SCB EIC, the research centre of Siam Commercial Bank (SCB), has downgraded Thailand's economic growth forecast this year to 1.4-1.5% from 2.4% after US President Donald Trump's tariff hike on Thai imports.
Thitima Chucherd, head of macroeconomic research, said SCB EIC also reduced its global GDP growth target to 2.2% from a 2.4% estimate issued in March, with US growth cut to 1.3% from 1.9%.
The new reciprocal tariff on Thai products shipped to the US is 36%, effective as of yesterday.
The global average for new widespread US tariffs is 16%, and the average for Southeast Asia is 33%, according to Ms Thitima.
To mitigate the adverse impact of the tariff, SCB EIC anticipates the Bank of Thailand will cut the policy interest rate three more times this year, reducing it to 1.25% by year-end.
"Many other countries face lower US tariffs than Thailand," she said.
"As a consequence, we will have stiffer price competition, prompting Thai companies to adjust product development and expand export markets."
Risk management and increasing manufacturing efficiency are vital, in addition to effective trade negotiations by the government to minimise the short-term impacts of the new US tariff, said Ms Thitima.
Wachirawat Banchuen, senior financial market strategist at SCB, said the baht is expected to trade in a range of 34.50-35.50 to the dollar in the short term, as other emerging economies tend to let their currencies depreciate to strengthen the price competitiveness of their exports.
As the new US tariff took effect, the dollar weakened in contrast with an anticipated appreciation.
Other major currencies, including the euro, yen and Swiss franc, have strengthened as they are now considered safe-haven currencies, he said.
If the Thai government cannot convince the US to lower the tariff by July, SCB predicts the baht will plunge to 35.50-36.50 to the dollar.
"But if the US agrees to lower the tariff partially for Thailand and other countries, minimising impacts on global capital flows, the baht could stabilise and slightly appreciate to 34-35 against the greenback in the latter half of 2025," said Mr Wachirawat.
Sittichai Duangrattanachaya, senior strategist for Thai and international stock markets at InnovestX Securities, said earnings of listed companies on the Stock Exchange of Thailand would decrease by 6% if Thai GDP falls 0.5%.
If revenue from the US market declines by 10%, listed companies' earnings are projected to drop by 2%, and a single interest rate cut by the central bank would be sufficient to substitute such a decrease, said Mr Sittichai.
