Thai stocks on Monday recovered for the first time since the coup against premier Thaksin Shinawatra, but analysts warned the bloodless takeover could dent economic growth already hit by months of political uncertainty.
The Stock Exchange of Thailand composite index rose 1,41 points or 0,21% to close the morning session at 683,12 after falling to a two-month low on Friday in the wake of the late-night coup on September 19.
But analysts said the coup, which capped months of political turmoil in the kingdom, created more uncertainty over the future of Thailand, raising concern among business leaders and investors over a slowdown in the country’s economy.
”In the eyes of foreign investors, the coup was taken as a blow to democracy. Most foreign investors were surprised by the coup. They did not expect this to happen,” said an economist who declined to be named.
”After the coup, there was more uncertainty. We cannot see the direction of Thailand, and the coup would likely dampen consumer spending and slow down economic growth.”
Vallop Tiasiri, president of the Thai Automotive Institute, a state-funded agency that promotes the car industry, said he expected a slump in investments due to mounting political uncertainty.
”In the world of business, uncertainty means high risk” for major investments, Vallop said.
”During the past year, everybody was taking a wait-and-see stance before making any big investment decisions, and they have to wait again,” he said.
Since January, Thailand has been mired in the political crisis, which erupted amid public anger over the Thaksin family’s tax-free sale of shares in Shin Corp, the telecoms giant he founded before entering office.
Thailand has repeatedly revised down its economic forecast due to the prolonged political paralysis, with the economy seen rising just 4% this year compared with 5% projected earlier.
With Thaksin’s government gone, Pornsilp Patcharintanakul, deputy secretary general of the Board of Trade, also voiced caution over the economy, citing a possible cancellation of a five-year economic booster programme.
Thaksin last year unveiled the 1,70-trillion-baht ($45-billion) scheme that includes plans to expand Bangkok’s mass transit railway system and upgrade the country’s infrastructure.
The project was supposed to bring massive foreign investments to Thailand as more than 1 000 foreign firms had shown interests in joining the project, but Pornsilp said the scheme was gone for good.
”I don’t think the project will go ahead,” he said. ”Everything has changed.”
The economist, who declined to be named, also said the coup virtually halted Thailand’s trade talks with foreign governments, particularly free trade deals with the United States and Japan, the kingdom’s top economic partners.
”Not only the US, but no other country will pursue free trade agreements with Thailand, because the international community will not accept an interim government,” he said.
Following the coup, Thailand’s military leaders have pledged to install a civilian prime minister within two weeks to replace Thaksin, setting themselves an October 4 deadline.
”Foreign governments will wait until a fully elected government takes charge next year,” said the economist, referring to October 2007 polls promised by the junta. ”Until then, no foreign government will pursue serious trade talks.” — Sapa-AFP