Thai turmoil 'disastrous' for tourism

Thailand's violent political turmoil has had a "disastrous" effect on the vital tourism sector, the country's finance minister said Friday, stressing that the overall economy remained sound.

"Tourism in value terms accounts for six percent of our GDP," Finance Minister Korn Chatikavanij told a Tokyo conference, adding that the sector also accounts for "as much as 15 to 20 percent of the total employment."

"And clearly, with the events that took place over the past several weeks, and the pictures of these events flashing across TV screens across the world, it is going to have a very disastrous impact on tourism."

Thai security forces on Wednesday crushed a six-week protest by anti-government protesters in street battles that left 15 people dead and saw arsonists torch some 36 key buildings across the capital Bangkok.

The stock exchange and the nation's biggest shopping mall were among locations torched in the chaotic aftermath of the campaign to end the "Red Shirt" protesters' occupation of Bangkok's top retail district.

Korn said that "we anticipate that the impact on the GDP of the protest so far is probably between 0.3 and 0.5 percent of GDP."

However, he stressed that the wider economic picture was sound in the kingdom, telling the conference that "we expect the formal Q1 (first quarter) figure to be in two digits" this year.

"So, in spite of our political problems, I foresee positive growth for the year 2010. More importantly, our overall financial standing is sound.

"We have a consistent foreign account surplus, record foreign exchange reserves, and good fiscal space. Our stock market has been robust, as of course has been our exchange rate," he said.

Thai troops Thursday hunted for militant protesters as authorities extended a night curfew in the capital despite tentative signs of a return to normality.

The finance minister said that "in the past 30 hours or so the situation has been very quiet, thankfully" and said that "outside of Bangkok, the latest report is that the situation is very calm."

The Reds are mostly supporters of ex-premier Thaksin Shinawatra who was ousted in a 2006 coup and who is now accused by the government of bankrolling the protests and inciting the deadly unrest.

The protests have been driven by rising disenchantment by Thailand's rural and urban poor against the Bangkok-centred money and power elite.

Korn said: "Thailand is committed to making our democracy work. We believe that building on giving equal rights to all our citizens is essential to sustainable economic development in the long term."

The lesson from the political turmoil, he said, "might be that open, competitive, and relatively equal access to resources and opportunities is more important than the strict Western model of democracy."