The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) continues to cut its GDP forecast, with maximum growth down to 4%, while inflation is likely to soar to 5.5% based on the unsettled Russia-Ukraine war and Covid-19 outbreaks in China.
The economy is projected to expand in the range of 2.5-4%, down from 2.5-4.5% earlier, said Supant Mongkolsuthree, chairman of the Federation of Thai Industries (FTI), who chaired a JSCCIB meeting yesterday.
The Russian invasion of Ukraine starting on Feb 24 caused the JSCCIB to downgrade its 2022 GDP growth target last month to a range of 2.5-4.5%, down from 3-4.5%.
Thailand and the global economy are dealing with the impact of the war, leading to an energy price surge and higher prices of everyday goods, said the committee.
The Russia-Ukraine crisis will cut global economic growth by more than one percentage point and raise prices of goods globally by about 2.5%, said Mr Supant, citing a forecast by the Organisation for Economic Co-operation and Development.
The conflict in Eastern Europe is expected to maintain global oil prices at high levels, which are likely to stay above US$100 a barrel throughout this year, he said.
This will pile up pressure on businesses, especially those related to agriculture and steel, as they will face higher production costs, leading to higher prices of goods, which will eventually affect consumer confidence, said Mr Supant.
The JSCCIB expects the inflation rate to increase to a range of 3.5-5.5%, up from 2-3% predicted last month. The energy and food sector will feel the greatest impact, said the group.
The JSCCIB maintains its export growth forecast for 2022 at 3-5%, but some industrial sectors may be affected by the war.
The FTI earlier expressed concern that Thailand's car exports may miss the target of 1 million units this year because of a raw material shortage and surging prices. Prices of key raw materials for car manufacturing such as steel will increase while the prolonged scarcity of semiconductors, another major component, is possible, said Kriengkrai Thiennukul, vice-chairman of the FTI.
The JSCCIB is also worried about a new round of Covid-19 cases in China, causing the government to reimpose lockdown measures that may affect the country's manufacturing sector. A lockdown will not only slow the Chinese economy, it may also lead to a supply chain disruption, affecting countries such as Thailand that depend on raw materials and goods made in China, said the group.