Thailand’s political turmoil could slice nearly one-third off economic growth this year, according to Korn Chatikavanij, finance minister, in a sombre assessment of the damage from the nine-week protest.
Speaking in Tokyo two days after the Thai army cleared thousands of protesters out of central Bangkok, Mr Korn stressed growth in the rest of the year would depend in large part on “how quickly we can put our house in order”.
“I think we could reasonably have looked forward to anything like seven per cent growth for the year, without the political conflict. But with the conflict and the way it unfolded, it could easily be two per cent off that,” Mr Korn said in an interview.
Mr Korn’s comments came as Abhisit Vejjajiva, the prime minister, delivered an untypically emotional address to the nation calling for reconciliation.
“Fellow citizens, we all live in the same house. Now, our house has been damaged. We have to help each other,” he said.
His government faces an uphill battle to reconcile with the red-shirt wearing protesters. More than 80 people – the vast majority of them protesters – died during the nine weeks of demonstrations, stoking the fury of a movement already angry over what they perceive as the double standards of the urban elite.
“We did not lose – we will start a new fight,” shouted one protester as hundreds of demonstrators arrived back to cheers in the city of Chiang Mai, deep in the rural heartland of the opposition. Almost a third of Thailand remains under curfew.
To reduce the impact of the protests and start reconciliation, the minister said he was finalising a “healing and reconstruction” plan to help individuals and businesses affected by the protests that he hoped would be ready for cabinet approval by Tuesday.
“The good news is that we have the money – government revenues are far exceeding the original budget because of the rapid economic recovery,” Mr Korn said.
The finance minister noted that Thailand had been fortunate as it had gone into the crisis with a “very robust” economy. With a low base set early last year, during the worst of the global slowdown, first quarter gross domestic product would also be up on a sequential basis – but the impact of the protests meant it would be “struggling” to sustain such improvement, he said.
Three weeks ago the Bank of Thailand raised its GDP forecast for the full year to 4.3-5.8 per cent, up from 3.3-5.3 per cent, saying that it expected export growth driven by the revival of the global economy would outweigh the costs of the protests.
The full cost of the demonstrations and their violent denouement has yet to be calculated, but the head of the Tourism Authority of Thailand recently estimated the cost to the tourism sector, which accounts for 6.5 per cent of GDP by value, at some Bt120bn (£2.6bn, €3bn, $3.7bn).
The minister held out the prospect of an “early election” though he stressed this could only take place when the prime minister would be able to campaign without fearing for his life.
He blamed Thaksin Shinawatra, who was removed as prime minister in a military coup four years ago and now lives in exile, for engineering the demonstrations. However, he said reconciliation talks would be open to many of his supporters.
Editorial Comment, Page 12 Video: Korn Chatikavanij on the country’s outlook, www.ft.com/thaieconomy
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