Crisis to slow GDP growth, costs may exceed Bt80 bn
The cost of the severe flooding could pass Bt80 billion, with manufacturing, services and agriculture all hit by the worst inundation in years.
“It’s expected to lower economic growth by 0.6-0.9 percentage point this year,” Finance Minister Thirachai Phuvanatnaranubala said yesterday.
The Bank of Thailand estimated the damage at Bt60 billion while the National Economic and Social Development Board predicted more than Bt80 billion, he said after meeting with senior representatives from the two economic-research sources and the Finance Ministry.
They discussed the economic impact from the massive flooding in the Central provinces and beyond.
“The prices of some goods will rise and some goods may run out” because of the disruption in production, he said.
The central bank gave assurances that it would not let the short-term effect on prices influence its effort to fight inflation. This signalled that it might not raise the policy interest rate because of price rises due to flooding.
Somchai Sujjapongse, director-general of the Fiscal Policy Office, said one month of flooding would create economic losses estimated at Bt69 billion, which would shave 0.6 percentage point off growth in gross domestic product.
Combined with the estimated slowdown of 0.2 percentage point from the impact of the stumbling global economy, Thai GDP this year will expand only 3.7 per cent, down from 4.5 per cent forecast in June, he said.
“The cost will be much higher if the flooding is prolonged,” he said.
The economic slowdown will also wipe out Bt12 billion of tax revenue, he said. The Finance Ministry is expected to allow taxpayers hit by floods to delay tax payments.
The flood crisis has weakened the manufacturing, agricultural and service industries.
People in some quarters of Bangkok are hoarding food and other necessities, as they were warned that some areas of the capital would be swamped, resulting in the shortage of some products, Somchai said.
Thirachai said that over the next three to five years, the government needed to invest in measures to prevent flooding, such as permanent concrete flood barriers and redesigned road systems.
Hospitals and industrial parks should also be better protected, he said, referring to the hospitals and Rojana Industrial Park in Ayutthaya.
