Climate change can have severe impacts on business

Owing to Thailand’s recent floods, the country’s central bank has slashed its growth forecast for 2011 from 4.1% to 2.6%.

That may not sound like much. But remember that it is now October, so most of the growth in the year has already happened (barring seasonal fluctuations for Christmas).

That means output in the last quarter must be expected to fall dramatically.

An analyst at Barclays Capital, Singapore, predicted a likely 15%-20% drop in production from one month to the next. The same analyst expects “a sharp recovery” in the first quarter, 2012.

‘Climate change’ and ‘global warming’ sound very gentle. But the reality is that they can bring the same kind of volatility to physical markets that we have seen recently in financial markets.

The downturn is inevitable once the rain has fallen. But customers may be forced to switch to other suppliers. The upturn next quarter is less than certain.

If we do not want to live with this kind of volatility then we need to do something about climate change.

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