At a crossroads
The United Kingdom’s economy has encountered a challenging phase, with consecutive monthly declines in GDP marking the first back-to-back contraction since the tumultuous days of the Covid-19 lockdowns.
Thailand is battling the worst flooding in years with a large swathe of its crop land inundated by seasonal storms and swollen rivers, threatening to fuel food prices and hinder a nascent tourism recovery.
Popular tourism destinations such as Bangkok and Chiang Mai in the country’s north-east have reported flooding of streets this week after heavy rain triggered by typhoon Noru saw the water level in the Chao Phraya and Ping rivers rising.
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An estimated 1.2 million rai (160,000 hectares) of agricultural land was hit by flooding with almost 82,000 houses damaged across 510 districts in 72 provinces, according to official data.
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With more storms forecast over the next few weeks, Thai officials are taking steps to minimise further damage to crops and houses with Prime Minister Prayut Chan-o-cha making a trip to flood-hit north-eastern provinces on Tuesday to oversee relief efforts.
The premier vowed to shield the economy and low-income households hit by the floods.
The biggest damage is to rice crop and it comes amid forecasts for smaller harvests from major producers such as India and Pakistan, with the latter hit by a devastating flood this year.
Kasikorn Research Centre estimates that Thailand’s main rice harvest may drop about 9 per cent because of the flooding, damage to the crop close to the harvest period and high fertiliser prices.
Thailand received about 24 per cent above average rainfall between Jan 1 and Sept 25, Kasikorn said, citing weather department data.
“The current flood impact will hit households that are already vulnerable due to low purchasing power, high costs of living and high household debt,” Kasikorn said.
A lower rice output as well as damage to vegetable and fruit harvests may also spell bad news for a country that is battling the highest food inflation in over a decade.
The hit to agriculture adds to headwinds to growth, such as high fuel and electricity prices and a weak baht, according to Mr Tim Leelahaphan, Bangkok-based economist at Standard Chartered Bank.
“Flood impact could be a tail risk that could emerge in the next quarter or two for Thailand,” said Mr Leelahaphan.
“We need to monitor whether it will impact manufacturing or result in rate cuts. Any potential impact on tourism, which we hope would recover in the next quarter or two, will be a new lesson for Thailand this time, especially as it is the hope for next year’s economic recovery,” he added.
The Tourism Authority of Thailand is monitoring the impact of floods in some key tourist destinations and it has seen no major disruptions yet, said governor Yuthasak Supasorn.
“Expected arrivals from Europe and the US in the winter season shouldn’t be affected,” Mr Supasorn said. “There hasn’t been any report about booking cancellations due to the floods.”
Thailand, also a major producer of rubber and sugar, is often ranked among the world’s most vulnerable to climate change.
While the country was battered by flooding in 2019, 2017 and 2011, some regions suffered severe droughts in the past decade.
On Tuesday, Bank of Thailand governor Sethaput Suthiwartnaruep said the revival in tourism will ensure South-east Asia’s second-largest economy will continue to expand next year. The central bank has previously said the impact of floods needs close monitoring.
(with inputs from ANN)
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