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On Monday, influential business associations called on the government to end the state of emergency because it has worsened the economic environment. Prasert Bunsumpan of the Federation of Thai Capital Market Organisations said the decree was not necessary. Instead, the government and its opponents should find ways to resolve the conflict as soon as possible in the interests of the nation.

In spite of the ongoing political conflict, companies said in a survey last month that they believed the country's GDP should be able to expand by 5 per cent. But the escalating conflict, coupled with the announcement of the state of emergency does not bode well for economic prospects. Eroding confidence in the Thai economy dampened the stock market index by 26.24 per cent from May 26 to September 5. The market saw a loss in value of Bt1.77 trillion, or 25.73 per cent, over that period.

The situation worsened with the announcement of the state of emergency, as it prompted foreign investors to leave the market. Thais barely recognise the decree, as life goes on as usual, but foreigners or investors who are not in Thailand tend to have a more acute, if misguided, picture of what's happening in the country. A number of foreign tourists have cancelled trips here because of the state of emergency, which normally signifies a country in absolute turmoil.

While the SET Index might not reflect the real economic fundamentals, Santi Vilassakdanont, chairman of the Federation of Thai Industries, said 16 key industrial groups had already been affected by the uncertain economic situation. Foreign importers fear that Thai exporters will not be able to deliver on time due to the political turbulence and the possibility of strikes by public utility agencies.

The political woes come from a combination of factors including the hard-line approach of certain government opponents. Everyone should be keen to see a quick resolution to these problems. Meanwhile, the best thing the government can do is to revoke the state of emergency as soon as possible.