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Tough times for Thai economy Tough times for Thai economy
(about 2 hours later)
By Will Smale Business reporter, BBC News Stranded passengers can now go home, but how many will rush back?By Will Smale Business reporter, BBC News Stranded passengers can now go home, but how many will rush back?
As anti-government protesters agree to end their blockade of Bangkok's main airports, travel industry experts have warned it could take some time for Thailand's tourist sector to recover.As anti-government protesters agree to end their blockade of Bangkok's main airports, travel industry experts have warned it could take some time for Thailand's tourist sector to recover.
And analysts warn that the wider economy has also taken a beating.And analysts warn that the wider economy has also taken a beating.
Put simply, the activists knew exactly what they were doing when they decided to bring Suvarnabhumi and Don Muang airports to a standstill over the last week. Put simply, the activists knew exactly what they were doing when they decided to bring Suvarnabhumi and Don Mueang airports to a standstill over the last week.
Holiday seasonHoliday season
Not only were more than 100,000 western travellers already in Thailand immediately stranded, all incoming planes of fresh holidaymakers were cancelled. Not only were more than 100,000 Western travellers already in Thailand immediately stranded, all incoming planes of fresh holidaymakers were cancelled.
While flights are now due to resume from 4 December, the impact on the key tourist sector may be long-lasting.While flights are now due to resume from 4 December, the impact on the key tourist sector may be long-lasting.
Firstly, it will take more than a week to fly home all the stranded holidaymakers.Firstly, it will take more than a week to fly home all the stranded holidaymakers.
Secondly, and more importantly, there are fears that visitor numbers will be sharply lower during the key Christmas and New Year period, as Thailand's reputation is dented.Secondly, and more importantly, there are fears that visitor numbers will be sharply lower during the key Christmas and New Year period, as Thailand's reputation is dented.
The tourism industry has vanished overnight, but the bigger picture is the wider economy Hugo Young, Aberdeen Asset ManagementThe tourism industry has vanished overnight, but the bigger picture is the wider economy Hugo Young, Aberdeen Asset Management
This is a real worry, as political commentators say there is no guarantee that political turmoil in Bangkok won't flair up again soon. This is a real worry, as political commentators say there is no guarantee that political turmoil in Bangkok won't flare up again soon.
For while most western holidaymakers visit the coastal resorts in the south of the country, the great majority of them first have to arrive at Bangkok's main Suvarnabhumi international airport before switching to an internal flight. For while most Western holidaymakers visit the coastal resorts in the south of the country, the great majority of them first have to arrive at Bangkok's main Suvarnabhumi international airport before switching to an internal flight.
"It all depends on whether the unrest disappears," says Norman Gage, director of the UK's National Association of Independent Travel Agents."It all depends on whether the unrest disappears," says Norman Gage, director of the UK's National Association of Independent Travel Agents.
"No British tourists have been going there over the past week, but numbers could now start to creep back up if there is no unrest."No British tourists have been going there over the past week, but numbers could now start to creep back up if there is no unrest.
"Thailand is still a beautiful country.""Thailand is still a beautiful country."
Bank of Thailand chief economist Amara Sriphayuk has estimated that the tourist sector could lose 140bn baht ($4bn; £2.7bn) in revenues next year if the political turmoil continues.Bank of Thailand chief economist Amara Sriphayuk has estimated that the tourist sector could lose 140bn baht ($4bn; £2.7bn) in revenues next year if the political turmoil continues.
'Bad news''Bad news'
Yet it is not just holidaymakers who fly in and out of Bangkok to visit Thailand and surrounding countries - the airport is also a vital export hub.Yet it is not just holidaymakers who fly in and out of Bangkok to visit Thailand and surrounding countries - the airport is also a vital export hub.
Both passenger and cargo flights were hit by the protestsBoth passenger and cargo flights were hit by the protests
Thailand has enjoyed a growing trade in perishable food exports in recent years, and most of this goes through Bangkok, along with high value exports such as computer chips, and even a highly lucrative trade in orchids.Thailand has enjoyed a growing trade in perishable food exports in recent years, and most of this goes through Bangkok, along with high value exports such as computer chips, and even a highly lucrative trade in orchids.
Although cargo flights have already been restarted, all these exports had also been brought to a halt over the last week. Although cargo flights have already been restarted, all these exports had also been brought to a halt over the past week.
Hugo Young, the Thailand chief executive at investment firm Aberdeen Asset Management, told the BBC from his office in Bangkok that the country's economic situation was now "bad news".Hugo Young, the Thailand chief executive at investment firm Aberdeen Asset Management, told the BBC from his office in Bangkok that the country's economic situation was now "bad news".
"The tourism industry has vanished overnight, but the biggest picture is the economy as a whole," he says."The tourism industry has vanished overnight, but the biggest picture is the economy as a whole," he says.
"Nobody [Western companies] is going to now want to put their money in.""Nobody [Western companies] is going to now want to put their money in."
Mr Young also warns that the political turmoil could worsen, centred around the future of the monarchy, which is greatly revered by many, while others want to see Thailand become a republic. Mr Young also warns that the political turmoil could worsen, centred on the future of the monarchy, which is greatly revered by many, while others want to see Thailand become a republic.
"I think the country could be at something of a crossroads," he says."I think the country could be at something of a crossroads," he says.
"Ultimately whether the King will survive for long or not is fairly perilous. This situation is obviously far from good for the economy.""Ultimately whether the King will survive for long or not is fairly perilous. This situation is obviously far from good for the economy."
'Serious disruptions''Serious disruptions'
Most analysts are in agreement that the Thai economy now faces some serious challenges.Most analysts are in agreement that the Thai economy now faces some serious challenges.
The protesters knew the impact of blockading the airportsThe protesters knew the impact of blockading the airports
Earlier this week rating agency Standard & Poor's (S&P) downgraded its outlook on the Thai economy from stable to negative.Earlier this week rating agency Standard & Poor's (S&P) downgraded its outlook on the Thai economy from stable to negative.
"The recent occupation of the two airports in Bangkok... has caused serious disruptions to economic activities in the kingdom and raises the possibility of widespread violence markedly," says S&P analyst analyst Kim Eng Tan. "The recent occupation of the two airports in Bangkok... has caused serious disruptions to economic activities in the kingdom and raises the possibility of widespread violence markedly," says S&P analyst Kim Eng Tan.
"These developments will add to the negative pressures of a global slowdown on Thailand's economy.""These developments will add to the negative pressures of a global slowdown on Thailand's economy."
The current Thai government has also warned that the political turmoil has shattered business confidence already hit by the global economic slowdown.The current Thai government has also warned that the political turmoil has shattered business confidence already hit by the global economic slowdown.
It said the economy may contract next year, causing a spike in unemployment.It said the economy may contract next year, causing a spike in unemployment.
Mr Young said it would be inevitable that such a scenario would also further inflame political unrest.Mr Young said it would be inevitable that such a scenario would also further inflame political unrest.
However, it is important to remember that both the Thai tourist industry and the wider economy have recovered from turmoil in the recent past.However, it is important to remember that both the Thai tourist industry and the wider economy have recovered from turmoil in the recent past.
Despite the impact of the 2004 tsunami, overseas visitor numbers rose in 2005 by 15% to 13.38 million.Despite the impact of the 2004 tsunami, overseas visitor numbers rose in 2005 by 15% to 13.38 million.
And visitor numbers and the wider economy also proved equally resilient following the army coup in 2006.And visitor numbers and the wider economy also proved equally resilient following the army coup in 2006.