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Most serious drought expected in next five years forecast

Thailand is expected to face the most serious drought in five years from February because of the El Nino, the Interior Ministry’s Disaster Prevention and Mitigation Department announced on Monday.

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Thailand is expected to face the most serious drought in five years from February because of the El Nino, the Interior Ministry’s Disaster Prevention and Mitigation Department announced on Monday.

Director-general Anucha Mokkhawes said the first effects would likely be felt  in the upper parts of the North and Northeast regions. Irrigated zones were not hit, but outside these zones water shortages for agriculture were already in evidence.

Central and Eastern provinces had also  begun to experience drought in the upper parts of the regions, and the affects would spread. The South would also be hit, but not seriously.

Mr Anucha said the El Nino threat was expected to result in the lowest rainfall in five years. This would also increase the risk from forest fires.

He said farmers in 23 provinces in the Chao Phraya river basin –  Kamphaeng Phet, Tak, Nakhon Sawan, Phichit, Phitsanulok, Sukhothai, Uttaradit, Uthai Thani, Bangkok, Chainat, Nonthaburi, Lop Buri, Saraburi, Sing Buri, Ang Thong, Pathum Thani, Ayutthaya, Chachoengsao, Nakhon Nayok, Samut Prakan, Suphan Buri, Samut Sakhon and Nakhon Pathom – were advised not to grow second-season rice and to instead grow short-lived crops such as beans, corn, sugarcane and cassava, which need less water.

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Most serious drought in 5 yrs forecast

The contraction would be Thailand’s first since 1998, said Mathew A. Verghis, the World Bank’s Lead Economist in Bangkok. It would follow a decade of growth averaging nearly 5 percent each year.

“Countries like Thailand that have been dependent on manufacturing exports are most affected,” said Verghis, who covers Thailand and four other Southeast Asian countries. The World Bank released its latest forecasts for Thailand and other economies in East Asia and Pacific on Tuesday. The global economic slump shut down what has been, for the past three decades, the main engine for Thailand’s economic growth: exports. As a result, the manufacturing sector has been badly hit. The Thai government estimated that one million or more workers would lose their jobs this year due to the slowdown. In January, the unemployment rate stood at 2.4 percent of the total workforce – a full percentage point higher than the 1.4 percent recorded in December 2008.

Most serious drought in 5 yrs forecast

The Thai government announced an economic stimulus program totaling 117 billion baht ($3.34 billion). The program included a host of short-term measures to boost household consumption and assist lower-income families. The government is now preparing a second stimulus package worth 1.6 trillion baht ($45 billion). Among other initiatives, this package focuses on public investment in infrastructure projects, which the government hopes will help create 1.6 million jobs. “The infrastructure investments, if implemented, will help generate growth and improve Thailand’s competitiveness,” said World Bank. “However, it is worth noting that financing for infrastructure has been available for the past few years. What has suppressed investment was not funding, but rather political and institutional constraints.” While the impact on the real sector has been larger than expected, the global crisis has not shaken the Thai financial sector. The World Bank attributed this to Thailand’s strong macroeconomic fundamentals; low external debt coupled with high international reserves; and a sound financial sector, which has undergone a series of reforms following the 1997 crisis.

A large share of loans in 2008 was for working capital as the cost of raw materials and fuel increased significantly in the first half of the year.Next year, loans will be more scrutinized for credit quality. Large corporations will increasingly turn to domestic borrowing as the cost of off-shore borrowing increases rapidly. Bank loans to large corporations will therefore to continue to expand, as their credit quality is generally high, but those to small and medium enterprises (SMEs) may not.

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