SINGAPORE – Recent protests in Thailand will be a “double blow” to growth in the country, which has already been hit by the Covid-19 pandemic, analysts say.
In addition, the protesters will not leave until they see a “new” Thailand, Tininan Pongsudhirak, a professor at Chulalongkorn University, said on Friday.
The Thai government declared a state of emergency on Thursday as tens of thousands of protesters gathered in central Bangkok this week. They set up camp in front of the prime minister̵
“Rising political temperatures in Thailand following the declaration of a state of emergency in Bangkok will deal a major blow to an economy that is already being shaken by the pandemic,” Lavanya Venkateswaran, a market economist at Mizuho Bank, wrote in a note.
Mizuho Bank lowered its GDP growth forecast for 2020 for the Southeast Asian country from -6.3% to -7.5%.
“This time, the social unrest caused by decades of deep political division has been heightened by the COVID-19 pandemic,” Venkateswaran said, noting that the areas affected by political uncertainty are also the same affected by the pandemic. This includes lower private sector investment and consumption expenditures and the consequences of lower tourist arrivals. The Thai economy relies heavily on tourism for growth.
Regarding the protests, veteran investor Mark Mobius told CNBC on Friday: “This is a serious situation, no doubt about it, mainly because tourism is so important for Thailand and if you are worried, tourism does not come in and you have a real problem. “
The state of emergency will increase political uncertainty – and as it happens during a pandemic – it will be a “double focus” on growth this year and in the medium term, Mizuho’s Venkateswaran said.
Calling the situation “untenable”, Pongsudhirak of Chulalongkorn University said: “We have not seen this type of protesters before, they are on the street … in contradiction, determination, before urgent decrees.”
“They look very determined to me, they won’t leave until they see a new kind of Thailand,” he told CNBC’s Signals on the Street.
He added that the Thai economy had “stopped” as the government was “weak” and had run the economy poorly.
Thai protesters greet three fingers during an anti-government protest at the Monument to Democracy in Bangkok, Thailand, on October 13, 2020.
NurPhoto | Getty Images
The protests this week followed months of anti-government demonstrations that erupted last year after courts banned the most vocal party that opposes the prime minister’s government.
The demonstrations paused when the pandemic struck and measures to stem the spread took effect – but they resumed in July. Pro-democracy activists say the monarchy is too close to the military, and say it undermines democracy, according to a Reuters report.
Citing their demand for a reformed monarchy, Mizuho’s Venkateswaran said it was “unthinkable even a year ago,” but the coronavirus outbreak changed that. Thailand’s hiring laws forbid insulting the monarchy or slandering the king and is among the strictest in the world. Those who break the law can be imprisoned for up to 15 years.
“The economic tensions of the pandemic have not spared the otherwise sacred Thai monarchy,” he added.
– Yennee Lee of CNBC contributed to this report.