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Bangkok Post
4 days ago
- Business
- Bangkok Post
Real estate price war on the horizon
The slowdown in the real estate sector is expected to trigger a price war in the property market and dampen the purchasing power of upper-income homebuyers. Amonthep Chawla, chief economist at CIMB Thai Bank (CIMBT), warned the housing market may encounter a price war in the near future, similar to what occurred in the automotive sector last year, based on the sector's ongoing slowdown. Competition could emerge for both new and existing residential projects. Sales of second-hand homes in both low-rise and high-rise segments have been declining for some time, leading to price reductions and intensified competition, he said. "We are concerned the property sector may experience a price war similar to what happened in the auto market last year, which could prolong its recovery. However, the impact on the property sector could be more severe, given the higher value of the housing market," said Mr Amonthep. While slower loan growth has partially helped to improve Thailand's household debt-to-GDP ratio, he said it also reduced liquidity in the economy and weighed on economic growth. According to a Bank of Thailand report issued on June 30, total household debt tallied 16.35 trillion baht in the first quarter of 2025, equivalent to 87.4% of GDP, down from 16.42 trillion baht or 88.4% of GDP in the previous quarter. Mr Amonthep said the country's household debt-to-GDP ratio is expected to ease further this year and next, largely due to loan contraction and softer economic growth. Despite ongoing policy rate cuts under the central bank's monetary easing, loan growth in the banking sector has yet to pick up due to the slowing economy and the regulator's responsible lending guidelines, he said. CIMBT expects the Thai economy to slow further in the second half of this year amid headwinds from both domestic and external factors. The economy is expected to stagnate in the final quarter of 2025 through to the first quarter of 2026, before recovering in the second half of next year. Data from the Real Estate Information Center (REIC) shows the price index for new houses in Greater Bangkok tallied 132.4 in the second quarter of 2025, up 0.6% year-on-year and 0.4% quarter-on-quarter. Although the index rose, the growth rate has slowed, largely due to an increase in unsold housing units, prompting developers to accelerate inventory clearance. Rather than cutting prices outright, most developers have made only modest adjustments in line with weaker purchasing power. Many large developers are instead turning to promotional strategies, such as complimentary gifts and special campaigns, to ease the financial burden on homebuyers, according to REIC data.
Bangkok Post
01-08-2025
- Business
- Bangkok Post
Tariff deal shows Thais ready for ‘new world order'
Economic and trade analysts have warned of a sluggish economy later this year as the impact of the 19% tariff rate imposed on Thailand by the United States takes hold. Nonetheless, there are silver linings as it could spur the country to diversify and be more innovative in order to stay relevant and competitive in the face of the overall contraction of global and US trade, experts said. The 19% tariff rate announced by President Donald Trump this week was lower than expected and would help Thailand avoid a technical recession, according to Amonthep Chawla, chief economist at CIMB Thai Bank (CIMBT). A technical recession occurs when a country's gross domestic product (GDP) contracts for at least two consecutive quarters. 'The US 19% reciprocal tariff on Thai exports is expected to enhance the competitiveness of Thai products. Sectors that will benefit include electronics, auto parts, tyres, processed foods and mobile phone components,' Dr Amonthep said on Friday on the sidelines of the 2025 Bangkok Post Forum panel discussion on 'Positioning Thailand in the New Global Economy: Trade, Investment and Strategic Resilience'. 'However, Thai export growth is still projected to decline in the second half of the year due to a broader slowdown in US imports — resulting from earlier stockpiling — and a weakening US economy driven by rising inflation,' he added. Dr Amonthep also noted that the better-than-expected tariff rate would likely encourage more foreign direct investment (FDI) in Thailand. He foresees more firms seeking to relocate production from China to Thailand, reducing direct competition with Vietnam and Indonesia. Industries such as electrical appliances, batteries and auto parts are expected to benefit the most. According to Dr Amonthep, Thai businesses will also gain from lower input costs due to reduced tariffs on US imports, including pharmaceuticals, food products, animal feed, corn, soybeans and more — supporting investment in these sectors. Thailand's economic outlook is expected to remain subdued, however, due to structural challenges, including an ageing population, declining competitiveness, and rising debt levels across public, corporate and household sectors, said Dr Amonthep. The US tariffs are expected to further erode the competitiveness of Thai small and medium-sized enterprises (SMEs). As a result, the government should adopt targeted measures to support vulnerable SMEs, he said. Nalinee Taveesin, President of the Thailand Trade Representative Office, said the government is preparing targeted support for SMEs and farmers likely to be affected by the new trade barriers. 