Post flood recovery imminent for Thai financial sector
With robust fundamentals in place, Thai banks are set to recover along with the country’s economy from the massive damage inflicted by the monsoon flooding. January 20, 2012 | Wong Wei HanThe financial sector in Thailand went through a particularly difficult period in the second half of 2011. The massive flooding which affected close to 60 provinces effectively slowed whatever momentum the banking sector had built up to recuperate from the political turmoil in previous years and the regional impact of the global economic slowdown. As a result, Thai banks are once again held back in their recovery, facing downside risks on credit and capital profile that look to persist in 2012. However, Thai banks are generally well-positioned to overcome the current setbacks, relying on the same resilience that has sustained the sector through various hardships in the past decade. The monsoon flooding that began to hit Thailand in July inflicted the worst disruption to the country’s economy since the 1997 financial crisis, with World Bank estimating the costs of damage and reconstruction to be at $45 billion and $25 billion respectively. Large swathes of the industrial, agricultural and tourism sectors in Thailand were devastated. Notably, the flooding severed automobile and electronics manufacturing output while crippling related domestic SMEs along the supply chain. As a result, domestic business sentiments and consumer demand are set to fall considerably in Q4 2011, driving Thailand’s economy off its original course towards recovery in the second half of 2011. The National Economic and Social Development Board has revised downwards its forecast for 2011 GDP growth to 1.5% down from pre-flood prediction of 3.5%-4.5%. However, the economy is widely projected to rebound in 2012, with a 4.5% - 5.5% growth forecast for the year, as the government continues to roll out rehabilitation measures to support reconstruction and revive spending, including a $10.5 billion package which promises soft loans as temporary relief for businesses and investors. Against this backdrop, Thailand’s banking sector is expected to struggle in Q4 2011 due to the nation... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Databook, Industry Outlook, ThailandDatabook,Industry Outlook,Thailand, Databook,Industry Outlook,Thailand, Keywords:GDP, Thai Flood, NPL, Credit Demand, Siam Commercial Bank, Krung Thai Bank, Kasikornbank GDP, Thai Flood, NPL, Credit Demand, Siam Commercial Bank, Krung Thai Bank, Kasikornbank
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