(Updates with central bank comment in seventh paragraph.)
Oct. 14 (Bloomberg) -- Thai Prime Minister Yingluck Shinawatra said Bangkok will be spared from floods that have killed almost 300 people and devastated areas north of the capital after defenses on the Chao Phraya river were bolstered.
“The impact to Bangkok will only be in the area outside the flood barrier,” Yingluck told reporters today at the city’s national flood center. Water levels in provinces north of the city have “started to stabilize,” she said.
The three-month-old disaster has crippled manufacturing hubs in central provinces and destroyed more than 10 percent of rice farms in the world’s biggest shipper of the grain. To save Bangkok from the same fate, Yingluck ordered the army to widen canals to drain water toward the Tha Cheen river west of the capital, relieving pressure on the swollen Chao Phraya.
“Inner Bangkok is the heart of the country and we can’t let it flood because that would cause vast economic damage,” Pracha Promnog, head of the flood center, said today at a media briefing. “We are trying everything to prevent any flooding in Bangkok’s center.”
That may ease concerns for the capital’s 9.7 million residents, who have been hoarding rice, instant noodles and bottled water, and buying sandbags to protect their homes as floodwaters threatened to break through the city’s defenses.
While Bangkok may avoid widespread damage, floodwaters continue to threaten cities and industrial estates in Thailand’s central and northern provinces.
The cost of the disaster may rise to as much as 120 billion baht ($3.9 billion), and force the central bank to cut its forecast for economic growth this year, Governor Prasarn Trairatvorakul said today.
“The flooding impact on the whole economy will depend on the rehabilitation process after this,” he told reporters in Bangkok. “We need to monitor the situation closely.”
At least 289 people have been killed as monsoon rains and floods have swept across the country since July 25, according to data from the Department of Disaster Prevention and Mitigation. About 26 of Thailand’s 77 provinces are still affected, the agency said today on its website.
Floodwaters yesterday overwhelmed defenses around the Hi- Tech Industrial Estate in Ayutthaya, a base for manufacturers including Hana Microelectronics Pcl, the country’s biggest semiconductor packager.
“A major breach occurred in the south wall of the industrial estate, and despite heroic efforts from the Thai army and many of the volunteers who have been working the past seven days to hold the waters back, the waters started to come in,” Hana’s Chief Executive Officer Richard Han said in a Bloomberg Television interview today.
Floodwaters earlier swamped the neighboring Rojana Industrial Estate, crippling operations of Japanese manufacturers including Nikon Corp. and Pioneer Corp.
A total of 930 factories nationwide have been damaged in the disaster, according to the Ministry of Industry.
A “huge amount of water” flowing from northern provinces and peak tides predicted between today and Oct. 17 and again from Oct. 28-31 will still test barriers defending Bangkok, the government’s flood center said this week.
Conflicting warnings are complicating preparation efforts.
Residents in northern Bangkok and Pathum Thani province were told to evacuate late yesterday after a water barrier failed. The government’s flood center later said the evacuation order wasn’t official, and the breach was a false alarm.
“The issue is less the rain and more the run-off waters that come from the northern parts where the dams release the water,” said Han from Hana Microelectronics. “That is anticipated to rise over the next few days in the Ayutthaya area before it passes through Bangkok, and that’s why everyone in Bangkok is extremely worried that it’s their turn now.”
The damage bill may rise as high as 156.7 billion baht and curb growth by 1.3 percentage points to 1.5 percentage points, the University of the Thai Chamber of Commerce said yesterday.
The university, a private institution established by the chamber, now expects the economy to grow by 3 percent to 3.5 percent this year. Consumer confidence declined to a four-month low in September, a separate report showed yesterday.
“The central bank can help the economy by holding its key interest rate on Oct. 19,” Thanavath Phonvichai, an economist at the university, said today. “Consumer confidence is on a downtrend. If they can cut the key rate, that will help boost the economy next year.”
Thailand’s gross domestic product rose 2.6 percent in the second quarter from a year earlier, the slowest pace since 2009. A faltering world recovery also poses a threat to expansion.
--With assistance from Daniel Ten Kate and Anuchit Nguyen in Bangkok and Rishaad Salamat in London. Editors: Tony Jordan, Jake Lloyd-Smith
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