Thai unrest could impact on economy
Updated
If violence erupts between the Thai government and supporters of former Prime Minister Thaksin Shinawatra, it'll have an impact on Thailand's economy, which has been recovering slowly from recession. Previous periods of unrest have cost Thailand billions in lost revenue from the tourist and export sectors
Presenter: Scott Alle
Speakers: Dr Supavud Saicheua, Managing Director, investment banking firm Phatra Securities; David Cohen, director of Asian economic forecasting at Action Economics
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ALLE: The political unrest has the potential to put the brakes on the recovery that gathered pace over the second half of 2009.
But so far foreign investors have viewed the instability as a buying opportunity.
SUPAVUD: There has been a lot of foreign net buying. And yes in that sense they are not worried.
ALLE: Supavud Saicheua is the managing director of investment banking firm Phatra Securities in Bangkok.
He says the stock market's resilience over the past few trading days and the continued strength of the currency, the baht, reflects investors' confidence in Prime minister Abhisit's leadership.
SUPAVUD: Investors who have been quite a distance from Thailand would argue Prime Minister Abhisit now is more experienced than he was a year ago and has stronger support from the military and other powerful forces than before.
ALLE: South-east Asia's second biggest economy suffered a ten billlion dollar blow from just nine days of dissent and protest in late 2008, which resulted in both of Bangkok's airports being shutdown leaving an estimated 100,000 passengers stranded.
Tourism, which accounts for nearly seven per cent of GDP, and is a major employer, took a nose dive
The numbers of international visitors plunged 16 per cent in the first half of last year, no doubt affected by the global economic downturn, but also by political tensions.
But Dr Supavud believes both sides want to avoid any repeat of the kind of economic fallout caused by the airport protests.
SUPAVUD: There's no chance for that happening. I think the Red shirts are very aware of causing economic damage can only be very negative to their cause and I think that therefore they're noting to start to get themselve sinto trouble for that. The yellow shirts have this problem and I think that's it's a problem that's going to stick with them for a long time.
ALLE: The Thai economy has emerged from the downturn in good shape. Exports have picked-up, a second government stimulus package is expected to boost investment especially infrastructure. The World Bank rates the economy's fundamentals as sound with low external debt, high holdings of foreign reserves, and a reformed financial sector.
David Cohen, director of Asian economic forecasting at Action Economics says the country's resilience shouldn't be underestimated.
COHEN: There's something about the Thai mentality they bend but they don't break. I think that's the secret to their successfully sustaining their independent country for centuries.
ALLE: But all of that skill for compromise and accommodating sharply divergent political views without lapsing into violence could be tested over coming days.
Dr Supavud Saicheua
SUPAVUD: So far the mood have been optimistic, that the red shirts feel they have put forward a reasonable demand whereas the government is also saying is also reasonable to stay. Unfortunately therefore I think the situation will tense- up in the days ahead
