The bank cut its gross domestic product (GDP) growth projection from 4% to 2.8%, making its prediction the most pessimistic of local research houses.
Economic growth will shrink 0.2% quarter-on-quarter for July to September - a third straight quarter of contraction, according to Banluasak Pussarangsi, executive vice president of CIMB Thai Bank, who said the third quarter would mark the bottom point for the Thai economy in this year, after which the economy will pick up to grow 5.3% quarter-on-quarter for the last three months of the year.
Despite positive growth projections for the fourth quarter, Mr Banluasak said growth will still be lower than it was during the same period of 2012, partly due to the fact the economy was boosted by the government's stimulus programmes last year.
Weaker-than-expected economic growth in the first half of this year has so far compelled the government's think-tank, the central bank, economic policy makers, and local research houses to revise down their full-year growth forecasts. The National Economic and Social Development Board (NESDB) in August slashed its 2013 economic growth prediction from 4.2-5.2% to 3.8-4.3%, while the Bank of Thailand is to revise down its growth estimates to 4.2% for this year and 5.0% for next year.
Kasikorn Research Center recently cut its 2013 economic growth forecast to 3.7%, while SCB Economic Intelligence Center revised its annual growth estimate to 3.4%.
For 2014, CIMB Thai Bank also forecast slow growth at around 3.4%, because it says households will have low net spending power after debts and other basic expenses.
The bank predicted that consumption in Thailand will be slow over the next two years, until household debt burdens are lowered.
Mr Banluasak argued that the Monetary Police Committee is likely to reduce the policy interest rate by 25 basis points to 2.25% this year, as the result of the slower economy and low inflation. He said the rate will likely be maintained at this level over the next year.
On the exchange rate, CIMB Thai Bank said it anticipated that the baht would appreciate as US quantitative easing measures cause funds to flow into the region, strengthening the baht against the US dollar.
However, funds may flow out of the region over the next one or two years when the US economy starts to recover. The bank predicts the exchange rate will stand at 32.50 baht to the dollar at the end of 2014.