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| Thailand slashes growth forecast as floods hurt economy | Thailand slashes growth forecast as floods hurt economy |
| (40 minutes later) | |
| The Bank of Thailand (BOT) has slashed its growth forecast for the current financial year after the country was hit by its worst flooding in decades. | The Bank of Thailand (BOT) has slashed its growth forecast for the current financial year after the country was hit by its worst flooding in decades. |
| The central bank cut its forecast to 2.6% for 2011, down from an initial projection of 4.1% growth. | The central bank cut its forecast to 2.6% for 2011, down from an initial projection of 4.1% growth. |
| The floods have affected one third of all provinces in the country and forced several industrial estates and factories to shut down. | The floods have affected one third of all provinces in the country and forced several industrial estates and factories to shut down. |
| The BOT kept the interest rate on hold at 3.5% in a bid to boost growth. | The BOT kept the interest rate on hold at 3.5% in a bid to boost growth. |
| "The downward revision in gross domestic product (GDP) forecast was expected, given the severe damage dealt to the manufacturing, agricultural and services industry," said Penn Nee Chow of UOB Bank. | |
| "And with Bangkok now more than likely to be flooded, vital financial and other services, as well as tourism will be dealt a blow." she added. | "And with Bangkok now more than likely to be flooded, vital financial and other services, as well as tourism will be dealt a blow." she added. |
| Economic impact | |
| Authorities have warned the floods may last for another four to six weeks. Heavy flooding has forced almost 1,000 factories to shut down. | |
| Last week the central bank said the damage to industry may be more than 100bn baht ($3.3bn; £2.1bn). | |
| "In terms of flood impact on factory output and business sectors, it seems like capacity utilisation for October will be very low," said Rahul Bajoria of Barclays Capital. | |
| "A drop in industrial production to the tune of 15%-20% month-on-month cannot be ruled out." he added. | |
| To make matters worse, Yingluck Shinawatra, Thailand's prime minister, has said it may not be possible to protect the country's capital Bangkok from flooding. | |
| Bangkok contributes almost 41% to the country's GDP, and analysts have warned that any substantial damage to the capital may hurt growth even more. |