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BANGKOK : Violent clashes between police and protesters will send shockwaves through Thailand's economy, which is already struggling with the global financial crisis and prolonged unrest, industry experts say.
News that two people died and more than 400 were injured during protests outside Bangkok's parliament on Tuesday could discourage foreign investors, wary since a September 2006 coup overthrew premier Thaksin Shinawatra.
"I think the prolonged political turmoil we've seen over the last two years is clearly having an impact on the economy," said Vincent Milton, Bangkok managing director of credit agency Fitch Ratings.
"Particularly in the midst of financial insecurity around the world, it's clearly not a good combination."
Thailand has already seen its stock market plunge on the back of the most recent upheaval, starting in late May when a protest group began a campaign to unseat the People Power Party government which was elected last December.
The Stock Exchange of Thailand has dropped nearly 40 percent since May 23, the last day of trading before the so-called People's Alliance for Democracy (PAD) launched their new campaign.
In late August, tensions escalated as PAD protesters rampaged through the historic district and seized the prime minister's offices in Bangkok, prompting the government briefly to declare a state of emergency.
The PAD objects to the new government's links to Thaksin, against whom the PAD held massive street protests in early 2006, adding to the turmoil that year that culminated in the coup that overthrow him.
Adding to the woes, the elected prime minister Samak Sundaravej and his cabinet were forced out of office last month after a court ruled Samak had illegally accepted payment for appearing in TV cooking shows.
The ruling coalition quickly nominated Thaksin's brother-in-law Somchai Wongsawat as new prime minister.
Somchai named his cabinet on September 24, but a new set of unfamiliar ministers has left many foreign companies scratching their heads over who to do business with.
The political stand-off has already caused an estimated economic loss of 100 billion baht (2.9 billion dollars), and a loss of at least 42 billion baht in tourism revenue, the board of investment said on its website.
"The new investor who is considering where to put his money, he will not put it where (there was) just a state of emergency," Nandor Von der Luehe, chairman of Joint Foreign Chambers of Commerce in Thailand, told AFP.
"Thankfully that has lifted, but again violence is put on the news."
The recent turmoil should not stall foreign-funded projects already under way, he said. He added that the last round of protests were very localized and life went on as normal in the rest of Bangkok.
Television images of bloody Thai protesters running for cover as tear gas rounds reverberate also come as the world deals with a financial crisis, triggered by the collapse of the US subprime mortgage market.
Amid global market turmoil, Thais are taking a cautious attitude and waiting to see how the protests play out, said Thanawat Pholvichai, director of the Center for Economic and Business Forecasting.
Consumer confidence has plummeted, reaching a 10-month low of 69.6 in early September, the Thailand Board of Investment said. The index has been below 100 -- a number considered normal -- for upwards of two years.
"When everything is unclear, the Thai people feel there will be an effect on the Thai economy," said Thanawat, whose agency compiles the monthly consumer confidence index.
This will lead to people saving money, reducing consumption and investment that could spur the economy, he said.
"The only hope is the budget, the government expenditure to boost economic activities," Thanawat said.
- AFP /ls
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