Exports may contract by more than 2% this year, following an interest rate hike by the US Federal Reserve and concerns over higher global energy prices in the winter, says the Federation of Thai Industries (FTI).
Kriengkrai Thiennukul, chairman of the FTI, predicted dim export prospects after the Joint Standing Committee on Commerce, Industry and Banking announced last month it was slashing its export growth forecast to -2% this year, down from -1%.
The committee's best-case scenario for exports is zero growth.
Mr Kriengkrai believes the Fed may continue to raise interest rates this year after its latest hike of 25 basis points in July, reaching the highest level in 22 years, which will increase costs for borrowers.
The Fed hiked its benchmark rate to a range of 5.25% to 5.5%, aiming to stabilise prices in the US.
Higher interest rates, along with increased energy demand in the winter leading to higher energy prices, will affect people's purchasing power, which will eventually deal a further blow to exports, he said.
"The global economic outlook in the second half of this year is not good. Even higher goods orders during the Christmas and New Year celebrations in December can hardly boost exports," said Mr Kriengkrai.
According to the Commerce Ministry, the customs-cleared value of exports dipped for a ninth consecutive month in June, falling by 6.4% to US$24.8 billion.
Exports of agricultural and agro-industrial products contracted by 8.6% year-on-year in June to $4.53 billion, while industrial product exports dropped 4.6% to $19.3 billion.
For the first half of 2023, exports decreased by 5.4% to $141 billion, while imports declined by 3.5% to $147 billion, resulting in a trade deficit of $6.3 billion.
Global oil prices are increasing in part because Saudi Arabia decided to extend its unilateral cut of oil production by around 1 million barrels a day through the end of September in an effort to lift energy prices, according to media reports.
The move is expected to pressure businesses looking to control energy costs.
"Energy is one issue that requires prompt management by the new government," said Mr Kriengkrai, hoping a new administration can be established this month.
Another issue is high household debt, which amounts to 16 trillion baht, or 90.6% of GDP.
"If debts from loan sharks are included, the number could reach 120% of GDP," he said.
"This issue is a major challenge for the new government."