Thailand to absorb economic shock of tsunamis: Analysts
Thailand to absorb economic shock of tsunamis: Analysts
Nicolas Revise, Agence France-Presse/Bangkok
Thailand should easily absorb the cost of the tsunamis which devastated its southern coasts last month as the region's tourist sector represents only a small part of the national economy, experts say.
According to early official estimates, the total destruction of the south as a tourist destination will cost Thailand between 600 million and a billion euros (about US$780 million to $1.35 billion).
But most of the damaged infrastructure is in the form of minor hotels and small businesses, about 1,000 in all, said Andrew Stotz, a researcher with ING bank.
"The economy is not driven dramatically by what happened in the south but obviously by businesses in Bangkok," he said.
In fact, the economic value of the six provinces hit by the Indian Ocean tsunamis on Dec. 26 represents only 2.7 percent of Thailand's Gross Domestic Product (GDP), according to the finance ministry.
Thai authorities were also quick to give assurances that the tsunamis would not affect economic growth in 2005, maintaining their prediction of between 5.5 and 6.5 percent.
"Growth will be at the same level, despite the tsunami which affected the six southern provinces," Ampon Kittiampon, secretary general of the office of economic and social development, announced last week.
GDP grew by 6.2 percent in 2004 and 7.8 percent in 2003.
Western analysts and diplomats calculate a loss of growth of between 0.3-0.5 percent, "a minimal impact", according to one.
"The net impact of the tsunami is probably going to be modest", said Sriyan Pietersz, vice president and head of research of JP Morgan Securities (Thailand).
"The impact will be minimal and less important than the impact of the bird flu," he added.
Thailand continues to have one of the most dynamic and diverse economies in Asia. Tourism accounts for about six percent of GDP.
In the affected provinces tourism represents about 40 percent of economic activity, but according to the Tourism Authority of Thailand (TAT) much of the infrastructure remains intact.
On Phuket island, a big draw for international tourists with about 2.75 million visitors a year, all roads, sewerage and electricity infrastructure is "intact" and 25,762 out of 31,276 hotel rooms are usable, according to property and hotel consultant Bill Barnet.
And almost a month after the catastrophe, much of the reconstruction work is complete with many small restaurants, guest houses, bars and cafes back on their feet.
Only the Khao Lak region still looks like a war zone. Most of the buildings there were swept away by the tsunami or later razed by Thai public works vehicles.