Flood damage costs rise

Floods hit Ayutthaya with 7% of Thailand's economy & 15% of manufacturing output. Floods in Bangkok could add 50 billion baht of damage or more.

Photo taken at Ayutthaya’s Rojana Industrial Park where an ATM booth lies under water.

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Losses could reach B150bn, analysts say by Darana Chudasri, Parista Yuthamanop & Phusadee Arunmas

Economic losses from this year's floods look to rise sharply with the disruption to industry and manufacturing supply chains in Ayutthaya, local analysts say.

The Central Plains region is bearing the brunt of Thailand's worst flooding for 50 years.

Thanavath Phonvichai, an economist with the University of Thai Chamber of Commerce (UTCC), estimated damage from the floods could rise to as much as 150 billion baht.

The university's Centre for Economic and Business Forecasting last Thursday cut its economic growth forecast for 2011 to 3.6% from a previous forecast of 4.4% due to projected losses from the floods.

"The situation is much more serious now, as the floods have disrupted the main transportation links and have affected the tourism and industrial sectors,” Mr Thanavath said.

The UTCC estimates losses from the retail and tourism sectors at 10 billion baht each, with damage to the industrial sector ranging from 10 to 30 billion baht. 

Widespread flooding in Bangkok could raise the economic toll by another 20 to 50 billion baht, Mr Thanavath said, adding this assumes minimal to no damage to the hotels and shopping centres in Bangkok's central business district.

Pornthep Jubandhu, a senior economist at the SCB Economic Intelligence Centre, said Ayutthaya accounts for 7% of the country's economy and generates 15% of Thailand's manufacturing output, second only to Samut Prakan.

Flooding to date has mostly affected the agricultural sector, which accounts for 8% to 10% of gross domestic product.

"If the industrial sector is affected, then there will be a major impact on the overall economy,” Mr Pornthep said, adding that industry accounts for 40% of the overall economy — rising to half if associated service and logistics businesses are included

It's still too early to estimate the full impact of the losses. But there is no question that the situation has deteriorated over the past two or three days.

SCB now expects economic growth this year to fall to the lower end of its forecast of 3.5% to 4.5% growth.

The economy will be hardest hit while the flood remains.

"On the other hand, we should see a rebound next year as reconstruction begins and from pent-up demand,” Mr Pornthep said.

Supavud Saicheua, a managing director of Phatra Securities, is even more pessimistic, saying the floods come at a time when the global economy remains in crisis.

If flooding hits Bangkok, in addition to the damage already seen in the central and eastern provinces, it would cover an area that accounts for as much as 60% of the Thai economy, he said last week.

"Flooding seasonally peaks at the end of October, so we have not even seen the worst yet,” Dr Supavud said. 

Considering the weakness in the US, European and Japanese economies, and the prospects that Greece will default on its public debt, the Thai economy is expected to come under severe pressure in 2012.

Dr Supavud said growth previously forecast at 4% in 2012 could “fall in half or drop even further”, with losses from the flood possibly as high as one to two percentage points of GDP alone

The Stock Exchange of Thailand meanwhile may see selloffs today as investors review the potential economic and business disruption from the floods. 

Sukit Udomsirikul, a senior vice-president at SCB Securities, said the auto and electronics sectors would be worst hit, with the potential impact lasting for one to three months.

"The impact of the floods will be seen on the supply side, with delays coming across the supply chain,” he said.

Household consumption and the labour markets will also be affected until reconstruction begins.

Potential losses are certainly expected at over 100 billion baht, or 1% of GDP.

