Floods: Economy slowed to near-zero growth

3.8% growth predicted before the floods fell to 0.1%. Growth was 7.8% in 2010. Forecast 5.5% to 6.5% this year.

underwater factory

Photo above of a factory north of Bangkok under water and out of action during last year's floods.

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Economics

2011 GDP growth sinks to 0.1% on flood crisis

Bounceback of about 6% expected this year
Wichit Chantanusornsiri

Thailand recorded gross domestic product growth of 0.1% last year as flooding disrupted business and manufacturing, but this year's growth should come in at between 5.5% and 6.5%, says the government's top think tank.

Before the floods, the National Economic and Social Development Board (NESDB) projected GDP growth of 3.8% for the year.

The economy grew by 7.8% in 2010.

The 2011 figure came in far below estimates by private and government analysts, who had predicted growth of 1% to 1.4%. 

In the fourth quarter alone, GDP dropped by 9% year-on-year, the largest fall since the third quarter of 1998.

Quarter-on-quarter, the decline was 10.7%. 

"With the government's plan for water management, any flood impacts will be lower this year," said secretary-general Arkhom Termpittayapaisith.

The NESDB projects growth of 5.5% to 6.5% this year, a full percentage point higher than earlier projections of between 4.5% and 5.5%. 

Private sector flood recovery investment totalling an estimated 798 billion baht will support growth in 2012.

The World Bank said the flood crisis resulted in 1.4 trillion baht worth of damage - 630 billion baht to the industrial sector and the rest from loss of income.

The government will spend 120 billion baht on flood rehabilitation and flood prevention measures this year.

Mr Arkhom said higher-than-expected oil prices will threaten Thai growth in 2012.

His agency is basing its forecast on oil at US$105-110 a barrel.

A quick recovery in tourism is expected. Last month saw 1.94 million visitor arrivals, up by 7.7% year-on-year.

While the industrial sector contracted by 4.3% last year, the farm sector expanded by 3.8%, private investment by 3.3%, household spending by 1.3%, exports by 16.4% and tourism arrivals by 19.8%.

Nomura, the Japanese brokerage, expects the weaker-than-expected fourth-quarter GDP growth will encourage the Bank of Thailand to cut its policy rate by 25 basis points at its March 21 meeting on March 21.

(Source: Bangkok Post, Economics, 2011 GDP growth sinks to 0.1% on flood crisis, Bounceback of about 6% expected this year, 21/02/2012, Wichit Chantanusornsiri, link

Economics Vocabulary


Gross Domestic Product (GDP) - the total value of all the goods and services produced by a country in one year (See Wikipedia)

GDP growth -
the percentage change in GDP measured over a year that shows how fast an economy is getting bigger or shrinking
weaker-than-expected fourth-quarter GDP

out of action - not working, not operating; not operating temporarily; not functioning normally (example: the injured footballer was out of action for the rest of the game)

crisis - an urgent, difficult or dangerous situation วิกฤตการณ์  วิกฤต
flood crisis

bounceback - rise again after falling
expected - believe will happen คาดว่า (จะเกิดขึ้น)

2011 GDP growth sinks to 0.1% on flood crisis
Bounceback of about 6% expected this year

disrupted - interrupted and prevented from continuing smoothly by creating problems ขัดขวาง
projected - expected, forecast; what people believe it will in the future

think tank - "an organization that conducts research and engages in advocacy in areas such as social policy, political strategy, economics, military, and technology issues. Most think tanks are non-profit organizations...Other think tanks are funded by governments, advocacy groups, or businesses, or derive revenue from consulting or research work related to their projects" (See Wikipedia)

National Economic and Social Development Board (NESDB) - the government agency that makes long-term economic plans to drive economic growth and development in Thailand (See Wikipedia)

Thailand recorded gross domestic product growth of 0.1% last year as flooding disrupted business and manufacturing, but this year's growth should come in at between 5.5% and 6.5%, says the government's top think tank. Before the floods, the National Economic and Social Development Board (NESDB) projected GDP growth of 3.8% for the year. The economy grew by 7.8% in 2010.

