NationThailand-Oct 6
The World Bank has cautioned that damage from a severe El Niño, including flooding of the kind seen across the region a decade ago, could prove larger than current forecasts assume.
The warning came as Thailand’s economy was singled out for both its gains from the global artificial intelligence (AI) boom and its slow adoption of the technology at home. Speaking at an online press briefing on Tuesday (October 6) to launch the bank’s latest East Asia and Pacific Economic Update, Riding the AI Wave, Franziska Lieselotte Ohnsorge, the World Bank’s Chief Economist for East Asia and Pacific, was asked what share of Thailand’s gross domestic product (GDP) might be lost to flooding in the fourth quarter. She did not offer a figure. Instead, she described the question as a reminder of the risks from a really severe El Niño. The last such event, in 2016, brought widespread flooding across the region, disrupted thousands of lives and caused crop production to fall significantly. The bank’s baseline already assumes that El Niño will weigh on agricultural output, Ms Ohnsorge said, but the damage this year may be underestimated. Past episodes have not always translated into lower GDP growth, she noted, because many factors drive the economy, yet losses in crop production have consistently stood out. Economies that depend heavily on crops are most exposed to downside surprises. Despite those risks, the bank has raised its 2026 growth forecast for Thailand by 0.7 percentage points to 2.0%. That is well below the pace in neighboring Viet Nam (7.4%) and Malaysia (5.1%), but it matches the upgrade given to Malaysia. Ohnsorge said the upgrades across the region share a common cause: a global surge in AI-related activity that is lifting economies embedded in the electronics supply chains behind it. AI-related products account for more than 70% of export growth in Thailand, Malaysia, the Philippines and Viet Nam, she said, and Thailand, Viet Nam and Malaysia stand out for how heavily they rely on exports of AI-enabling goods. A correction in AI-related investment or financial markets is one of the report’s main downside risks, and East Asia would feel it through two channels at once: slower exports and tighter financial conditions. Other regions, she said, would be affected mainly through finance.
Read more at:
