October 21st, 2011
07:48 AM GMT
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.
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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