JANUARY 29 — This month’s floods in Thailand are a worrisome reminder of the increasing uncertainty of extreme weather events. Thailand’s flood season usually ends in November, but this year, influenced by a low depression and a strong northeast monsoon, widespread flooding in the south of the country has killed more than sixty people, affected over 330,000 households, and resulted in widespread asset losses.
Far from being an anomaly, however, the unpredictability of these extreme weather events may become the norm. Using a United Nations global methodology to estimate future disaster losses, we anticipate that average annual losses in Thailand due to floods will reach more than US$2.5 billion (RM11.1 billion) by 2030, or 0.65 per cent of the country’s 2015 GDP, which is the equivalent of 2.6 per cent of gross fixed capital formation, and 2 per cent of gross savings.
The final impact on Thailand’s GDP for 2017 will depend on the duration of the floods. To date, the worst affected sector is rubber, which accounts for 1.5 per cent of GDP and 2.4 per cent of export revenues. The Rubber Authority of Thailand estimates that approximately 10 per cent of the country’s rubber production has been lost so far. As Thailand is the world’s largest exporter of rubber, accounting for 38 per cent of world exports, a tighter global market supply may result in an increase in prices, which would somewhat mute revenue losses. Nevertheless, based on climate outlook forecasts expecting the floods to recede by the end of January, a loss of 10 to 15 billion baht could still be expected. Read more