Speaking yesterday at a KBank seminar for customers on the outlook for the economy, interest rates and foreign-exchange rates, Pareena Phuangsiri, senior specialist at the division, said that while Beijing’s attempt to move to a domestic-consumption-driven economy had lifted the level of consumption to gross domestic product from 35 per cent to 37 per cent in the past two years, the ratio was still well below the average of around 70 per cent for advanced markets.

Meanwhile, the ratio of domestic investment to GDP in China last year stood at 44 per cent, which is regarded as too large when compared to the average of 20 per cent among advanced markets, she said.

The figures for domestic consumption and investment are indicators that the planned transition in the country’s economic structure will take some time to achieve because they are currently far off planners’ targets, she added.

Pareena said the continued prevalence of the “old” economy in China during the transition period had led to an increase in the country’s non-performing loans, as well as to a higher proportion of loss-making enterprises.

Loss-making enterprises in China so far this year account for 20 per cent of all businesses, compared with 13 per cent last year.

With the overall Asian economy so reliant on China’s, the country’s slowdown is continuing to have an impact on the region’s exports, the senior specialist said.

In the first five months of this year, Asian exports fell from the same period last year, she said, adding that those from South Korea, Singapore, the Philippines and Hong Kong in particular had witnessed weaker performance.

For Thailand, weak exports remain a major drag on the economy, especially those to G-3 markets (the US, Japan and the European Union) and China, which continues to face headwinds from economic and social reform, Pareena said.

Kasikorn Research Centre predicts that the Kingdom’s exports this year will show flat growth, after a decline of 5.6 per cent last year.

The key growth drivers for the Thai economy remain tourism and public spending.

Kobsidthi Silpachai, head of the centre’s markets and economic research unit, said that “Brexit” – the possible exit of the United Kingdom from the EU – was currently adding to worries over the recovery of the global economy, as well as to volatility in financial markets.

Even though his division believes the UK electorate will not vote to leave the EU in a referendum next week, the latest poll shows a slight majority of people agree with such a move, which has increased the level of concern among investors.

In the event of the United Kingdom exiting the EU, free-trade agreements involving the UK and its international trade partners would have to be renegotiated, with the latter possibly suspending investment until new deals could be reached, while global trade activity would also be affected, he said.

Moreover, financial investors would move to safe havens like Japan, which is a funding-currency market, to wait for a clear picture of the implications of a Brexit, which would mean the baht would likely depreciate against the US dollar in the short term, Kobsidthi predicted.

KBank targets the baht/dollar exchange rate remaining at around 35.50 until the end of this month, before weakening to 36 in the third quarter and 37 in the final quarter of the year, he added.