Extreme drought feared to derail Thailand's economic recovery

Rice yields are suffering terribly.

The El Nino weather phenomenon might prove too much for Thailand's nascent economic recovery, according to a report by UOB.

UOB noted that the drought threatens the livelihoods of an important portion of Thais because some 40 per cent of the population works in agriculture.

"We expect the drought to result in a contraction in off-season rice production in the first half of 2016 relative to the same period last year. The decline in major rice production means lower incomes not only for rice farmers but also for other stakeholders in the supply chain including suppliers of fertilizers and other agricultural supplies," UOB said.

"The agricultural productions and farm income could be lower if the impacts from the El Niño are greater than forecast. Private consumption expenditure and economic expansion may be affected accordingly. Nevertheless, losses will be limited if rainfall arrived as predicted. The drought therefore is a major risk to Thailand’s GDP growth that requires closely monitoring in 2016," the report added.