Gross domestic product might grow only 0.5-1 per cent this year if flood waters expand to every district in Bangkok and hit industrial estates in the eastern part of the capital, according to the University of the Thai Chamber of Commerce.
The UTCC also showed that consumer confidence last month plunged to its lowest point since the Asian financial crisis of the mid-1990s, because of the flood disaster. The overall confidence index dropped from 81.8 points in September to 72.4 points in October.
“Confidence fell as people were shocked after many economic activities were suspended because of the floods,” said Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre. “People’s sentiment is expected to continue to drop this month as flooding continues, particularly in Bangkok.”
He said that if the floods dispersed around the capital city and destroyed the remaining industrial estates, GDP growth this year would be dragged down to only 0.5-1 per cent from the previously expected 1.5-2.5 per cent.
The lower growth would be mainly due to Bt260.6 billion in losses in the industrial sector, Bt42.75 billion from the tourism industry, and Bt85.04 billion in the agricultural sector. However, Thanavath said consumer sentiment could recover next month or early next year if the government quickly implements remedial measures to boost the industrial sector and helps ease the impact to small and medium-sized enterprises.
He said the economy could swing back to normal in the second quarter, with 2012 GDP expected to grow by 4-5 per cent.
Saowanee Thairungroj, vice president of UTCC’s Research Division, said lower confidence would continue to undermine spending on new cars, houses, travel and new investments.
Other indices related to consumer confidence also dropped to some of the lowest figures in almost 10 years last month on impacts from the flooding.
The confidence index on job opportunities fell from 73 points in September to 63.7 points in October. Consumer confidence regarding future income dropped from 100.3 to 90.9.
Other negative factors influencing low confidence last month included the Central Bank’s lowering of its GDP growth forecast from 4.1 per cent to 2.6 per cent for this year, higher cost of living, the global economic crunch and higher fuel prices.
Meanwhile, the Thai Chamber of Commerce says it will go ahead with its 29th annual meeting as scheduled, in Rayong from December 9-11.
The theme of the meeting will be “Unite Power for Sustainable Growth”, which will focus on seeking strategies to recover economic growth after the floods, continuing anti-corruption efforts, and reducing the income gap.
Source: The Nation