Thai Floods Hurt Global Economy, Especially Crops
11 November 2011
THAILAND - The worsening floods in Thailand will be felt by the world's consumers from food shortages to higher-priced hard drives.The heavy monsoon rains that began in July have caused the worst flooding in almost 70 years - killing more than 500 people, damaging 1,000 factories and destroying 1.6 million hectares of farmland.
According to AgWeb, the United Nations has warned that the flooding across Southeast Asia, including Cambodia and Vietnam, could lead to serious food shortages and rising prices.
In Thailand, 12.5 per cent of rice paddies are affected.
The production of many multinationals moved to Thailand after the 1997-98 Asian crisis, especially from Japan, as they benefited from a strong yen.
Sony has indefinitely delayed the launch of its NEX-7 mirrorless camera because factories are damaged. A shortage of computer parts is expected by year's end. Apple CEO Tim Cook has acknowledged components for Mac computers are affected, though the impact on Apple itself is not yet known.
Toyota on Tuesday cited losses from the disrupted supply chain, scrapping its annual profit forecast, saying it needs more time to assess the impact.
Western Digital, the world's second largest maker of hard drives by sales, warned it would have difficulty to meet demand for products in December.
Because Thailand is the world's largest exporter of rice, flooding pushed U.S. rice futures up nine per cent on the Chicago Board of Trade to its highest settlement price in a month.
Thai Prime Minister Yingluck Shinawatra has pulled out of this weekend's summit of Asia-Pacific leaders in Hawaii to focus on the floods. Officials have said it could take until mid-December before the waters, which are 3 metres deep in some places, begin to recede. Among those who have set up shop in Thailand are Canon, Nikon and Hitachi.
"It is a good place to do business," said Joseph D'Cruz, a business professor at the Rotman School of Management. "You get cheap, dependable, well-educated, literate labour, with a good work ethic."
He believes the flooding will have a serious impact on the country in the short term, but added: "Thais are very resourceful people. They will bounce back. The country will bounce back."
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