said.

With the risks ahead, the committee expects the baht to stay around 34 to the US dollar, with the policy interest rate maintained at 1.50% in the second half.

Supant Mongkolsuthree, chairman of the Federation of Thai Industries, said the drought was also weighing on the Thai business sector, leading to production cuts in both the agriculture and industry sectors.

"We expect the Chinese slowdown to have a greater impact on the Thai economy than the Greek debt crisis," said Mr Supant.

Issara Wongkusolkij, the Thai Chamber of Commerce chairman, said the business sector wants the government to be flexible in its crackdown on illegal fishing as it can have an adverse impact on Thai seafood businesses and exports.

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