Anti-Government red shirt rally in Bangkok, Thailand, 20 Mar 2010
Anti-Government red shirt rally in Bangkok, Thailand, 20 Mar 2010

Thailand's economy is taking a battering, especially the vital tourism industry as the latest protests in Bangkok have frightened off visitors to the country. Tensions have escalated as protesters moved to force military units to stand down amid minor grenade explosions in the capital.

Thailand's tourism industry has taken a hit as thousands of anti-government protesters have taken to the streets over the past few weeks to try to force fresh elections.

The so-called Red Shirts, supporters of former prime minister Thaksin Shinawatra, have mounted a series of targeted demonstrations, ranging from ritualistic blood curses to head-shaving to noisy parades through the streets of the capital.

Although their rally has been somwhat peaceful so far, many remember the Red Shirts' protests last year that turned violent.


The Association of Thai Travel Agents said international visitor arrivals fell between 20 and 30 percent in March, when the protests began.  Tourists coming from such key markets as Japan, China, Hong Kong, Taiwan and South Korea cancelled their plans.

Andrew Cornelio, director of sales and marketing at the Dusit Thani Hotel, said the travel advisories from more than 30 countries also contributed to the dip in tourism.

"For the Dusit Thani we have seen many cancellations,  he said. "In terms of numbers we've lost quite a lot. Right now we have about I would say 15 to 20 percent down from what we expected to be. It's cost our first quarter figures to be below what we have budgeted for."

The tourism industry had been forecasting tourist arrivals of over 15 million for 2010. But analysts say the target is now not expected to be met. Tourism accounts for about six percent of Thailand's economy.

Arporn Chewrekrengkai, chief economist with the Government Pension Fund, has revised her optimistic outlook for tourism this year.

"This political uncertainty will definitely have a very adverse impact on the tourism sector," she said. "Originally I thought the tourism sector would pick up very well in the last quarter of last year. That's why in earlier forecasts we can get around 15 to 15.5 million foreign visitors. So if these kind of demonstrations continue we believe that it will hurt the remaining of this year."

But Arporn says that Thailand's overall economy will get a boost from strong export growth - up between three-point-five to four percent compared to 2009.

More confrontational stance

Saturday's protest took a more confrontational stance as Red Shirt protesters demanded troops stationed close to the rally site in central Bangkok to stand down.

Security officials reported two separate grenade attacks that injure one soldier and two civilians.

The protesters accuse Prime Minister Abhisit Vejjajiva of taking power through illegitimate means with the support of the military and are demanding he dissolve Parliament and call new elections. The prime minister has repeatedly rejected the calls.

Leaders of the protest movement have been portraying the demonstrations as a struggle between Thailand's poor, mainly rural masses and the Bangkok-based elite.

The group largely consists of supporters of former prime minister Thaksin, who was ousted by a 2006 military coup for alleged corruption, and pro-democracy activists who opposed the army takeover.  Thaksin remains in exile in the face of corruption charges.