KResearch maintains 2024 GDP at 2.6% due to floods and slowdown in key economies

KResearch maintains its GDP forecast for 2024 at 2.6% despite the economic stimulus program, but it must keep an eye on the problem of flooding and the slowdown of the main economy. Flood damage is estimated to be up to 30,000 million baht. It is expected that the MPC may reduce interest rates at the end of the year, pointing out that household debt is still high. As a result, bank loans this year will grow no more than 1.5%. Mr. Burin Adulwattana Managing Director and Chief Economist of KResearch Co., Ltd. revealed that KResearch maintained Thailand's economic growth rate in 2024 at 2.6% on the back of export recovery. Tourism and the government's economic stimulus measures. The Thai economy in the second half of the year will grow higher than in the first half of the year. From exports and investment, and tourism during the high season, as well as the government's economic stimulus measures. However, the impact of the flood is estimated to be 20 billion baht and may be as much as 30 billion baht. If the situation becomes severe in the central and southern regions, which are agricultural areas, but it is believed that it will not be as severe as in 2011, while the slowdown in the world's main economies and weak domestic demand will also pose a risk to the Thai economy in the coming period. Thai industry is expected to remain in the midst of flood problems. The baht fluctuates highly. Competition with foreign products and additional costs, especially from the minimum wage, all of which will affect the agricultural sector. For the whole year 2024, the automobile, housing, and construction segments are expected to be difficult business segments due to shrinking revenue. As for the financial sector, The main problem is still household debt of 90% of GDP. In the next 1-3 years, the growth of new loans will be much more limited than before, with the Thai banking system's loans expected to grow by no more than 1.5% this year amid a decline in the borrowing capacity of debtors. The problem will be linked to the low level of income. They have little savings, so they are more sensitive than other groups of debtors. 8.2% of people who rely on informal debt need help with debt restructuring. Financial planning and increase access to new loans in the system. In addition to a sustainable solution by increasing income stability for debtors at the same time. At the same time, the government must take measures to increase revenue. In order to reduce debt, the government must have policies to increase GDP growth by unlocking complex laws to facilitate the business sector to be active. It helps attract investment into the country, which is considered a sustainable debt solution. Meanwhile, the issue of raising the minimum wage by 400 baht per day. If it can be done on October 1. Mr. Burin stated that businesses that use a large number of workers will not be able to continue. In many business groups, they do not agree with this policy. However, it will see a push for the business sector to turn to more machines, which reduces lab or costs. In the case of the US Federal Reserve or the Fed cutting interest rates by 0.5% more than expected and signaling another 2% interest rate cut by 2026, it is the beginning of a downward interest rate cycle, which may be a factor that makes the Bank of Thailand or the BOT likely to cut interest rates once at the end of 2024. However, Global geopolitical problems The problem of political unrest in the world along with the downward trend in global interest rates. It is expected to result in the price of safe assets such as gold, which has been at a new high in the past. However, investors should be aware of the volatility of various assets. Especially after the COVID-19 period, so you still need to be cautious when investing and diversifying risks well. China's economy is likely to expand below the target of 5% in 2024 due to the unresolved real estate crisis and the Chinese government's policy to stimulate the domestic economy. It also faces trade barriers from China from the West. For Europe The G erman economy is also signaling fragility, and the impact of geopolitical conflicts has also created more uncertainty for the European business sector, which must be watched because it will affect trade, investment and international relations policies. Source: Thai News Agency