The already prolonged political conflict has cost the economy more than Bt100 billion, and if the unrest drags on for another six months as some have projected, it could result in a recession being posted for 2014, warn the Board of Trade of Thailand and
The TCC said that if there is no violence, gross domestic product could grow by 2-3 per cent this year. However, if violence erupts or the conflict continues into the second half, Thailand could face flat or even negative growth for the first time since the serious flooding in 2011.
Isara Vongkusolkit, chairman of the BOT and the chamber, said that if the political unrest ends soon enough to allow a new general election by the third quarter, GDP should grow by 2-3 per cent this year.
He called for both pro- and anti-government sides to negotiate to find the best solution for the Kingdom so that growth could return to normal soon.
He added that because of the lack of a Board of Investment committee, some Bt500 billion to Bt600 billion worth of initial capital investment that should have poured in the country has been put on hold.
Some foreign investors, mainly from Europe and Japan, have given up on Thailand for now and shifted to other countries in Asean, particularly Indonesia and Vietnam.
In addition, after discussions with various business sectors, the TCC found that the tourism industry has been hit the hardest by the political unrest. Travel-agency revenue and bookings for tours and hotels have dropped significantly. On average, bookings with hotels in Bangkok and nearby provinces have dropped by 25-30 per cent.Trade in jewellery and ornaments has fallen by 30 per cent, while spas, car rentals, hospitals, and the MICE (meetings, incentives, conventions and exhibitions) industry have also seen big reductions since late last year.
Sales of property, housing and cars have dropped significantly so far this year compared with the same period in 2013. Businesses that have been seriously hit are real estate, furniture, home painting, and electrical appliances.
However, some businesses have not suffered much impact. These include garments and apparel, as some Thai enterprises have already moved their plants to neighbouring countries. Moreover, the export sector has been growing well again on positive signs of a global economic recovery. The chamber projects export growth of at least 5 per cent this year.
Chusak Chuenprayoth, chairman of the Board of Trade’s agricultural quality committee, said drought had started to reduce production of some crops, but should not affect exports in the long run.
He projected that fruit exports should continue to grow at the same rate as last year. However, the TCC is exploring some areas that could be hit hard by drought or the next monsoon season.