The impacts of the current flooding are expected to bring down Thailand’s economic growth to 1.5 percent this year from the previous forecast of between 3.5 and 4 percent. However, the Government’s post-flood rehabilitation has been cited as a supporting factor for the country’s economic growth in the first quarter of next year.
According to the Secretary-General of the Office of the National Economic and Social Development Board (NESDB), Mr. Arkhom Termpittayapaisith, the flooding situation is likely to continue until December 2011, with damage estimated at around 200-300 billion baht.
He said that the Thai economy in 2012 is expected to expand by 4.5-5.5 percent, and the inflation rate is forecast at 3.5-4 percent. The first quarter of next year would be the period of flood recovery and would also be driven by the real estate sector, and the construction sector. Repair work, the purchase of more water pumps, and other related flood-protection projects would help spur economic growth next year, as well. Mr. Arkhom stated that industrial estates affected by this flood should be able to resume their operations in January or February next year.
The NESDB report on the economic outlook for 2012 says that business flood-rehabilitation measures are among supporting factors for Thailand’s economic growth. These measures include credit support, corporate tax reduction, and the restoring of confidence in Thailand. This will result in an increase in domestic demand, especially in private investment and consumption. The construction sector will be driven by post-flood reconstruction of both private property and public infrastructure. There will be high investment to replace damaged facilities and equipment with new ones.
The report cited the restoration and rehabilitation measures for flood-hit people and water management as major projects in economic management for the rest of 2011 and 2012. The measures include the returning of the production sector and consumer purchasing power to normalcy within the first quarter of 2012. They also seek to maintain availability and fair pricing of consumer goods, especially since the flood crisis is likely to lead to a shortage of supply and unfair prices for certain goods. Other measures will ensure that proper and effective water management is employed to prevent future floods and droughts, and long-term flood-protection mechanisms will be created to enhance investor confidence.
Meanwhile, several Japanese car factories that have suspended operations following the flood crisis are now starting to resume their production. Only Honda Motor Company’s plant in Ayutthaya is still inundated.
According to the Emergency Operation Center for Flood, Storms, and Landslide, 17 provinces that are still suffering from floods include Nakhon Sawan in the North, Ubon Ratchathani and Roi-et in the Northeast, Chacheongsao and Nakhon Nayok in the East, and Chai Nat, Ang Thong, Ayutthaya, Lop Buri, Saraburi, Suphan Buri, Nakhon Pathom, Pathum Thani, Nonthaburi, Samut Sakhon, Samut Prakan, and Bangkok in the central region.