Thailand: The Floods and the Fourth Quarter GDP

The devastating floods in Thailand towards the end of last year led to an 11% drop in the fourth quarter GDP, by far the largest quarterly drop in real GDP on record. The dramatic fall is depicted in the first chart. All facets of the economy were affected by the floods. Private consumption declined 4.0% and government consumption by 6.0%. Gross fixed capital formation declined 5.4% and inventories fell by 776 million '88 Baht. Foreign trade was particularly hard hit. Exports of goods and services were down 19.6% and imports of goods and services, 12.7%.

Towards the end of the fourth quarter, signs of recovery began to appear. After declining 29% in October and 23% in November the Manufacturing Production Index, rose 31% in December. Exports of goods that had declined 15% in October and a further 4.3$ in November, increased 12.9% in December. The second chart shows the monthly percent changes in manufacturing production and in exports of goods. The export data have been indexed to 2000=100 to facilitate comparison.

The floods did not greatly accelerate the overall rate of inflation but the year to year percentage change in the price of raw food was 10% in October, 11% in November, 9.7% in December and 6.5% in January, as shown in the third chart.