Flooding in Thailand worsens, could affect global economy

This aerial image shows partially-submerged factories in floodwaters in the outskirts of Bangkok, on October 20, 2011.

Jeremy Hobson: Next, to Thailand, where devastating floods are getting dangerously close to the center of Bangkok. And now there are concerns that
the rising waters will have an impact on global business.

The BBC's Rachel Harvey joins us now from Bangkok. Good morning.

Rachel Harvey: Good morning.

Hobson: Well first of all, you've been out and about in the streets -- tell us how bad things are getting with these floods?

Harvey: The further north you go from Bangkok, the worse it becomes. The central provinces immediately to the north of Bangkok have been really hard hit -- we're talking about millions of acres of farmland that are now completely inundated; communities that have been cut off by the flood waters.

In Bangkok itself, the government was saying a few days ago that the capital would be spared. But now they're saying the volume that has built up is so much, that they can no longer say that the whole of the capital will be safe. Some parts will, inevitably now, be flooded. It's a question of how well they might be able to manage the flow of water through the capital city.

Hobson: And we all remember the huge impact on supply chains around the world after the tsunami in Japan -- is this the kind of thing that could have an impact on business worldwide?

Harvey: Potential it could -- particularly in Japan at the moment -- because there is a big Japan investment presence here in Thailand, both in the auto industry, in computer industry, and food processing. And a lot of those firms are based in industrial parks -- five of which have now had to be abandoned to the water.

And of course the longer that goes on, the greater the impact that will be had not just here in Thailand, but regionally and globally. Already, Thailand is talking about possibly a cost in excess of $3 billion and maybe shaving at least a percentage point off GDP for the rest of this year.

Hobson: Is tourism being affected by this?

Harvey: Not really -- yet. But we're about to go into the peak season. Now, part of the reason it hasn't been affected so badly yet is because Bangkok hadn't -- until this point -- been hit. And because most of the major tourism -- beaches and that kind of thing -- are further south.

Thus far, it hasn't had a big impact; if it hits Bangkok, then obviously there will be a short-term impact. But most of the big beach resorts and that kind of thing are further south of here.

Hobson: The BBC's Rachel Harvey with us from Bangkok. Rachel, thanks.

Harvey: You're welcome.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

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