Declines in the automotive and real estate sectors hit economic expansion

Payong predicted that the situation in the auto industry could prompt the Federation of Thai Industries (FTI) to lower its car production target this year from 1.9 million to 1.85 million vehicles when it is reached at the end of this month. The reduction will likely come from the domestic market from 0.7 million vehicles, while export production will remain at the same level of 1.15 million vehicles, he said.

The JSCCIB also admitted that the total value of real estate transactions in the first four months of this year fell by 11.8% for houses and by 7.4% for apartments.

Meeting participants identified rising interest rates and banks’ application of more stringent lending criteria under the Bank of Thailand’s responsible lending measures aimed at reducing household debt as the main factors behind this situation.

JSCCIB predicted that property transfers in the Bangkok metropolitan area this year, which accounts for 60-70% of the country’s total, would fall 9.3% year-on-year to a total of 576 billion baht. Of that figure, 365 billion baht would come from houses, down 8.7% year-on-year, and 211 billion baht from condominiums, down 10.3% year-on-year.

The meeting also slightly lowered its forecast for export expansion this year from 0.8-1.5% to 0.5-1.5%, in line with stagnant global trade, geopolitical tensions and the likelihood of freight rates rising by up to 95%.

Considering the current economic situation over the past six months, the JSCCIB agreed to revise its GDP growth estimates for this year to 2.2-2.7%, with inflation at 0.5-1%.

“JSCCIB will closely monitor factors that may impact the global and domestic economy for the rest of the year and we will adjust our forecasts accordingly,” Payong said.