Bank of Thailand reduces GDP growth projection due to flood

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The Bank of Thailand (BoT) lowered its Gross Domestic Product (GDP) growth projection for 2011 significantly owing to the widespread flood in upper part of the country, Mass Communication of Thailand (MCOT) reported on Friday.

Assistant BoT Governor Paiboon Kittisrikangwan said on Friday the BoT decided to lower GDP projection from 4.1 to 2.6 percent, factoring in the country's estimated 140 billion baht (4.5 billion U.S. dollars) damage losses, owing to the widespread flood.

Paiboon explained that the floods have affected manufacturing activities at six industrial estates in the central provinces of Ayutthaya and Pathum Thani.

As the flooding continues, Lat Krabang Industrial Estate in eastern Bangkok may be affected.

If floodwaters spread into inner Bangkok, the cumulative impact on trade, tourism and related sectors is likely to be prolonged, and more severe than previously expected.

However, provided that the flood situation concludes by the end of the year, the Monetary of Policy Committee (MPC) expects domestic growth to recover in 2012 with key support from reconstruction spending, together with fiscal stimulus through the government's direct spending and additional measures such as the rice pledging scheme and the minimum wage increase.

Under the baseline scenario, the BoT projects the Thai economy to grow by 4.1 percent in 2012 on the back of domestic demand recovery, the strength of which will make up for some anticipated loss in export momentum due to the global slowdown.

A total of 377 people were confirmed dead and two people were missing in the floods that have inundated the upper part of the country for almost three months, the Disaster Prevention and Mitigation Department reported on Friday morning.

Flash floods were caused by the heavy monsoon "Nock-Ten" since mid July. Floods still prevail in 27 of 77 provinces, affecting about 730,000 households and 2.2 million people.