Thailand's annual GDP may shrink to 1.5% due to flood

Thailand's annual GDP is projected to drop in the fourth quarter due to repercussion from worst-flood in 50 year, Bangkok Post reported on Tuesday.

The Thai economy is projected to contract by 3.7 percent in the fourth quarter, down from a previous projection of 5 percent before the floods, depressing annual growth to 1.5 percent from the earlier projection of 3.5 percent to 4 percent, according to the National Economic and Social Development Board (NESDB).

The country's worst floods, caused by heavy monsoon and overflow from several dams in upper part of the country, in nearly 60 years has claimed more than 600 lives and affected about 10 million people since mid July.

A better outlook is projected for next year with 4.5 percent to 5.5 percent economic growth, the NESDB said on Monday.

The NESDB estimated the floods would damage the Thai economy by 2.3 percent, or around 200-300 billion baht (6.4 - 9.6 million U.S. dollars).

The figure is an initial projection, but the real impact depends on how quickly the government and companies can repair infrastructure and operations. 

Some have set a target of 45 days after the water recedes to resume production, except for the electronic sector, which will need up to six months.

The agency announced that the GDP growth of 3.5 percent in the third quarter, exceeding 2.7 percent in the second quarter and 3.2 percent in the first, supported by the recovery of industrial manufacturing after the tsunami in Japan. 

The GDP of the industrial sector in the quarter was 3.1 percent, rebounding from a contraction of 0.1 percent in the second quarter.

Export value rose 27.3 percent year-on-year and private investment and tourism also grew, said NESDB Secretary-General Arkhom Termpittayapaisith.

However, the floods caused a contraction by 0.9 percent in the agricultural sector, slicing 0.7 percent off overall economic growth in the third quarter.

For the initial nine-month period, the NESDB reported economic growth of 3.1 percent.

GDP value at current prices is projected at 10.66 trillion baht, down from a previous projection of 10.87 trillion. The projection is based on oil priced at 103-107 U.S. dollars a barrel.

The projection for investment growth this year was cut to 4.7 percent from 6.2 percent. Private investment is projected at 8.8 percent growth while government investment should contract by 7.9 percent.

Consumption growth is projected at 2.3 percent, down from 3.3 percent previously. Export growth is projected at 17.2 percent growth to 226.9 billion U.S. dollars and inflation at 3.8 percent.

He expects flood rehabilitation and the continued growth of Asian economies will contribute to the higher figures.

Risk factors are a delay in rehabilitation in both the industrial and household sectors, the euro zone debt crisis, oil prices and the government's ability to build a water management plan next year.