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Devastating Flooding likely to slash GDP by 1 to 1.7 per cent

Large-scale and devastating flooding is likely to cause damage equivalent to a range of 1-1.7 per cent of Thailand’s Gross Domestic Product GDP, said Thai Deputy Prime Minister/Commerce Minister Kittirat Na Ranong.

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flood damage costing 1-1.7 per cent of GDP

Large-scale and devastating flooding is likely to cause damage equivalent to a range of 1-1.7 per cent of Thailand’s Gross Domestic Product GDP, said Thai Deputy Prime Minister/Commerce Minister Kittirat Na Ranong.

Thailand’s emergency chief today met with the ministers of finance, industry, agriculture and cooperatives, senior officials from the Bank of Thailand and the Office of the National Economic and Social Development Board NESDB to discuss assistance measures for businesses affected by flood.

Mr Kittirat said the current flood is more devastating than expected and that the Thai economy is likely to feel the brunt more than earlier forecast at about 0.6-0.9 per cent of the GDP–about Bt60-90 billion. The damage could amount to 1-1.7 per cent of GDP.

The assessment does not yet include damage to the Nava Nakorn Industrial Estate, which has been flooded after its protective dyke was breached on Monday. Finance Minister Thirachai Phuvanatnaranubala said if the government speeds up spending money on rehabilitation, it will help drive the economy to offset losses incurred from the flooding.The government will ask for cooperation to expedite flood insurance claims for affected factories.

The total amount of insurance for four industrial estates in Ayutthaya is about Bt250 billion while losses have reached Bt77 billion so far.In the coming 3-5 years, the government must improve integrated infrastructure including dams, dykes, water retention areas, roads and irrigation system to tackle the flood results effectively and to draw confidence from investors, he said.Bank of Thailand Governor Dr Prasarn Trairatvorakul said the outstanding loans to  industries affected by the Ayutthaya amount to Bt60 billion but it will not affect the financial position of commercial banks. Each bank has measures to help their flood-affected customers.

The BoT will work out with commercial banks to boost liquidity of the private sector to ensure a sufficient money supply. The central bank will also seek cooperation from those banks to extend loan repayment and tax form filing to help those plants.

The permanent secretary for finance viewed that the 2012 deficit budget may be increased to seek loans for post-flood rehabilitation Industry Minister Wannarat Channukul said plants which survived flooding may be asked to hire labourers of flooded factories. Otherwise, such workers may be offered training to improve their skills during their period of unemployment. Investment privileges may be offered to affected plants to shoulder their tax burden.

NESDB Secretary-General Arkom Termpitayapaisit sees flood damage costing 1-1.7 per cent of GDP, or Bt182 billion, including Bt40 billion in the agricultural sector, Bt110 billion in the industrial sector and the remaining damage in trade, tourism and basic infrastructure sectors.It is expected to take about 3-6 months for rehabilitation work. The sooner rehabilitation is complete, the less impact on Thai GDP. MCOT online news

via Large scale flood likely to slash GDP by 1-1.7 per cent.

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