Southeast Asia's second-biggest economy has been battered by
political turmoil since late last year, when protesters backed by
the royalist establishment launched a bid to oust the populist
government of Prime Minister Yingluck Shinawatra.
The government clung to power even after a court forced Yingluck out
of office for abuse of power on May 7, but the military ousted it in
a coup on May 22, saying a takeover was necessary to restore order
and prevent further violence.
Gross domestic product shrank 2.1 percent in the first quarter of
2014 as the lengthy anti-government protests damaged confidence and
scared off tourists.
With only caretaker status after dissolving parliament in December
for a February election that was later annulled, Yingluck's besieged
government had lacked the power to take policy decisions or approve
A senior central bank official, Mathee Supapongse, said on Friday
that under the new military government, "the overall picture looks
better, but it's not easy to get to the central bank's economic
growth forecast of 2.7 percent".
"We need time to assess the situation first," said Mathee, head of
the bank's macroeconomics department. "It's been half a year now and
stimulus measures will not come all at once, but gradually, so the
effect will rather be felt next year."
He was speaking at a briefing after the release of central bank data
that showed private investment in April, the first month of the
second quarter, was 4.7 percent lower than in the same month last
year and consumption was down 0.8 percent.
It followed data on Wednesday that showed factory output fell for
the 13th straight month in April, imports plunged and exports
remained weak, underscoring the difficulty the military government
faces in averting recession.
"REFORM BEFORE ELECTIONS"
While the United States and other allies have urged a quick return
to democracy, Thailand's new military rulers have held out little
hope for early elections.
Army chief and coup leader General Prayuth Chan-ocha has spoken of
the need for broad reforms before an election. Another top officer
said on Thursday that conditions had to be right and divisions
healed before a return to civilian rule.
Despite martial law and a ban on gatherings, small peaceful protests
against the takeover have been held daily in Bangkok. Activists,
spreading word through social media, say they will hold a big show
of opposition on the weekend.
A military spokesman said on Friday the junta was "carefully
checking" the Internet for the planning of protests.
"If there are gatherings then we will start with negotiations with
the crowd but if there is no understanding then we will have to
apply the law strictly," deputy army spokesman Winthai Suvaree told
Thailand has become polarized between supporters of Yingluck and her
influential brother, deposed premier Thaksin Shinawatra, and the
royalist establishment that sees Thaksin and his populist ways as a
threat to the old order.
Despite the animosity of the elite and the Bangkok middle class,
Thaksin's popularity in the rural north and northeast has ensured
that he or his allies have won every election since 2001.
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Navy commander Admiral Narong Pipattanasai, the junta member
overseeing tourism, told reporters on Thursday that 26 million
people were expected to visit this year, down from a targeted 28
million, because of the unrest.
He said revenue from tourism was expected to drop to 1.8 trillion
baht ($55 billion). The authorities had been banking on 2 trillion.
"We will do our best to improve the situation," Narong said. "The
next pressing task is to build confidence among tourists and to show
them that they can travel in Thailand freely ... through campaigns
and other methods."
Tourism accounts for about 10 percent of the economy. Many foreign
governments have issued warnings about traveling to Thailand, which
can affect insurance cover.
Narong said a nationwide night-time curfew, imposed on the day of
the coup for seven hours but cut to four hours on Wednesday, could
be shortened again in tourist areas. Even in Bangkok, the curfew is
not being strictly enforced.
The protests in Bangkok have been rowdy and tense at times but there
has been no serious violence. For a day or two after the coup there
were also small protests in the northern city of Chiang Mai, but
tourist resorts have been unaffected.
The National Council for Peace and Order, as the military junta is
known, has imposed rigorous security and censorship, detaining more
than 200 people including Yingluck and ministers of the ousted
government, though she and many other detainees have since been
An ardent supporter of Thaksin and leader of his "red shirt"
activists said upon release from detention he was washing his hands
of politics for the sake of national reconciliation.
Suporn Attawong, known by followers as "Rambo Isarn" after the
northeastern heartland of Thaksin support, said he had not been
pressured by the army to quit politics.
"I had a lot of time to contemplate and realized that some of us
need to back down for Thailand to be at peace. I have been in
politics since I was 20 years old, it's time to step away," Suporn
told Reuters on Friday.
($1 = 32.7750 baht)
(Reporting by Bangkok bureau; Writing by Robert Birsel; Editing by
Alan Raybould and Alex Richardson)
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