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Thailand Prepares for Economic Impact from US War on Terrorism - 2001-09-24


As the terrorist attacks in New York and Washington reverberated around the world, gold traders in Thailand were flooded with business as Thais sought economic refuge in the precious metal. Thailand is preparing for some economic impact during what is expected to be a prolonged international fight against terrorism.

Gold shops in Thailand's were inundated with buyers after the terrorist attacks in the United States. Gold is still a traditional investment for Thai people during uncertain times. Many Thai people began to convert their money into the precious metal to protect their savings from economic turbulence as the United States and its allies prepare to crackdown on terrorists around the globe.

The price of gold has jumped almost 10 percent.

"Actually for this period of time of year the demand for gold is quite low," said Metha Assabumrungrat, general manager of the Gold Traders Association. "But after the incident in the U.S. more buyers have come into the gold shops and buy more gold - especially the gold bar for their investment."

Mr. Metha is anticipating a fresh round of buying once the United States and coalition of countries carry out a military response to the terrorist attacks on New York and Washington.

But while gold prices have risen, the Thai economy's is set to slow down.

Earlier this week a state-run economic think tank, the National Economic and Social Development Board, revised downwards its annual growth forecast to between 1.5 to two percent from an earlier estimate of higher than 2.5 percent.

Richard Henderson, research director at Kim Eng Securities says, while the immediate economic impact from the current international tension is likely to be small, there are concerns about the long-term effects - especially on the all important tourism industry in Thailand.

"The threats are still very much in the future, especially the threat via tourism and the threat via the global economy," he said. "What I worry about more is that the effects could be quite long, drawn out. The most obvious vulnerability has to [be] tourism. Thailand has got a very large exposure to the global tourist industry."

More than 10 million tourists arrived in Thailand last year, bringing $6.8 billion into the country. The Tourism Authority of Thailand expects at that number will drop significantly.

Bill Heinecke, chief executive officer for the Royal Garden Resort chain of hotels in Thailand, says the tourism industry will need to be prepared for tougher times.

"If you take the short term first - certainly we will very aggressively try to sell Thailand and Thailand doesn't look so badly compared to the United States as a destination for European travelers, even for Australian or the Japanese markets," he said.

Despite the uncertain outlook facing the Thai economy and the tourism industry generally, Mr. Heinecke remains positive. He says as long as consumer confidence in Thailand remains upbeat, the economy "should hold up."

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