Thailand GDP has shrunk 10.7% in October-December, more than economists had predicted. According to the government's data, the country's GDP dived 9% compared to the same period in 2010. The worst floods in 50 years that have inundated two-thirds of the country in combination with weaker US and European demand are to blame for the poor numbers. Thai Chamber of Commerce declared that the economic recovery remains fragile due to political uncertainty and soaring energy costs.
Thai government has pledged to implement a minimum wage hike of ($10) a day starting in April. Experts warn that the increase will send some employers to go out of business. They say the financial post-flood burden is already pushing some Japanese companies to relocate factories in Cambodia and Vietnam where labour costs are cheaper.
According to Labour Protection and Welfare Department the number of workers who lost their jobs after floods forced factories to shut down, rose to almost 46,000.There are around 280 manufacturing plants that have remained closed.
Even though the country’s manufacturing index fell for the fourth consecutive month and exports dropped for a second month in December, The government is optimistic about a possible rebound, with Finance Minister predicting a 7% growth in 2012.
Prime Minister Yingluck Shinawatra has pledged to spend $11 billion on infrastructure to reclaim investor's confidence and post-flood rehabilitation and reconstruction in an effort to give the economy a boost.
Despite the poor numbers of the economy since the worst floods in 50 years hit Thailand, the government remains positive and expects recovery in the next quarter in contrast with Bleak economists predictions. The final word will be of investors' confidence in the country's ability to restart its industrial sector.