Dim economic prospects over the next six months have caused the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) to cut its export growth forecast to -2% this year, down from -1%.
The committee's best-case scenario for exports is zero growth.
The latest projection is based on the global economic slowdown and estimates for China's growth to decrease to 5.4-5.5%, down from a previous estimate of 6%, as well as rising interest rates, said Payong Srivanich, chairman of the Thai Bankers' Association.
"The world economy is expected to keep slowing in the second half of this year," he said.
"Concerns over drought and the daily minimum wage increasing are also negative factors in the country."
Exporters are advised to seek new markets, including the Middle East and India, as the economies of Europe and the US slow down, while the Thai government should launch more free trade agreements to upgrade sales in new markets and increase exporters' competitiveness, the JSCCIB recommended.
Kriengkrai Thiennukul, chairman of the Federation of Thai Industries, said the Thai economy cannot depend solely on tourism revenue.
He said the local economy needs government spending to propel it as export value fell for an eighth consecutive month in May.
"More budget spending will be forthcoming if the process of setting up the new government goes smoothly," said Mr Kriengkrai, referring to concerns over a delay in state budget planning for fiscal 2024.
EASING INFLATION
Both the JSCCIB and the Commerce Ministry believe inflation will continue to soften this year.
The committee adjusted its inflation prediction, estimating 2.2-2.7%, down from 2.7-3.2%, thanks to the decline in global energy prices and an expected deceleration in prices during the last quarter of the year.
The ministry cut its full-year inflation forecast to 1-2% this year, down from 1.7-2.7% previously, as price pressures have eased.
According to Wichanun Niwatjinda, deputy director-general of the Trade Policy and Strategy Office, headline inflation in the third quarter is expected to expand at a low rate after posting a 3.88% rise in the first quarter and a 1.14% increase in the second quarter.
The inflation rate in the first half of the year was 2.49%.
He said fuel prices in the third quarter are likely to remain relatively stable, and are low compared with the previous year.
Some food prices, especially for fresh meat, should decrease following high supply and a relatively high price base last year, said Mr Wichanun.
As a result, inflation is estimated to be 0.77% in the third quarter and 0.62% in the fourth quarter, according to the ministry.
However, the prices of vegetables, fruit, eggs and dairy products are likely to rise because of the drought and Thailand's economic recovery, he said.
In addition, geopolitical conflicts, the global economic slowdown, extended drought and stimulus measures the new government may introduce are all factors that could influence inflation rates, said Mr Wichanun.
He said the ministry's latest forecast was based on economic growth of 2.7-3.7% this year, with Dubai oil prices at US$71-81 per barrel and an exchange rate of 33.5-35.5 baht per US dollar.
On Wednesday, the ministry reported headline inflation, gauged by the consumer price index (CPI), was 0.23% year-on-year in June, decelerating for a sixth consecutive month and the lowest level since September 2021 when the rate was 1.68%.
The main contributors were a deceleration of food prices, especially meat and seasonings, a drop in fuel prices and a high price base in June 2022.
Mr Wichanun said inflation last month was the result of a 3.37% year-on-year uptick in the prices of food and non-alcoholic beverages, with prices rising for fresh vegetables and fruit (lime, Chinese kale, cabbage, rambutan, watermelon and durian) as well as eggs, following a low yield from turbulence and high demand during the back-to-school period, in addition to tourism.
Prices also rose for prepared food such as breakfast and food cooked to order, attributed to higher costs, said the ministry.
Core inflation, which excludes volatile food and energy prices, was 1.31% year-on-year in June, decelerating from 1.55% in May.
On a monthly basis, the CPI dropped by 0.60% from the previous month, attributed mainly to a decrease in the prices of some items such as diesel, personal care (skin care and protection, body soap, facial foam), pork, mackerel, rice, fresh vegetables (eggplant, lime, morning glory), delivery food and prepared food.
For the six-month average, headline inflation rose by 2.49% from the same period last year, while core inflation for the period was 1.87%.