Thai finance minister Korn Chatikavanij this weekend denied
there would be any regional spillover from the countrys
crisis, despite growing fears that it could dent investor
confidence in southeast Asia.
Its a long, long way from the situation
where we become problematic to the region, Korn told
Emerging Markets in a telephone interview from
Everything in fact looks very good and solid,
[although] prospects dont look so bright given that there
is this political tension which remains.
But he added: Our currency has remained strong, our
government revenues have been increasing, and we are actually
repaying some of the government debt earlier than was
His comments come as Asean nations watch Thailands
unfolding drama with increasing unease. An Indonesia foreign
ministry spokesman was quoted last week as saying he feared
instability in Thailand could lead to a repeat of the 1997 Asia
economic crisis, where a collapse of the Thai baht sparked a
regional economic slump.
Asean politicians in recent weeks have stepped up their
calls for a resolution to the political standoff in Thailand,
in which anti-government protestors have brought the country to
Korn said the Thai economy had been recovering well from the
global crisis until tensions escalated in Bangkok. All
engines were fine, Korn said. But what happened
subsequent to that was an escalation of the political standoff
and thats already having an impact on
Korn said that prolonged protests could cut growth to 2%,
from previous projections of roughly 4.5%. If problems
persist for a full year, its 2% less growth, he
But Korn said early indications show that the countrys
quarterly GDP figures are expect to hit 9% growth year on year.
These figures will be formally announced in the next few
This will probably be one of the highest
quarterly growth rates in the world, Korn added. This
reflected a strong recovery in exports and farm income, as well
as the government stimulus packages.
But Korn warned that the tourism sector was particularly
hard hit, with very sharp drop offs in bookings
During the recent standoff red-shirt protestors occupied
parts of central Bangkok that were mainly made up of luxury
hotels and shopping malls.
Unless we can find quick and relatively peaceful
resolution to the crisis, it may have quite a significant
impact on the high season towards the end of the year,
Korn said. Tourism has a share of total GDP of around
6.5% and probably more if you include indirect impact. So that
alone will be a significant dampener on prospects for the
He added that foreign investment had also been affected.
So far theres no tangible impact as yet but without
a doubt investors who have previously considered Thailand to be
relatively free of political risk will have already reassessed
This would make [it] that little bit harder for us to
attract the kind of investments that we want, he