KASIKORN Research Centre’s analysis estimates that the economic impact of floods arising from continuous rainfall from Friday to Sunday (Sep. 25-27) is approximately 7–17 billion baht while risks associated with natural disasters and extreme weather, which are becoming increasingly frequent and severe, pose a significant structural challenge to the Thai economy, Naewna newspaper said this evening (Sep. 28).
Inundated were Bangkok and its vicinity, including Samut Prakan, Nonthaburi, and Pathum Thani areas which were subsequently declared disaster zones, as well as in at least 20 other provinces, such as Sa Kaeo, Prachin Buri, Ayutthaya, Chon Buri, Nakhon Nayok, and Nakhon Ratchasima.
Although most areas in Bangkok have gradually returned to normal, the impact persists in several locations and the situation is expected to take at least another week to resolve, assuming no further complications arise.
The initial economic impact stemmed from temporary disruption of economic activities. Because the floods gushed in rapidly, businesses and the public had limited time to prepare. Coupled with travel obstacles, certain activities were temporarily halted or slowed down over the weekend — prior to the announcement of special government holidays and the private sector’s shift to “Work from Home” arrangements.
Key sectors impacted by the floods in Bangkok and its vicinity were retail, restaurants, services particularly those reliant on consumer mobility and on-site treatments, and SMEs. Daily wage earners were also hit by income loss due to difficulty in travelling and not being able to work.
Initially, this research centre estimated the impact on economic activity over a 3–7 days’ timeframe, considering opportunity costs for businesses and workers, such as the temporary closure of restaurants and shopping malls, disruptions in the delivery of goods and food, reduced travel and tourism, plunging sales at petrol stations, and decreased demand for health and financial services.
However, some impacts may be offset later, as certain activities merely involve deferred spending. Conversely, activities such as purchasing food, beverages, and essential consumer goods might have actually got a boost from accelerated buying before or during the floods. Furthermore, since September is not a peak month for foreign tourist arrivals in Thailand, the impact on the tourism sector is somewhat limited.
Based on these assumptions, Kasikorn Research Centre estimates the initial net economic impact at approximately 7–17 billion baht, or roughly 0.03–0.11% of GDP. The initial impact primarily stems from a temporary loss of economic activity rather than damage to the production base.
However, these figures remain highly uncertain and depend on the duration of the situation. Should the flooding persist or expand to affect factories, industrial estates, or critical transport and supply chain systems, the economic effect could increase significantly.
The disruption does not end immediately when the water recedes. Households and businesses continue to face the gradual realisation of asset damage, affecting homes, vehicles, machinery, and equipment, along with subsequent repair and recovery costs.
This situation may lead to more cautious spending in other areas, with this varying according to the financial standing and coping capacity of individual households and businesses. Those with high debt burdens, limited savings, or restricted access to credit are particularly vulnerable, possessing a lower capacity to absorb such losses compared to others.
Looking ahead, the risks linked to natural disasters and extreme weather, which clearly are becoming increasingly frequent and severe, will pose a significant structural challenge to the Thai economy, affecting lifestyles, business operations, infrastructure, and fiscal burdens.
Consequently, enhancing resilience requires a multi-dimensional approach: ranging from water management systems and infrastructure, early warning mechanisms, and business continuity planning, to insurance schemes and financial instruments for risk distribution. Such measures are essential to ensure that the burden of disaster-related losses does not fall solely upon households, the business sector, or the government.
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Top and Front Page: Floods in Bangkok and the economic cost. Photo – Naewna
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