Bangkok floods bring instant pain to debt-laden households

BANGKOK – Bangkok’s severe flooding is hitting Thailand’s fragile economy where it is most vulnerable, wiping out incomes for small businesses and workers already burdened by high debt and stretching the government’s finances.

The disruption has been immediate for thousands of street vendors, drivers and other informal workers who do not get paid if they cannot get to work.

Nearly a week of flooding has brought parts of the capital’s informal economy to a standstill, even as initial estimates suggest only a modest hit to national growth.

That matters because Bangkok and its surrounding provinces generate roughly half of Thailand’s economic output.

Thai Airways International cut flights and suspended cargo intake, while carmakers including Honda Motor and Toyota Motor halted some production. 

For smaller businesses and workers paid by the day, the losses can be harder to absorb.

Restaurants in flood-hit areas have reported losing as much as 80% of their revenue, as customers, employees and delivery drivers struggle to reach them.

“My income has fallen to zero,” said Somchai Onsarn, a street vendor who typically makes about 3,000 baht (S$114) a day selling cosmetics. The area where he usually sets up his stall remains flooded. “I couldn’t go out to sell anything.”

Initial estimates paint a less severe picture at the national level.

The University of the Thai Chamber of Commerce estimates that flooding in Bangkok and dozens of provinces could shave about 0.07 percentage point off economic growth, equivalent to as much as 12.3 billion baht in losses. The damage could double if flooding persists and disrupts more activity.

Tim Leelahaphan, an economist at Standard Chartered, said: “The estimates may not yet capture the full extent of the damage. They can also mask the impact on more vulnerable groups, with low-income households likely to be hit hardest.”

Kae, a tuk-tuk driver, said being trapped at home meant losing the fares he depends on for his livelihood. “When I couldn’t leave my home, I couldn’t earn anything,” he said. “The economic impact feels very different on the ground from what the estimates suggest.”

The floods are hitting an economy with little cushion.

Thailand’s economy is expected to grow only about 2% to 2.5% in 2026. The country also has one of Asia’s highest levels of household debt, which constrains consumption and leaves many families with limited capacity to withstand even a temporary loss of earnings.

Bank of Thailand assistant governor Chayawadee Chai-anant said: “Small businesses and vulnerable groups could face a heavier debt burden. Successive economic shocks are weakening their balance sheets. That is quite worrying.”

Thai Prime Minister Anutin Charnvirakul’s government has approved about four billion baht in immediate flood relief, but it has its own borrowing constraints. The budget deficit is running at about 4% of gross domestic product, and public debt was already forecast to climb very close to the self-imposed ceiling of 70%, limiting room for large relief programmes.

Climate change threatens to make demands for such efforts more frequent. Thailand does not include climate in its annual fiscal-risk reports, according to Athiphat Muthitacharoen, a budget policy specialist.

More frequent floods, droughts and other extreme weather could require greater spending on relief and reconstruction, even as an ageing population puts increasing pressure on health and welfare budgets. BLOOMBERG