Business forecast centre revises 2011 GDP projection downward due to flood crisis

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BANGKOK, Oct 6 – University of the Thai Chamber of Commerce (UTCC) Centre for Economic and Business Forecasting has revised its 2011 GDP growth projection downward to 3.6 per cent from 4.4 per cent due to an estimated Bt100 billion in damages from the current flood crisis, according to Thanawat Polvichai, centre director.

The estimated Bt104 billion in damages incurred from the flood crisis include damage to the agricultural sector at Bt54 billion, industrial sector at Bt20 billion, trade at Bt9.8 billion, tourism at Bt5.7 billion, public utilities at Bt9 billion and to housing at Bt2.2 billion.

Taking into account Bt26 billion damages from southern flood earlier this year, the damages amount to approximately Bt130 billion, likely to impact the projected GDP growth to drop 1-1.3 per cent.

The Thai economy in the last quarter is predicted to be less robust as farmers cannot mortgage rice crops damaged by flooding, and that will have an impact on their spending ability, due to concerns of future income.

Moreover, falling stocks resulting from the economic crisis in Europe, lowered consumer earnings and less spending could cause GDP to drop by one per cent.

Mr Thanawat said if the current flood to the capital cannot be contained and flood does take place in Bangkok, damages could rise by Bt20 billion.

Regarding the flood impact on industry, Permanent Secretary for Industry Witoon Simachokedee said Thursday that 520 factories in 19 provinces have been affected by the widespread flooding. The Ministry of Industry set up a “war room” in the central province of Ayutthaya to address the problem.

As for industrial estate in Ayutthaya, the permanent-secretary said about Bt1.2 billion of direct damage incurred from damage to machinery, raw materials and products, while indirect losses estimated by some parties to reach tens of billion baht are likely to be opportunity losses from possible three-month shutdowns of factories. However, he believed entrepreneurs can find other plants to substitute flood-hit ones.

For assistance to flood-stricken plants, the ministry’s local offices will conduct surveys after the floods recede. Centres will be set up in six industrial zones to help rehabilitate damaged plants. The Industry Ministry will waive yearly fees for flooded plants, he said.

Moreover, the Board of Investment (BoI) has an assistance measure to waive import duties for new machinery to be imported to replace equipment damaged by flooding while the Small and Medium Enterprise Development Bank of Thailand (SME bank) plans to offer soft loans.