http://www.cnbc.com/2015/07/26/thailands-economy-in-trouble.html
Thailand's worst drought in a decade appears to have ended, but the damage could cast a shadow on the economy for months to come.
"Thailand has turned from the land of smiles to the land of frowns. Indeed, deep frowns that are unlikely to cheer anytime soon," ANZ economists said in a recent note.
The crippling dry weather that first emerged in late 2014 is no longer present in the country's 67 provinces, the deputy head of Thailand's disaster prevention department told Reuters last week. But with more than 40 percent of the country's population engaged in agriculture, the drought has exacerbated troubles in an economy already weighed down by slowing manufacturing, shrinking exports and rising external debt.
That's spurred sharp growth downgrades. Credit Suisse is now expecting 2015 economic growth at 2.5 percent on year, down from 3.1 percent previously, while JP Morgan is pricing in a 2.6 percent rise, down from a June estimate of 3.5 percent.
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Assessing the damage
Thailand is one of the world's biggest rice exporters, but the drought has impacted 80 percent of rice farming land, possibly causing a 15-20 percent drop in output, according to the Thai Rice Exporters Association.
"Not only is offseason [rice] crop production down, even planting of the main [rice] crop season will likely be delayed to August from June-July normally," said Credit Suisse research analyst Santitarn Sathirathai.
To be sure, agriculture as a whole accounts for less than 10 percent of Thailand's gross domestic product (GDP), but "the more significant drought-related risk to growth will be if water rationing also affects industrial areas, potentially curbing manufacturing output," warned Benjamin Shatil, a JPMorgan economist, in a report earlier this month.
Reduced output in turn, will hurt employment.
"We believe the drought effect on lower farm output, led by a 30 percent drop in paddy output in January-May, worsened labor market conditions as farm employment shed 700,000 jobs in June," noted Citi economist Jun Trinidad.
The unfavorable weather also depresses agricultural incomes, which has a knock-on impact on consumer spending.
CNBC : Thailand economy in trouble
Thailand's worst drought in a decade appears to have ended, but the damage could cast a shadow on the economy for months to come.
"Thailand has turned from the land of smiles to the land of frowns. Indeed, deep frowns that are unlikely to cheer anytime soon," ANZ economists said in a recent note.
The crippling dry weather that first emerged in late 2014 is no longer present in the country's 67 provinces, the deputy head of Thailand's disaster prevention department told Reuters last week. But with more than 40 percent of the country's population engaged in agriculture, the drought has exacerbated troubles in an economy already weighed down by slowing manufacturing, shrinking exports and rising external debt.
That's spurred sharp growth downgrades. Credit Suisse is now expecting 2015 economic growth at 2.5 percent on year, down from 3.1 percent previously, while JP Morgan is pricing in a 2.6 percent rise, down from a June estimate of 3.5 percent.
Read More Thai military has limited time: Former PM
Assessing the damage
Thailand is one of the world's biggest rice exporters, but the drought has impacted 80 percent of rice farming land, possibly causing a 15-20 percent drop in output, according to the Thai Rice Exporters Association.
"Not only is offseason [rice] crop production down, even planting of the main [rice] crop season will likely be delayed to August from June-July normally," said Credit Suisse research analyst Santitarn Sathirathai.
To be sure, agriculture as a whole accounts for less than 10 percent of Thailand's gross domestic product (GDP), but "the more significant drought-related risk to growth will be if water rationing also affects industrial areas, potentially curbing manufacturing output," warned Benjamin Shatil, a JPMorgan economist, in a report earlier this month.
Reduced output in turn, will hurt employment.
"We believe the drought effect on lower farm output, led by a 30 percent drop in paddy output in January-May, worsened labor market conditions as farm employment shed 700,000 jobs in June," noted Citi economist Jun Trinidad.
The unfavorable weather also depresses agricultural incomes, which has a knock-on impact on consumer spending.