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Thai tumult keeps a fragile economy on edge

Protesters say the government's economic policy threatens their future, but unrest may scare tourists away.

Last updated: 01 Dec 2013 14:40
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Bangkok, Thailand - As anti-government protests rage around the Thai capital, concerns abound over what the turmoil will mean for the country's crucial tourism sector, with television images showing running street battles between rivals and plumes of tear gas fired to disperse unruly crowds.

Many nations have issued travel warnings and raised concerns about the weeklong unrest in the "Land of Smiles". Meanwhile, questions remain as to what will happen next in the tense stand-off with determined demonstrators demanding that embattled Prime Minister Yingluck Shinawatra step down.

Worries about the long-term effects on Southeast Asia's second-largest economy are also intensifying. But for opponents of the ruling Puea Thai Party, the protests are seen as necessary to oust the government because of what they see as misguided economic policy.

"I don't want to see the demonstrations, but I really have no idea what else to do because the government does not care about us at all," said Pawatpong Racha-apai, 29, during a tear-gas filled protest at Government House on Sunday. "Yes, this may affect the country. Foreigners may be afraid of coming here, and I'm afraid of an economic slowdown. But I am more afraid that the country's future will be worse if we let this government rule this country."

At a raucous demonstration outside the Royal Thai Police Headquarters on Sunday, protester Wichuda Pornhansawijit, 40, agreed. She said Yingluck's mishandling of Thailand's affairs and concern for the future had brought her and her two daughters onto the streets. "I don't want my children to have to shoulder the burden of debt from this government's disastrous policies," she told Al Jazeera, with hundreds of riot police looking on behind her. 

In the red

But pro-government supporters - known as "red shirts", who had gathered at a sports stadium 15 kilometres away - said the Yingluck administration was democratically elected by a large majority of Thais, and that its economic policies had greatly benefited their lives.

Protests escalate in Thailand amid violence

"It is very different from [former prime minister] Abhisit Vejjajiva's rule and Yingluck's," Tanayot Junpatak, a 49-year-old rice farmer from Thailand's northeast, told Al Jazeera. "Yingluck has real policy. Government money is now coming in to help us farmers."

It remains to be seen how the latest round of Thai turmoil will affect the country. With gorgeous white-sand beaches, alluring nightlife, and relatively inexpensive costs, tourism helps drive the economy, representing nine percent of Thailand's gross domestic product (GDP). 

Despite the bloody 2010 military crackdown on red shirt demonstrators who protested against the rule of Abhisit's Democrat Party, the tourism sector quickly rebounded and surged by 12 percent that year, despite months of unrest that resulted in the deaths of an estimated 90 people. 

Will tourists forgive and forget like they did three years ago? According to figures from Thailand's Tourism Ministry, about 16bn baht ($498m) has been lost through holiday cancellations already in November.

Somchai Jitsuchon, an economist at the Thailand Development Research Institute, told Al Jazeera it is difficult to forecast what will happen with foreign visitors. "We'll have to wait and see how the situation unfolds over the next few months. But we have other popular destinations in the north and south, not just Bangkok, so I don't think it will be affected much."

While tourism is important, Thailand's export sector steers the ship. Exports - including products such as automobiles and rice - comprise 60 percent of Thailand's $366bn economy. But the sector has been in decline for months, long before the latest outbreak of political turbulence. 

The government's economic planning agency, NESDB, has lowered its official 2013 GDP growth forecast to 3.0 percent from the 3.8-4.3 percent that it had projected earlier. Forecast export growth, meanwhile, sank from 4 percent to just 1 percent.

Somchai said the fall in Thai exports was largely out of the government's hands. "The export issue is not the fault of Yingluck's government, it is a problem caused by the global economic downturn."

Business woes?

The importance of Thailand's small and medium-sized business community is significant to the country. About three million such enterprises operate across Thailand, according to government figures, accounting for nearly 80 percent of all jobs and contributing some 3.5tn baht ($10bn) annually to the economy. That represents about one-third of the country's gross domestic product.

Thai Red Shirts support PM from stadium

Government opponents have also highlighted its decision to hike the minimum daily wage from a nationwide average of about 210 baht to 300 baht ($6.55 to $9.36) in January. Some say the move drove up expenses and forced many factories to leave for places with lower labour costs such as Vietnam, Bangladesh, and Cambodia.

Because of the wage increase, costs for Thai companies were expected to rise by 6.4 percent on average this year, according to NESDB.

"Ever since the factories have had to pay more for salaries, our costs have shot up," said Thidathip Panyalertwut, 33, the co-owner of JOG Sports, a small athletics apparel business in Bangkok. "Big factories are shutting down, so where are all these people going to go? It's a catch-22. The workers received higher salaries so they're happy, but now many of them have lost their jobs."

But red shirt Aree Sawangjai, 56, from Samut Sakorn, says the government's populist policies have improved her life immensely. The rubber factory worker said she now receives overtime pay, whereas she hadn't under the previous administration. "There are more orders for our products and business has never been better. That means more money for us," said Aree.

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Al Jazeera
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