'Despite challenges such as economic security concerns, US-China tensions and supply chain disruptions, Thailand remains resilient and ready to move forward,' she said. The new tariff rate could be interpreted as 'good news' as it is likely to encourage Thai exporters to pursue untapped markets to make up the shortfall. Thailand is currently pursuing free trade agreements (FTAs) with the European Union and South Korea, and is also working towards the Asean–Canada agreement. Recently, the country signed FTAs with Sri Lanka, Bhutan and the European Free Trade Association (EFTA) ahead of the expected US hikes. In addition to enhancing regional ties, Thailand is actively expanding into untapped markets in Africa, the Middle East, Central Asia and other emerging regions, she said. Pipope Chokvathana, vice-chairman of the Economic and Academic Affairs Department at the Federation of Thai Industries (FTI), has warned that Thailand will face double competition with goods from both China and the US flooding in amid the new US tariffs. 'In this so-called new world order, we woke up to this tariff news. Likely the GDP (growth) forecast for 2025 would be 2% if the tariff was at 10%,' Mr Pipope said. 'If the tariff is 19%, then GDP growth this year would be 1.5%. This picture is not totally positive. 'Ever since China faced higher tariffs, they have been planning to reduce exports to the US, and when it comes to competitiveness, a lot of products from China are coming to Thailand. So it becomes Chinese versus Thai goods,' he explained. 'And likely later, there are going to be floods of US goods to Thailand as well.' Mr Pipope said Thai manufacturers should strive to stay relevant and be innovative to deal with the dual threat posed by these superpowers. As the market evolves, companies must be agile and responsive to consumer preferences and international economic conditions. 'The FTI's guidelines are go digital/AI, go innovation, go green and go global,' said Mr Pipope. 'We need to get producers to learn how to use new technology, integrate it into the system and do it quicker, to increase our productivity. 'We need to diversify the market. The world order is changing.'
Bangkok Post
29-06-2025
- Business
- Bangkok Post
Analysts: War threatens Thai economy
Amonthep Chawla, chief economist at CIMB Thai Bank (CIMBT), said even though tensions have eased, the ongoing conflicts in the Middle East remain a threat to the Thai economy, in addition to US President Donald Trump's tariffs and the border dispute with Cambodia. "The risk premium remains high and it is highly unlikely global oil prices will drop significantly to below US$60 a barrel," he said. "The market should take a wait and see stance on how the situation develops." Nattaporn Triratanasirikul, deputy managing director of Kasikorn Research Center (K-Research), shared a similar view that the Iran-Israel conflict would not end quickly. The think tank projects global oil prices hovering in a range of $80-90 per barrel in the second half of 2025, at times shooting up to $100. "This fluctuation could possibly lift Thai inflation by 0.3% in the latter half of the year," noted K-Research. Suwat Sinsadok, managing director of Globlex Securities, said the US joining Israel's war with Iran is clearly driven by Trump's fear that rising oil prices could make US inflation soar. "The US has pumped more shale oil to serve domestic demand, but this amount remains inadequate. As a consequence, the US needs to import oil and rising oil prices will make its inflation rise," he said. In Mr Suwat's view, Iran clearly does not want the fighting to last long, but it also wants to hurt Israel as much as possible. "Iran is confident it has an edge and high capacity in fighting with Israel, so it keeps attacking its infrastructure such as ports," he said. "I believe Iran will continue to damage Israel to a certain level before it agrees to enter peace talks brokered by the US." Pichai Lertsupongkit, chief commercial officer at InnovestX Securities, said the sharp uptick of global oil prices pushed the price of listed companies to surge substantially, and is likely to affect export-oriented companies on the Stock Exchange of Thailand (SET). The brokerage is likely to downgrade the SET index target for 2025 if the Middle East conflict pushes the oil price to $90 per barrel, he said. Iran's Fars News Agency said Trump's ceasefire announcement was false and intended to divert public attention from an attack on a US base in Qatar. Polymarket, a decentralised prediction market platform that allows users to bet on the outcome of real-world events, sees only a 17% probability Iran will close the Strait of Hormuz, down from a 60% peak. Notably, 38% of oil flowing through the strait goes to China, which is Iran's ally, while only 3% goes to the US.
