The local private sector anticipates Thai GDP growth will be less than 1% in the second half of the year, primarily due to the impact of tariffs.
According to the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB), Thailand's economic growth is expected to lag 1% in the second half this year, forecasting full-year GDP growth of 1.5-2%, down from an earlier projection of 2-2.2%.
Speaking after the JSCCIB's meeting on Wednesday, Payong Srivanich, chairman of the Thai Bankers' Association, said first-half growth is expected to be around 3% year-on-year, falling to less than 1% in the second half depending on the outcome of the US-Thailand tariff negotiations compared with other economies.
The heightened uncertainty surrounding tariffs is expected to continue to weigh on Thai exports and private investment in the second half of the year, noted the panel.
In addition, the rising volume of imports from China is likely to have a broadly negative impact on Thai businesses and employment, he said.
"To achieve the target of 2% growth, effective stimulus measures are necessary, including prompt disbursement of at least 70% of the 157-billion-baht stimulus budget," said Mr Payong.
Furthermore, the long-haul tourism market should be expanded, which has grown by 17% this year compared with the end of last year, he said.
This tactic is essential to offset the decline in Chinese arrivals and rebuild confidence regarding the safety of tourism in Thailand, said Mr Payong.
"Although Thai GDP grew by 3.1% in the first quarter this year, partly attributed to temporary factors such as public investment and a low base last year, real growth would have been around 2.1% without these factors," he said.
The JSCCIB revised its export forecast for the year, predicting a contraction of 0.3-0.5%, falling from an uptick of 0.3-0.9%.
The private sector also raised concerns regarding export circumvention and re-exporting practices involving a low level of local content, as these do not benefit the domestic economy.
While export figures may appear strong, they are accompanied by high import volumes, without corresponding increases in domestic production, consumption or private investment, noted the panel.
Mr Payong said the JSCCIB is also concerned over the rapid appreciation of the baht, which has risen to 32.5-32.7 per US dollar, outpacing regional currencies such as the Vietnamese dong, Singapore dollar and Chinese yuan over the past month.
"The exchange rate has strengthened beyond the level that allows businesses to remain competitive," he said.
Amid rising uncertainty, demand for loans slowed, in line with the decline in private investment and consumption. As a consequence, the banking sector adopted a more cautious approach to loan expansion, focusing on selective growth, said Mr Payong.