October 21st, 2011
07:48 AM GMT
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(CNN) – The floods in Thailand may cost the country more than tumultuous political uprisings did last year, as officials revise GDP growth expectations and maintain interest rates.

The Thai economy is now expected to grow less than 3% this year, down from previous estimates that put growth at around 4%, according to the Governor of the Bank of Thailand, Prasarn Trairatvorakul. This translates into shrinking 1.1% in the fourth quarter from a year earlier, Finance Minister Thirachai Phuvanatnaranubala told Reuters. Interest rates will remain unchanged at 3.5%, the first time rates were not increased since 2006.

In 2010, when “red shirt” antigovernment protesters clashed with the military in violent uprisings, the GDP grew 7.8%, according to an IMF report, despite concerns that the chaos would scare away tourists and investors.

While tourism is important to Thailand – accounting for about 7% of total economic output – manufacturing and agriculture are the most important sectors of the Thai economy, and both are bearing the brunt of floods.

The flooding in Bangkok has had severe consequences for industry, with many factories shut down due to flooding. Richard Han of Hana Microelectronics says the economic impact of the floods in Thailand may be greater than the impact of the March tsunami in Japan.

Western Digital Corporation, which supplies computer hardware to Hewlett-Packard and Dell, may be dealing with a drop of up to 40%, or $2.6 billion, in Thai exports this year, Industry Minister Wannarat Channukul told reporters.

Western Digital Chief Executive John Coyne called the flooding “a disaster of unprecedented scale,” according to the Wall Street Journal’s Marketwatch. Many shares of companies in the technology sector fell yesterday, with Dell falling 5.4%.

Sony, another company hard hit by the flooding, has been forced to postpone the launch of a new camera and headphones due to production suspension in two of its three factories in Thailand.

“Sony is shifting production to its Chonburi factory that normally makes car audio products, and aiming to start production as soon as possible,” said a Sony spokesperson, Yasuhiro Okada.

Automobile factories have also been affected, with Honda reporting stalled production in Thailand. Hoping to spare one of its motorcycle factories the same fate, Honda has enlisted 200 soldiers to build a levy around the Bangkok factory, Bloomberg reported.

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soundoff (23 Responses)
  1. octopus

    oh boy...

    October 21, 2011 at 8:33 pm |
  2. Sum Yung Gai

    Blah...

    October 22, 2011 at 5:59 am |
  3. Hafeefa

    hai ............bye

    October 22, 2011 at 3:27 pm |
  4. Hafeefa

    haiiiiiiiiii

    October 22, 2011 at 3:28 pm |
  5. Prof. Hogwarts PhD two

    Of course.. Political problems was red shirts demonstration in front a shopping centre for free election s which the army them went in a shot every body up. The floods have swamped huge massive industrial estates putting 100,000's out of work, not to mention farmers. The Thai army and govt completely overreacted to the political demands for shock horror..elections. Complete waste of life

    October 22, 2011 at 4:58 pm |
  6. Beerbarrel

    Ying-luck not compatible with Thailand. Need Yang-luck.

    October 24, 2011 at 5:36 am |
  7. Aor

    Tired with this "Shinnawatra" family. Whenever they are in power, Thai is always in trouble, even natural disaster. Please go out of Thailand. We need peace.

    October 24, 2011 at 6:53 am |
  8. rickirs

    The Shinnawatra family does not control the weather. Really! Companies that want to build factories in floodplains should be made to build for flooding or taxed for government infrastructure (eg., stormwater district) to avoid damage and shutdown.

    October 26, 2011 at 12:57 am |
  9. concern thai

    not blaming the weather or the cause of the flood, but the way the government has handled the problem is ridiculously bad. It just shows how incompetent some people in the governemnt. There are good and capable people in Thailand, they just never get the chance to put them to use. Instead of letting this natural disaster which has affected EVERY thai citizen unite us, we have let it divide us further. It's time to get rid of the colors. It serves no positive influences on the society.

    October 26, 2011 at 2:53 am |
  10. silom22

    How can you possibly blame the PM for the water problem? I mean, does Mrs. Shinawatra make it rain or what do you think? This is ridiculous!

    October 26, 2011 at 11:04 am |
  11. Lisia

    to Rickirs, Silom22
    of course Thugsin is behind all this flood. He try to protect the rice field in Supanburi which belong to Al-Fayed (Harrod) jasmine rice field by holding the water in northern dam longer than it should be. So the water been hold up north for too long and over the capacity of dam.. that's how the flood break out. Now they try to protect land west and east side of Bangkok from flood (of course owned by Thugsin's friends & family. They only open 2 watergates out of 40!! and now the water will come thru the center of Bangkok.... so who to blame.. think about it.

    October 27, 2011 at 5:01 am |
  12. sora

    From the record, it just shown that water level already raised almost at 90% of the damp before Yingluck became PM of Thailand. Whether this is the fact or not, you could ask for an information from every universities in Thailand.

    November 10, 2011 at 4:45 pm |
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