Long after the floodwaters subsided, the damage done to the Thai economy and the international supply chain remains significant. Economists are predicting an overall loss to the Thai economy of Bt1.12 trillion which represents over 10 percent of Thailand’s GDP. Exports could suffer losses of up to Bt148bn with the household and agricultural sectors set to lose Bt80bn and Bt50bn respectively.
Thailand’s industrial sector has been especially hard hit. According to Tanit Sorat, vice chairman of the Federation of Thai Industries, 10,000 factories employing 660,000 workers were affected by the flooding representing a loss of Bt475 billion. Over 50 percent of the damage is in the automotive and electronics industries.
In the automotive sector alone Thailand will produce 300,000 fewer units than projected. Major computer hard drive manufacturers have been forced to drastically cut back production, leading Dell to warn that its revenues could be affected by a worldwide shortage. Analysts are predicting that prices for external hard drives worldwide may jump by as much as 10 percent and that it may take a full year for hard drive manufacture to return to pre-flood levels.
Although countries have rushed to Thailand’s aid – Japan has approved a plan that allows Thai factory workers to find temporary employment in Japan for example – the flood will have far reaching global consequences. Because of Thailand’s key role in the supply chain, Toyota has been forced to slow car production in factories from Indonesia, Japan, and Malaysia to North America, Pakistan and South Africa. Pornsil Patchararintanakul, vice-chairman of the Thai Chamber of Commerce, says most Thai companies will have returned to normal by March 2012. However Japanese automotive giants including Honda are already looking to diversify their manufacturing base by moving processes to Vietnam and Indonesia.
Tourism, Thailand’s other major source of income, is also severely diminished. Visitor numbers over 2011 were down by around one million. – Charley Lanyon