Thailand floods cut growth forecast

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Thailand braces for a painful impact from the worst floods since 50 years. Economic growth for 2011 will take a hit, but confidence prevails that the country can manage the effects of the natural disaster and get back on its feet very soon.

After a long series of heavy monsoon rainfalls over the last months, Thailand has been impacted by severe flooding that – at the time of writing – was not only inundating huge areas of the countryside, but also threatening parts of the capital Bangkok and its economic nerve centers. So far, the total damage has been estimated at between $3 to 4 billion, and this year’s GDP growth forecast will have to be cut to below 3 per cent from 4.1 per cent.

With masses of dammed-up water in front of its city limits, Thailand’s 10-million-people metropolis Bangkok this week braced for the worst: Shops, banks and house owners were building up barricades of sand bags in front of their premises, and people flocked to supermarkets and groceries to stock up food and water. The Chao Praya, Bangkok’s main river, was close to brim over its banks, and forecasts said areas near the river, among them densely populated business and industrial districts such as Sathorn, Klong Thoey, Phra Kanong and Bang Na, could get flooded with water to a height between 0.5 and 2 meters.

For example, in Phra Kanong a huge refinery of Bang Chak Petroleum is situated very close to the river, and a big and busy container terminal of Bangkok Ports lies close nearby. If those complexes get flooded, it would heavily impact the supply chain for petrol and consumer goods. This would add to problems several other manufacturers are already facing, such as car and electronics factories north of Bangkok which had to be shut down temporarily due to heavy inundation. Bangkok’s regional airport Don Mueang had to be closed on Tuesday, October 25, after is has been flooded by more than one meter. Altogether, seven big industrial estates north of Bangkok have had to halt operations so far. This is critical, as the greater Bangkok area accounts for 41 per cent of Thailand’s economy.
Apart from that, agriculture in the south of Thailand has been hit hard, as the water brought rubber and palm oil plantations as well as food processing plants and border trade to a halt. Moreover, 12.5 per cent of Thailand’s rice fields have been damaged by the floods. 28 of the country’s 77 provinces are affected with  1.6 million hectares of land flooded, an area roughly the size of Kuwait.
With estimated costs of between $3 to 4 billion, the floods have already done more damage to the country’s economy than the political uprising last year, but the estimation has not yet included damage cost of infrastructure, state properties and public consumption. The GDP growth forecast has already been revised by and will be lower than 3 per cent for 2011, more than 1 per cent below earlier expectations.
The growth revision “comes as a big shock for us”, Thailand’s Minister of Finance, Thirachai Phuvanatnaranubala, told Inside Investor in an exclusive interview last week. He, however, also said that the floods are an eye-opener for the country and are forcing to rethink the government how water can be managed in a better way. There will be a “huge investment” necessary for water management, and he mentioned that this could be partly taken over by private investors.
Most of the water that is currently threatening to flood Bangkok is building up behind the levees of the Rangsit plain in the north. Even if it would be possible to let the water run down the various canals across Bangkok and the Chao Praya River down to the Gulf of Thailand in a controlled manner, it would take several weeks or even months until the situation returns to normal, Bangkok’s Governor Sukhumbhand Paribatra, said on Tuesday, October 25.
Thailand’s officials are, however, confident that the country will get back on its feet very soon. The Governor of the Bank of Thailand, Prasarn Trairatvorakul, has maintained GDP projection for 2012 at 4.2 per cent in a speech lately, but urged the government to reserve some budget funds for post-crisis measures.

 

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Reading Time: 3 minutes

Thailand braces for a painful impact from the worst floods since 50 years. Economic growth for 2011 will take a hit, but confidence prevails that the country can manage the effects of the natural disaster and get back on its feet very soon.

Reading Time: 3 minutes

Thailand braces for a painful impact from the worst floods since 50 years. Economic growth for 2011 will take a hit, but confidence prevails that the country can manage the effects of the natural disaster and get back on its feet very soon.

After a long series of heavy monsoon rainfalls over the last months, Thailand has been impacted by severe flooding that – at the time of writing – was not only inundating huge areas of the countryside, but also threatening parts of the capital Bangkok and its economic nerve centers. So far, the total damage has been estimated at between $3 to 4 billion, and this year’s GDP growth forecast will have to be cut to below 3 per cent from 4.1 per cent.

With masses of dammed-up water in front of its city limits, Thailand’s 10-million-people metropolis Bangkok this week braced for the worst: Shops, banks and house owners were building up barricades of sand bags in front of their premises, and people flocked to supermarkets and groceries to stock up food and water. The Chao Praya, Bangkok’s main river, was close to brim over its banks, and forecasts said areas near the river, among them densely populated business and industrial districts such as Sathorn, Klong Thoey, Phra Kanong and Bang Na, could get flooded with water to a height between 0.5 and 2 meters.

For example, in Phra Kanong a huge refinery of Bang Chak Petroleum is situated very close to the river, and a big and busy container terminal of Bangkok Ports lies close nearby. If those complexes get flooded, it would heavily impact the supply chain for petrol and consumer goods. This would add to problems several other manufacturers are already facing, such as car and electronics factories north of Bangkok which had to be shut down temporarily due to heavy inundation. Bangkok’s regional airport Don Mueang had to be closed on Tuesday, October 25, after is has been flooded by more than one meter. Altogether, seven big industrial estates north of Bangkok have had to halt operations so far. This is critical, as the greater Bangkok area accounts for 41 per cent of Thailand’s economy.
Apart from that, agriculture in the south of Thailand has been hit hard, as the water brought rubber and palm oil plantations as well as food processing plants and border trade to a halt. Moreover, 12.5 per cent of Thailand’s rice fields have been damaged by the floods. 28 of the country’s 77 provinces are affected with  1.6 million hectares of land flooded, an area roughly the size of Kuwait.
With estimated costs of between $3 to 4 billion, the floods have already done more damage to the country’s economy than the political uprising last year, but the estimation has not yet included damage cost of infrastructure, state properties and public consumption. The GDP growth forecast has already been revised by and will be lower than 3 per cent for 2011, more than 1 per cent below earlier expectations.
The growth revision “comes as a big shock for us”, Thailand’s Minister of Finance, Thirachai Phuvanatnaranubala, told Inside Investor in an exclusive interview last week. He, however, also said that the floods are an eye-opener for the country and are forcing to rethink the government how water can be managed in a better way. There will be a “huge investment” necessary for water management, and he mentioned that this could be partly taken over by private investors.
Most of the water that is currently threatening to flood Bangkok is building up behind the levees of the Rangsit plain in the north. Even if it would be possible to let the water run down the various canals across Bangkok and the Chao Praya River down to the Gulf of Thailand in a controlled manner, it would take several weeks or even months until the situation returns to normal, Bangkok’s Governor Sukhumbhand Paribatra, said on Tuesday, October 25.
Thailand’s officials are, however, confident that the country will get back on its feet very soon. The Governor of the Bank of Thailand, Prasarn Trairatvorakul, has maintained GDP projection for 2012 at 4.2 per cent in a speech lately, but urged the government to reserve some budget funds for post-crisis measures.

 

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