Bank of Thailand monitors floods hitting SMEs and households, warns of repeated shocks dragging liquidity
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The Bank of Thailand's preliminary assessment of the flood situation indicates that the services sector will be hit hardest, including transport and goods distribution, retail and wholesale trade, and some construction sites forced to suspend operations temporarily. Ms. Chayawadee Chai-Anant, Assistant Governor of the Corporate Relations Group and spokesperson for the Bank of Thailand, said at the BOT Monthly Briefing press conference for September 2026 that the manufacturing sector has not yet seen damage to factories or industrial estates, while the tourism sector has so far been affected only to a limited extent, though a rise in water levels could have broader consequences. Several agencies estimate the impact on GDP at 0.03-0.1% of GDP, and possibly more if the situation drags on, with the Bank of Thailand to reassess the overall GDP impact again. On the household side, there may be rising debt problems from borrowing to repair homes after the waters recede, and the Bank of Thailand has instructed financial institutions to accelerate assistance to affected borrowers. Currently 16 financial institutions have issued relief measures, comprising 10 commercial banks and 6 state specialised financial institutions, with measures including principal payment holidays, interest payment holidays, reduced instalments, extended repayment periods, lower interest rates, emergency loans, home repair loans, and capital top-ups for SMEs. As for the overall economic picture in August, conditions were stable, with private investment expanding 2.2% from the previous month and private consumption rising 0.4%, while the manufacturing production index fell 0.6% and the services sector fell 0.4%. Merchandise exports excluding gold declined 0.1%, while merchandise imports excluding gold rose 4.5%. Foreign tourist arrivals totalled 2.5 million, up 1.8% from the previous month, bringing the cumulative total from 1 January to 26 September to 22.9 million. The current account recorded a surplus of 2.4 billion US dollars and the trade balance a surplus of 1.8 billion US dollars. Headline inflation stood at 2.53%, up from 1.95% the previous month, and core inflation at 1.44%, up from 1.34%. The labour market remains fragile, with the number of people filing for unemployment benefits under Section 38 continuing to rise to a level comparable with the period of the Russia-Ukraine war, mostly from industries facing intense competition, particularly auto parts manufacturers affected by the influx of electric vehicles and imports of cheap goods.