Siam Commercial Bank's Economic Intelligence Center (EIC) is less bullish than before about the economic outlook in 2019, downgrading its GDP growth forecast to 3.8% amid increasing uncertainty on the domestic and overseas fronts.
Thailand's outbound shipments are estimated to grow at a slower pace of 3.4% in 2019, down from 7% projected for last year, burdened by slowing global growth and the trade dispute between the world's two biggest economies, said chief economist Yunyong Thaicharoen.
The research house is maintaining its growth estimate of 4.2% for 2018, he said.
The EIC's previous forecast was for 4% economic growth this year.
"The downwardly revised figure signals that the Thai economy is entering a late expansion cycle owing to the economic slowdown in major economies and the impact of the trade war, which will put pressure on Thai export growth this year," Mr Yunyong said. "Moreover, Thailand's financial cycle has already peaked, resulting in tighter financial conditions. However, it still shows positive momentum and is at a potential growth level."
The latest growth projection of 3.8% is higher than the average growth of the past five years, he said.
During 2013-18, Thailand's GDP growth was below 3%.
The global economy led by major economies peaked last year and its growth is expected to slow this year, Mr Yunyong said.
Most developed countries have already used fiscal policy to encourage economic expansion, and the diminishing returns will take a toll on the Thai economy.
Even so, the trade conflict could benefit the Thai economy in terms of foreign direct investment from China, Mr Yunyong said.
The Board of Investment last year approved tax privileges for Chinese investment worth 20.6 billion baht, up from 11.4 billion the previous year.
Mr Yunyong said Thailand's capacity utilisation is at 69% now.
Domestic demand will be the main contributor to economic growth this year, he said, adding that investment is expected to accelerate amid rising production capacity of various industries, continuous investment in the government's infrastructure megaprojects and relocation of production bases to Thailand by foreign operators hit by the trade war.
The EIC forecasts the number of foreign tourists to expand by 5.7% in 2019.
Chinese tourist numbers are expected to pick up in the second quarter and become a driving force for economic expansion in the remainder of the year.
Household consumption is expected to increase gradually, thanks to low unemployment, a gradual income increase and the government's stimulus measures.
Moreover, Mr Yunyong anticipates a quarter-point rate hike by the Bank of Thailand this year from the benchmark's current 1.75%.
High household debt and non-performing loans, along with tame inflationary pressure, will let the central bank raise its policy rate at the gradual pace, Mr Yunyong said.