Recent bomb blasts in Thailand present a new downside risk to the country’s economic activity, as the development obviously impacts its key tourism sector.
Thai authorities have opened the Erawan Shrine on Wednesday after the devastating attack on Monday that killed more than 20 people and injured scores more, BBC reported.
The speed at which the government has moved to take control of the narrative shows just how much pressure they are under to display they are in charge.
Observers say officials are trying to put on a show of “business as usual” at the shrine and the surrounding areas, encouraging people to visit and pay their respects. Most of the offices, schools and businesses in the area have remained open; political analysts say the government is desperate to retain an air of normality in the capital.
But industry experts say it will take more than this initial show of strength to convince investors and visitors that Thailand is still a safe place to do business in and to go on holiday to.
“It’s a shocking incident and the worst of its kind,” Andrew Herdman, director general of the Association of Asia Pacific Airlines, said.
“It’s bound to affect tourism, tourists will be fearful, and tourism is a key pillar of the economy.”
Tourism accounts for 10% of GDP and has been one of the bright spots in the economy. This year in particular, after the continuing political protests in the last 18 months, many had hoped tourist arrivals would help to push growth higher.
Foreign tourist numbers were up almost 40% in the April to June period of this year; in contrast, exports fell by more than 5% during the same time.
Major Setback
ANZ Bank says tourism is the only sector driving growth in Thailand at present and “a loss of momentum in the sector will present a new downside risk to economic activity”.
Ratings agency Standard and Poor’s added that the “attack has increased uncertainties over political stability and will put additional pressure on near-term economic prospects”.
That is the last thing Thailand needs. Most analysts say growth prospects could be hit hard if the government does not act decisively and show it is in control of the situation.
Also key will be whether there are any further attacks. Economic growth data out on Monday—released just hours before the attack—showed that economic performance was weak in the first half of 2015, coming in at 2.8%.
Thailand was only just starting to see an improvement in its economy. This attack could definitely be a major setback in the short run.