(Source: Bangkok Post, Losses could reach B150bn, analysts say, 10/10/2011, Darana Chudasri, Parista Yuthamanop & Phusadee Arunmas, link) 

Economic Impact of Floods Vocabulary

retail - to sell directly to the public for their own use ขายปลีก

sector - a part of the economy ภาคเศรษฐกิจของประเทศ (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) (See Wikipedia)

tourism sector
industrial sector
retail sector
tourism sector
agricultural sector

impact - an effect or influence ผลกระทบ
major impact - a very large effect or influence (harm or damage done) 

If the industrial sector is affected, then there will be a major impact on the overall economy

lasting - continuing to exist or have an effect for a long time ที่กินเวลานาน
the potential impact lasting for one to three months

minimal - very small in amount น้อยที่สุด, น้อยมาก
assumes minimal to no damage to the hotels and shopping centres in Bangkok's central business district

deteriorated - became worse ทรุดโทรม, เสื่อมโทรม, เลวลง, ชำรุด

gross domestic product - the total value of all the goods and services produced by a country in one year

the supply side - the part of an economy that relates to the production and supply of goods and services:
household consumption - money spent by households and families on goods and services  การบริโภค (See Wikipedia)

disruption - prevented from operating normally; a situation in which something cannot continue because of a problem การขัดขวาง, การหยุดชะงัก
disruption to industry and manufacturing supply chains

potential - possible ความเป็นไปได้
investors review the potential economic and business disruption from the floods

disrupted - interrupted and prevented from continuing smoothly by creating problems ขัดขวาง
links - connections ความเชื่อมโยงกัน
floods have disrupted the main transportation links

brunt - an unpleasant thing that one suffers
worst - most + bad
bearing the brunt of Thailand's worst flooding for 50 years.

expected - believe will happen คาดว่า (จะเกิดขึ้น)

forecast - a statement about what will happen in the future based on information available now พยากรณ์
the lower end of its forecast of 3.5% to 4.5% growth - (which is 3.5%)   
economic growth forecast - how much experts believe the economy will grow this (a percentage increase in size around 3.5% to 4.5%)

projected - expected, forecast; the amount that experts believe (forecast) for the future
projected losses from the floods - the expected losses from the flood

estimate - guesses of what the size, value, amount, cost, etc. of something might be, either by using available information or by guessing  การประมาณค่า
estimate losses - guess how big total losses in the economy will be (after the flooding is finished)
too early to estimate the full impact of the losses

toll - normally the number of people killed or injured in an accident or disaster, but in this case, it refers to the number of job losses or lost business in the economy

logistics - the activity of transporting, storing, and tracking goods (being sent from one place to another) (See Wikipedia) การขนส่งและจัดจำหน่ายสินค้า การขนส่งสินค้า

rebound - start to rise again after decline การฟื้นตัวของเศรษฐกิจ (ค่าขนส่ง) เพิ่มขึ้นอีกครั้ง หลังจากมีการปรับลดราคาไป

reconstruction - the process of building or creating something again that has been damaged or destroyed การสร้างใหม่, การประกอบใหม่

pent-up - a great feeling of desire or need or a force that has built up and not released yet (may release in an explosion)
demand - the need and desire to buy goods and services by households and businesses
pent-up demand - all the things that a person or people want to buy but they can't  

pessimistic - feeling that bad things will happen in the future (opposite of "optimistic" below) การมองโลกอย่างแง่ร้าย

global - throughout the world ทั่วโลก ทั้งโลก
crisis - a situation that has reached and extremely difficult or dangerous point: an urgent, difficult or dangerous situation วิกฤตการณ์ วิกฤต ช่วงวิกฤต

peak (noun) - the highest amount
X peaks at Y (verb) - the economic variable X reaches its highest value at time of year Y

Flooding seasonally peaks at the end of October

we have not even seen the worst yet

prospects - the possibility that things will happen ความเป็นไปได้ (See glossary)
default - failure to repay a debt, loan การผิดสัญญา
debt - an amount of money that you owe หนี้
public debt - money that the government has borrowed and still owes
default on public debt - when a government fails to pay back money it borrowed (a rare and dangerous event for the global economy)
the prospects that Greece will default on its public debt

severe - very serious and worrying ที่รุนแรง ที่น่าเป็นห่วง
pressure - stress, cannot live comfortably (difficult decisions must be made) ความกดดัน ความตึงเครียด

sell-offs - when a lot of stocks are being sold on the stock exchange  
The Stock Exchange of Thailand meanwhile may see selloffs