Macro and Politics

* The CBT will release the June Real Sector Confidence Index and Capacity Utilization Rate @ 10:00 local time today. The unadjusted Real Sector Confidence Index (RSCI) slid further to 101.4 level in May from the previous month’s 103.2, while the seasonally adjusted RSCI declined to 98.6 from 100.8, easing below the 100-threshold for the first time since September. Meanwhile, the capacity utilization rate (CUR) edged up to 75% from 74.3% and the seasonally adjusted CUR increased to 75.1% from 74.6% level in May. It is worth reiterating that we have started to observe the adverse impact of heightened political tensions and market volatility - particularly since March 19 - on leading indicators as of April. Moreover, the deteriorating confidence environment in the real sector persisted and deepened further in May. We maintain our 2025 growth forecast at 3.1%. Although the tightening in domestic financial conditions following March 19 has increased the downside risks to our forecast, high-frequency indicators have yet to show clear signs of a marked cooling in domestic demand dynamics. On the other hand, public spending continues to provide support to the growth outlook. As a result, we maintain our growth forecast at 3.1%.