The Bank of Thailand (BoT) expects slower economic growth in the third and fourth quarters this year on a quarterly basis, citing a high base effect.
Second-quarter gross domestic product (GDP) is anticipated to expand 1% from three months earlier, down from 1.5% growth recorded in the first quarter, Piti Disyatat, secretary of the central bank's Monetary Policy Committee (MPC), told a monetary policy forum on Wednesday.
The central bank now projects the growth rate for the third and fourth quarters at 0.6-0.7% per quarter because of the high base effect, he said.
Even as growth momentum slows, economic activities should increase in accordance with an improving outlook for domestic demand, the tourism recovery, and the acceleration of government budget disbursement.
On a yearly basis, the BoT forecasts stronger growth momentum of 1%, 2%, 3% and 4% in the first, second, third and fourth quarters, respectively.
Under this scenario, Thai GDP would expand 2.6% this year and 3% next, compared with growth of 1.9% in 2023.
At its meeting earlier this month, the MPC voted 6-1 to maintain the policy rate at 2.5%, with one member voting to cut the policy rate by 0.25 percentage points.
"Economic growth should continue to expand and achieve the potential growth rate of 3% next year," said Mr Piti.
However, he said the Thai economic recovery would vary from one sector to another, with services, led by tourism, leading employment and labour income in related industries to improve.
The recovery in the manufacturing sector would vary by industry, depending on cyclical or structural factors, said Mr Piti. The sector employs around 6.3 million people, and its cyclical and structural problems could have spillover effects for some areas of the service sector, he said.
Employment in the manufacturing sector represents 14-15% of total employment, compared with 30% in the agricultural sector, 20% in tourism and 20% in services.
Some segments of the automotive industry were affected by higher competition in the electric vehicle (EV) industry, especially from Chinese manufacturers. However, this phenomenon is happening worldwide, including in the US and Europe, Mr Piti said.
In addition, the production and export of internal combustion engine-powered vehicles have declined as demand rises for EVs, while global demand and importing economies soften, he said.
This situation has affected overall vehicle production in the country, said Mr Piti.
Stiff pricing competition in the EV segment has led prospective buyers to take a wait and see stance, dampening vehicle production. However, the situation is expected to gradually resolve later, he said.