GDP in 2010 to take sizeable hit from suspended projects
The Nation 05 December 2009
Economic growth next year is likely to be reduced by 0.2-0.5 percentage point due to the continued suspension of 65 projects in Map Ta Phut, according to the latest macroeconomic analysis by the Fiscal Policy Office.
Accounting for Bt229 billion of investment, the suspension of the projects is expected to cost between 80,000 to 100,000 jobs, of which most are residents of Rayong and nearby provinces.
In the worst-case scenario, the country's gross domestic product will be 0.5 percentage point lower than otherwise achievable, affecting 193,000 jobs directly and indirectly.
In the medium-case scenario, GDP will be 0.178 per cent lower, affecting 66,000 jobs.
The sectors that will be impacted the most are petrochemicals, steel, industrial estates, seaports, power plants and hazardous-waste treatment plants, including related industries in their supply chains.
The suspension of the 65 projects will affect both GDP and the supply side. The industrial sector currently contributes 40.2 per cent of GDP.
Five industrial sectors will be directly affected: petroleum and refining, petrochemical and chemical products, plastic and rubber, basic steel, and structural steel.
Upstream cement production and the automotive industry will be indirectly affected.
Given that Rayong is a major industrial province and an important revenue source for the government, state revenue collection will also be impacted.
Meanwhile, the original suspension of the Map Ta Phut projects was one key factor behind the decline in consumer confidence indexes in October, as surveyed by the University of the Thai Chamber of Commerce.
Financial institutions that provided loans to the project owners will also be affected in terms of loan growth, while other financial institutions will feel an indirect effect, given that suspension of the projects will hit the workforce and contractors.
The manufacturing sector in Rayong accounts for 8 per cent of the GDP of the country's manufacturing sector, while its mining and quarrying accounts for 56.8 per cent of the country's mining and quarrying GDP.
The gross provincial product of Rayong last year was Bt1.137 million per capita - the highest in the Kingdom - reflecting the high purchasing power of the people in the province.