Although the Thai government is trying to put a brave face on it, it doesn’t take a rocket scientist to see the Thai economy could be in major trouble, even after the current flooding situation is over. 14,172 factories in Thailand are currently under water, and more are expected to be flooded in the next 24-48 hours. While the Thai Commerce Minister said yesterday the Thai econom’s projected growth will only fall .3% below what was expected for the year, some analysts think it may well fall below that.
Along with the flooded factories in Thailand comes a massive loss of jobs. In Ayutthaya alone, it’s estimated close to 100,000 factory workers could lose their jobs. Many factories are paying 100 percent of their workers’ salaries at the moment, even though the plants are flooded and closed, some are paying 7percent and some only 50 percent, but this situation won’t remain for long. Factory owners are losing too much money and will eventually be forced to lay off most of their employees.
Many of the flooded factories are Japanese owned and, as Japan has had its own problems already this year with the massive earthquake and tsunami that hit the country, there’s only so much loss these companies can take. Some too may well decide operating in Thailand is too risky, if the Thai government can’t get a better handle on the flooding situation.
It floods every year in Thailand, to some degree or another, yet in the 15 or so years since the last massive floods took place, little has been done to improve the situation or to build permanent flood walls. Some Japanese companies may just tire of it, and move their operations to more reliable countries.
These and other reasons are why Thailand’s economy over the next six months to a year is likely to remain shaky at best, and the longer the floods remain, the worse it will get.