expects flooding to cut GDP by 0.6-0.9%

The Ministry of Finance has forecast a 0.6-0.9 percent reduction in the gross domestic product (GDP) on account of the flooding catastrophe while asking the Bank of Thailand (BoT) to delay its interest rate hike.

Speaking of his meeting with concerned agencies to assess the economic impact from the floods, Finance Minister Thirachai Phuvanatnaranubala stated that the BoT and the National Economic and Social Development Board (NESDB) estimated the total cost of damages to be around 60 billion THB and 80-90 billion THB respectively. Such figures would likely result in a lower GDP by 0.6-0.9 percent.

On this occasion, the Minister suggested the central bank to maintain the policy interest rate at a reasonable level and refrain from using the current flood situation and the rising product prices as an excuse to increase the rate.

Regarding the Finance Ministry’s contribution to the flood relief effort, Mr Thirachai said problems in the disbursement of assistance money were being fixed at haste. A portion of the fiscal 2012 budget will also be set aside for repairing the damaged utility system and improving the basic infrastructure for handling more floods in the future.