Myriad negative factors, including lower exports, widespread drought, baht strength, political uncertainty and poor business sentiment have prompted the University of the Thai Chamber of Commerce (UTCC) to lower its economic growth forecast to 2.8% for this year.
Thanavath Phonvichai, the UTCC’s president, said on Monday the domestic political situation is the business sector's biggest concern because it will hurt tourism and investment should there be violence or other chaos.
In December, the university forecast 2020 economic growth would average 3.1%, in a range of 2.7-3.6%.
The university also lowered the export growth forecast to 0.8%, down from 1.8%, with the baht averaging 29.5-31 to the US dollar, down from 29.75-31.25 baht.
UTCC predicts 2020 global GDP growth at 2.5%, down from 2.7%.
The school projects Dubai crude oil at $60-80 per barrel, up from $60-70 baht.
The number of international arrivals to Thailand is estimated at 41.4-41.8 million, down from 41.6-42 million, while the Bank of Thailand’s policy interest rate outlook was left unchanged at 1-1.25%.
“The strong baht is expected to trim export value by 70-80 billion baht, curbing domestic spending by 25-30 billion from a rise in oil prices because of the impact of the US-Iran conflict," said Mr Thanavath.
"Droughts are expected to cause 10 billion baht in damages to farm crops.
“The impact from these three key factors will result in a loss in money circulated in the economy by as much as 105-120 billion baht, reducing GDP by 0.5% this year.”
On Monday, the UTCC reported the business confidence index, a gauge of nationwide business sentiment, plunged to the lowest level in 24 months in December 2019 to 45.7, down from 45.9 in November.