CIMB Thai Bank (CIMBT) forecasts renewed war in the Middle East will heighten economic uncertainty in the second half of the year, while intensifying the global trade war.
Although concerns over the Middle East's impact on energy markets have eased, attention has shifted to the global trade war, said Amonthep Chawla, chief economist at CIMBT, as the bank monitors the potential use of Section 301 measures by the US, which were previously imposed on China, to pressure US trading partners.
Despite these conflicts, the bank's research centre expects global oil prices to remain less than US$100 per barrel, unlike the spike recorded the previous quarter. Brent crude oil is forecast to average $84 per barrel this year.
A second phase of the global trade war could weigh on Thai exports in the second half of the year. However, the artificial intelligence investment cycle is expected to continue supporting the country's exports.
CIMBT research forecasts Thai export growth of 10.5% this year, while the economy is projected to expand by 2%.
Although Thai GDP exceeded expectations by gaining 2.8% in the first quarter, economic momentum is expected to soften over the remainder of the year due to the impact of global conflicts and trade uncertainties.
Thai economic growth is projected at 1.8% in the second quarter, 2.1% in the third quarter and 1.1% in the fourth quarter, according to the bank.
Mr Amonthep said private investment and foreign direct investment will be the key drivers of economic growth this year, with CIMBT forecasting the former to expand by 5.2%.
Although the high-speed rail project linking Don Mueang, Suvarnabhumi and U-tapao airports has been terminated, the government is expected to continue investing in other viable infrastructure projects.
In particular, development in the Eastern Economic Corridor should continue, supporting economic activity, investment, trade and tourism in the eastern region and across the country, noted CIMBT.
However, public investment is likely to slow due to limited fiscal space, with the bank predicting a contraction of 0.1% this year.
Mr Amonthep expects private consumption to remain resilient in the second half of the year, supported by the government's "Thais Help Thais" stimulus programme.
However, domestic consumption is likely to moderate after the measure expires in the final quarter of the year, and the bank forecasts private consumption growth of 2.5% in 2026.
