Next year, KResearch does not expect it to be very easy, especially on the international front. Dr. Siwat Luangsomboon, KResearch Assistant Managing Director, said impacts of the trade war will be more serious than those seen this year. The US and China may not come up with an agreement within the expected timeline, and this will disturb the international trade atmosphere over the whole year. For Thailand, this situation is expected to affect our trade value by USD3.1 billion. In addition to the trade war issue, uncertainties remain on the matters of Brexit, Italy's fiscal situation and currency fluctuations in newly emerging markets, such as Turkey, Indonesia, the Philippines and India, all of which causing consistent volatilities in global financial markets. Meanwhile, many central banks of those countries are left with limited tools now that their interest rates have already been considerably raised.
"Global trade war will be a key variable for Thai exports next year. Included the base effect, our exports are projected to grow 4.5 percent versus 7.7 percent in 2018", according to Ms. Nattaporn Triratanasirikul, KResearch Assistant Managing Director. Meanwhile, the Thai economy may enjoy 4.0 percent growth, with the help of investment to compensate for the faltering momentum of external sector. Regarding the change in the Thai government, if everything goes smoothly, the country's spending and investment atmosphere may be improved. Moreover, the continuity of the budget disbursement for FY2020 will help the government's spending and investment to be the main economic growth engine throughout the second half of next year.
Aside from the continuity of public spending and investment, the rising interest rate trend is another important factor that should be monitored closely. Ms. Kangana Chockpisansin, Research Head, expects that "the Monetary Policy Committee (MPC) will likely raise its policy rate during its final meeting of 2018 slated for December 19 as will the Federal Open Market Committee (FOMC) on the same day after the Bank of Thailand has steadily sent a series of signals. In 2019, there is likelihood that the MPC will hike its policy rate further preferably during 2H19 following the general election." However, interest rate hikes will likely be seen in special fixed deposits, plus long-term home and car loans during 1H19, while interest rates overall may remain unchanged, given relatively high liquidity in the banking system. Loans may substantially grow during 2H19, but as the Thai economic performance is expected to slow down, loans may expand only about 5.0 percent in 2019, declining from the 6.0 percent growth projected for 2018. Non-performance loans (NPLs) at Thai and international banks may hit a record high around the middle of 2019 before standing at 2.98 percent by the end of 2019, down from the 2.91 percent growth projected at the end of 2018. This is because NPLs typically move with the economic cycle for every six months. Special attention must be paid to SME and home loans.
Regarding business outlook next year, Ms. Kevalin Wangpichayasuk, KResearch Assistant Managing Director, said, "Online retail, private hospital and public investment are sectors that are likely to enjoy good growth. Although e-commerce tax may affect the margins of the sellers after related systems are in place, online transactions are poised to remarkably increase in tune with the changing consumer behavior". Business sectors expected to see growth deceleration include agriculture, automobile and real estate as the property market next year is likely to be impacted by an upward revision of interest rate and the Bank of Thailand's housing loan measures which result in speeding up the transfers of property ownerships during the last quarter of 2018 to the first quarter of 2019. Hence, the ownership transfers in Bangkok Metropolitan Region may contract between 7.6 and 3.6 percent when compared to the estimated increase of 14.1 percent in 2018. Nonetheless, the number of accumulated unsold units is unlikely to significantly increase because the property developers have adopted more cautious approach in launching new projects.