South flooding damage estimated at up to Bt26 bn

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South flooding damage estimated at up to Bt26 bn
By Nalin Viboonchart
The Nation. 2011-04-08

Centre foresees only slight impact on country's economic growth in 2011

The economic impact from the flooding in the South is expected to dissipate within three to six months, with the damage estimated at between Bt21.7 billion and Bt26.5 billion, the Centre for Economic and Business Forecasting (CEBF) says.

The CEBF believes losses from the damage will lower Thailand's gross domestic product by 0.2-0.3 per cent this year. It also expects the impact to lower second-quarter growth by 0.5-1 per cent.

Director Thanavat Polvichai yesterday said that since the South contributed roughly 9 per cent to the country's GDP, the impact on economic growth as a whole would be quite limited. The CEBF is forecasting Thailand's economic growth this year at 4.5 per cent.

Estimated damage of Bt21.7 billion to Bt26.5 billion from the flooding is forecast to hit gross regional product (GRP) by 2.51-3.01 per cent this year. The agricultural sector will be hit the worst, with damage predicted at between Bt10 billion and Bt12 billion.

Thanavat said the worst-affected provinces from the flooding were Surat Thani, Krabi, Nakhon Si Thammarat, Trang and Phatthalung, accounting for 44.5 per cent of the area of the South. The first three provinces are forecast to recover from the flood within six months to one year, while other affected provinces are expected to revive within three to six months.

"Quick action by the government to alleviate the flood disaster in the South is also an important factor that has helped limit the damage," he said.

"The government has so far spent Bt30 billion to help affected people and has prepared about Bt30 billion to relieve the impact further. Meanwhile, some financial institutions such as the SME Bank are preparing loans worth a total of Bt10 billion to Bt15 billion. The combined amount from both the government and banks could help alleviate the flooding problem."

He added that the impact from the floods would also affect the Consumer Confidence Index (CCI) over the next few months. The CEBF expects consumer sentiment to recover in the third quarter.

"We're closely monitoring the economic situation and considering whether to revise our economic growth forecast for this year," Thanavat said.

"Although the impact from the tsunami and earthquake in Japan, the floods in our country and high global oil prices are negative factors for economic growth, the recovery in the US and continuous growth from Asian countries remain positive factors.

"We do not think the impact from Japan will significantly affect our country. So we still have a positive view on economic growth this year."

Wachira Khuntaweetep, a lecturer and economist for the CEBF, said the CCI in March declined for the second consecutive month, to 71.0 from 72.2 in February. The decline was attributed to concerns about the economic impact from the flooding, the tsunami and earthquake in Japan, high oil prices, the increased cost of living and the uncertain political situation.

The government is not likely to continue to subsidise diesel prices because of the huge burden on the Oil Fund.

Positive factors in March were high agricultural prices, increased interest rates and the rising SET Index. Export values in March continued to increase, rising to US$18.4 billion (Bt554 billion), up 29.1 per cent from February.