figure - an amount of money จำนวนเงิน
estimates - guesses of what the size, value, amount, cost, etc. of something might be การประมาณค่า
figure came in far below estimates

predict - when someone says what they think will likely happen in the future
predict growth

quarter -
a period of three months during the year 
fourth quarter - the last three months of the year in the calendar used by an organization such as the government or a company

quarter-on-quarter -
the amount during a quarter this year compared to the same quarter last year
year-on-year - the amount during a period this year (month, quarter, half year) compared to the same period last year

The 2011 figure came in far below estimates by private and government analysts, who had predicted growth of 1% to 1.4%. In the fourth quarter alone, GDP dropped by 9% year-on-year, the largest fall since the third quarter of 1998. Quarter-on-quarter, the decline was 10.7%. 

A quick recovery in tourism is expected. Last month saw 1.94 million visitor arrivals, up by 7.7% year-on-year.

impacts - effects on different people and things
projections - what is expected to happen in the future

"With the government's plan for water management, any flood impacts will be lower this year," said secretary-general Arkhom Termpittayapaisith. The NESDB projects growth of 5.5% to 6.5% this year, a full percentage point higher than earlier projections of between 4.5% and 5.5%. 

sector - a part of the economy ภาคเศรษฐกิจของประเทศ (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) (See Wikipedia)
private sector

recovery
- when the economy starts to get better after an economic downturn or recession (more jobs, higher incomes) การฟื้นฟูสภาพ becoming strong and healthy again after an illness or a problem ฟื้นฟู

investment
- taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
income - money that people receive from work or some other source, used for household consumption and savings

support - help สนับสนุน
support growth

Private sector flood recovery investment totalling an estimated 798 billion baht will support growth in 2012.  The World Bank said the flood crisis resulted in 1.4 trillion baht worth of damage - 630 billion baht to the industrial sector and the rest from loss of income.

rehabilitation - improve condition so that it can operate again; the process of making normal again after suffering injury or harm   การทำให้กลับสู่สภาพเดิม  การฟื้นฟูสภาพกิจการ
flood rehabilitation

prevention - the act of preventing something, or things that people do in order to prevent something
measures - actions taken to solve a problem มาตรการ
flood prevention measures

The government will spend 120 billion baht on flood rehabilitation and flood prevention measures this year.

threaten - 1. create risk; create a dangerous situation; 2. to say that you might do something bad or harmful, especially in order to make someone do something ขู่เข็ญ คุกคาม ทำให้กลัว

Mr Arkhom said higher-than-expected oil prices will threaten Thai growth in 2012.

forecast - a statement about what will happen in the future based on information available now พยากรณ์
barrel - a steel oil container (used to measure the amount of oil)

His agency is basing its forecast on oil at US$105-110 a barrel.

farm sector -
all the farms in the country
industrial sector - all the companies that produce goods in factories in the country

contracted - became smaller, shrunk
industrial sector contracted

private investment - investment by privately owned companies (not including government investment)

household - a group of people, often a family, who live together ครัวเรือน
household spending

While the industrial sector contracted by 4.3% last year, the farm sector expanded by 3.8%, private investment by 3.3%, household spending by 1.3%, exports by 16.4% and tourism arrivals by 19.8%.

brokerage - a business that sells things for other people or businesses, a "stock brokerage" sells stocks, bonds and other investments (See Wikipedia)
encourage - make people interested in and excited about doing an activity; cause someone to gain enthusiasm, motivation, and energy in what they are doing ปลุกใจ

policy - a plan of action to guide decisions and achieve outcomes (See Wikipedia) นโยบาย
basis point - one hundredth of one per cent. This is often used to express the interest rate on bonds (See Wikipedia)

policy
rate - the interest rate that the central bank sets in its monetary policy to influence and control the amount of credit and money supply of the economy and thus the inflation rate

cut its
policy rate
cut its policy rate by 25 basis points
cut its policy rate by 25 basis points at its March 21 meeting on March 21.

meeting - when a group of people come together to discuss issues and make decisions การประชุม

Nomura, the Japanese brokerage, expects the weaker-than-expected fourth-quarter GDP growth will encourage the Bank of Thailand to cut its policy rate by 25 basis points at its March 21 meeting on March 21.

About the author

columnist
Writer: Jon Fernquest
Position: Online Writer