Growth unlikely to be hit hard: Think tank

“Most factories outside the flooded areas in Samut Prakan and Chachoengsao provinces started operations in mid-November and about 70-80 per cent of those in the flooded areas are likely to begin their operations in late January or early February,” said Arkhom Termpittayapaisith, secretary-general of the National Economic and Social Development Board (NESDB).
Most companies are scheduled to resume normal operations within 45 days after the floods recede. However, the electronics industry with its need for high precision, hygiene and standard certifications could take longer, he said.

FUELLING ECONOMIC EXPANSION
The government could increase investment for infrastructure restoration in the flooded areas and implement its planned economic stimulus next year, which will likely fuel economic expansion, he said.
However, manufacturing could face challenges to recovery in the form of Europe’s debt crisis, likely baht volatility and expected lower government revenue, he said.

“Taxes levied on oil are postponed and some taxes are waived for the country’s restoration” after the floods, he said. A decrease in the corporate income tax rate is also planned.
The NESDB yesterday slashed its 2011 economic-growth forecast to 1.5 per cent from 3.5-4.0 per cent because of the nation’s worst floods in decades.
Floods are preliminarily estimated to have wiped out Bt200 billion to Bt300 billion from gross domestic product this year, Arkhom said. The NESDB is now assessing the actual damages.
Barclays Capital has revised its forecast for 2011 GDP growth to 2.4 per cent from 2.9 per cent on account of heavy estimated economic losses of about Bt300 billion to Bt400 billion stemming from the severe flooding.

GDP GROWTH TARGET THIS YEAR 2.6%
The Fiscal Policy Office is standing by its GDP growth target for this year at 2.6 per cent and for next year at 5 per cent.
Siam Commercial Bank’s Econo-mic Intelligence Centre has downgraded its growth estimate for this year to 1.8 per cent from 4.5 per cent mainly because of production pauses in the flooded and flood-affected industrial estates.
This year’s Consumer Price Index is now expected to show a 3.8-per-cent rise, within the earlier range of 3.6-4.0 per cent, according to the NESDB. Next year’s inflation is estimated at 3.5-4.0 per cent.
Prasarn Trairatvorakul, governor of the Bank of Thailand, said inflation last month was 4.19 per cent year on year, slightly accelerating from the month before mainly because of the floods, which caused supply shortages.
“The trend for inflation for this full year should be in line with the target, with estimates of 2.9 per cent for core inflation and 3.8 per cent for headline inflation,” he said.
The central bank said last week that its Monetary Policy Committee might cut its policy rate, which now stands at 3.5 per cent, at its next meeting on November 30.
According to the NESDB, private investment continued to expand 9.1 per cent in the third quarter, up from 8.6 per cent in the previous quarter, thanks to a 10.1-per-cent increase in machinery and equipment and 6.1-per-cent rise in construction.
Exports soared 27.3 per cent to US$63.3 billion (Bt1.97 trillion) in the third quarter.
Nine-month economic growth reached 3.1 per cent on the back of 24.6-per-cent export growth and 1.6-per-cent manufacturing expansion.