Thailand losing Bt75-113 billion in countrywide flooding

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BANGKOK, Oct 12 – Thailand could lose Bt75-113 billion from its gross domestic product (GDP) in countrywide flooding, according to Kasikorn Research Centre (KRC).

The assessment was calculated based on continued flooding since late July, with possible further damage as massive quantise of water passing through the Chao Phraya River basin, flowing into Thailand’s central part and Bangkok, and future storms that may hit Thailand.

The damage estimates include the agricultural sector at Bt20-30 billion, the industrial sector at Bt38-59 billion, and the service and other sectors at Bt17-24 billion.

The central province of Ayutthaya is expected to be the most affected. Its economic losses are already seen at Bt20-30 billion.

The centre said the current serious flooding will impact the country’s economic growth this year to drop by 0.69-1.04 per cent to overall economic growth at only 2.9-3.6 per cent.

Most damage will be realised in the fourth quarter of this year, resulting in lower GDP growth at 2.0-3.8 per cent compared to the previously expected 4.0-5.8 per cent.

Other consequences from flooding include impacts on goods prices, a main factor contributing to inflationary pressure next year in light of the 300 baht minimum wage hike, the end of the subsidy for low-income earners and energy price adjustments.

According to Kasikorn Research Center, this year’s headline inflation stands at 3.8-4.0 per cent, while the core inflation is at 2.3-2.6 per cent.

Challenges to the Thai economy will especially be on Thailand’s automobile and electronics industries, which have just recovered from Japan’s March quake and tsunami disasters, as well as the government’s minimum wage rise policy, which is to start next year.

External factors also pay a role such as the European debt crisis, the fragile US economy, and currency exchange rates.

Continued floods are also impacting foreign investment. The centre advised public agencies to build and strengthen confidence among foreign investors regarding Thailand’s economic stability by having a clear policy to prevent future problems caused by flooding.