The University of Thai Chamber of Commerce has reduced its forecast for the nation's economic growth in 2016 to 3%, down from 3.5%, on concerns about lingering drought and flat exports.
Thanavath Phonvichai, vice-president for research, said exports were now expected to grow only 0.8% at most, or possibly remain flat.
The lengthening drought has put pressure on the rural sector, lowering farmers' purchasing power, and gross domestic production in the agricultural sector is now predicted to contract by 3.2%, against the earlier projection of 0.2% growth. The industrial sector is forecast to expand at 2.5%,down on the earlier projection of 3.1%.
He said the Thai economy is expected to rebound in the second half of the year, with some positive signals being rising sales of cement and pickup trucks and exports. Bank lending also exceeded deposits, so it was expected the economy would show some recovery late in the second quarter or beginning of the third.
Mr Thanavath said both consumer and business confidence were likely to rise in the third quarter.
Therefore, the university projected that GPD would expand 3.3% in the second half, better than the 2.8% predicted for the first half of 2016.
Economic growth in 2017 was expected at 3.4%, supported by a recovering global economy that would push Thai exports as well as the government’s investment in infrastructure and private investment.
Bank of Thailand Governor Veerathai Santiprabhob, said on Thursday Thailand's economy is recovering but growth is uneven, while the impact of drought will be more severe and longer than previously expected, Reuters reported.
He said the central bank will ensure that the baht is no impediment to the economy, but will not use the currency to boost trade.
But the central bank has no targets for the baht, Mr Veerathai added.
The BOT's monetary policy committee on Wednesday unanimously voted to keep the benchmark interest rate unchanged at 1.50%, where it has been since April 2015, but cited increased risks to the economy