The Bank of Thailand will drop its growth forecast even lower for gross domestic product this year as the massive flood works its way through Bangkok and into Samut Sakhon.
"How much [the Monetary Policy Committee] will decide to revise downwards the GDP figure on November 30 will depend on the latest estimated loss figures. The situation has not yet stabilised," Deputy BOT Governor Suchada Kirakul said yesterday.
The flood situation is still evolving. Flood waters are spreading into downtown Bangkok and some areas of the neighbouring provinces, she said.
On October 28, the central bank slashed its growth forecast to 2.6 per cent from 4.1 per cent after floods swamped almost 10,000 factories and threatened to seep into the capital.
The tourism industry is expected to see a decline of about 700,000-800,000 arrivals this quarter, resulting in the no-show of about Bt20 billion in income. These effects were not taken into consideration at the previous MPC meeting, she said.
The latest estimated damage to manufacturing is a minimum of Bt150 billion, up from the previous estimate of Bt110 billion. The estimate will be updated before the MPC meeting.
The MPC, which paused its policy-rate hikes at its October 19 meeting because of the floods, will likely assess the severity of the flood's impact before deciding on the rate's direction.
If the economy worsens, policy-makers could shift towards a more accommodative stance, Suchada said.
"At the last meeting, the MPC acknowledged how bad the floods were. A decision was made then to leave the rate unchanged," she said. "The rate's next direction may be to be held as is or lowered. The market knows this signal. And this is help the central bank can provide directly, a monetary policy that supports economic recovery."
On October 19, the MPC decided to keep the policy rate on hold at 3.5 per cent, citing the nation's severe floods and weakening global economy.
Tisco Wealth expects the Thai economy to expand only 2 per cent this year, if the government fails to fix flood problems within a few months and areas of inner Bangkok are seriously affected. In the worst-case scenario, the fourth-quarter economy will contract.
Tisco Wealth will re-evaluate the 2012 situation. It noted that manufacturing should recover quickly if the machinery in inundated industrial zones is not significantly damaged.
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