Flood crisis effect on Thai economy highest in November: BoT

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BANGKOK, Dec 31 – The recent flood crisis in the country reached its peak of affecting the Thai economy in November, according to the Bank of Thailand (BoT) Domestic Economy Department.

The department director Mathee Supapongse said the strong impact of the flood on the economy had been continuous since October, particularly the farming sector both in terms of crop prices and production. The number of agricultural products dropped 7.2 percent year-on-year, resulting in an 8.6 percent decrease of income among farmers.

The industrial sector saw a shrinkage in almost all types of goods due to a halt in production at several automobile plants, a shortage of spare parts and transportation problems.

Meanwhile, the Manufacturing Production Index contracted 48.6 percent, especially from the production of hard disk drives, motor vehicles, and electric appliances.

The private sector’s investment lowered as a result of production obstacles, and therefore a stoppage in machinery and equipment investment was seen from the reduced amount of capital goods import. The Private Investment Index dropped 1.3 per cent year-on-year, also due to postponed investment, while the Private Consumption Index decreased 1.6 percent in all sectors when compared to the same period last year.

The global economic slowdown is another factor affecting production as well as imports and exports for many industries.

Import lowered by 1.9 percent, and 5.7 percent if excluding gold. Export value stood at US$15.3 billion, a slash of 13.1 percent from motor vehicles, electric appliances, electric circuit boards, and rice. Inflation rates remained high with headline inflation at 4.19 percent and core inflation at 2.90 percent.

The labour market experienced higher unemployment, but Mr Mathee viewed this as temporary, for labour would be back in demand once post-flood rehabilitation was complete.

Regarding the tourism sector, the number of foreign travellers entering Thailand in November shrank from 17.5 million to 1.2 million year-on-year. The director predicted that the Thai travel industry would resume as normal within 1-2 months, as most tourists are from Asian countries and tend to adapt themselves well to the situation.

Meanwhile, Mr Mathee said that the Thai economy in November shrinking more than earlier expected could cause the Bank of Thailand’s estimation on the country’s gross domestic product (GDP) in Q4 and 2011 to lower, but by how much is still to be determined based on Thailand’s economic figures in December.

BoT had previously estimated the country’s 2011 GDP would rise 1.8 percent.

Nonetheless, Mr Mathee said he expected domestic spending and consumption would recover in December, owing to the government’s assistance measures to stimulate the economy, while he said demand for automobiles has remained high.

According to the Bank of Thailand, the country’s 2012 economic outlook for agricultural and industrial sectors shows promise, as normal situations have returned after the flood crisis.