In a recent report talking about the effects of the protests against the Thailand government, Morgan Stanley (NYSE:MS) said the loss of tourism business will have a significant impact on the economic growth of the country this year.
Morgan Stanley estimates it could cut about 0.2 percent from the economy, which very well could be a low estimate.
The tourism industry has taken the biggest hit in light of the increasing violence, with occupancy rates reportedly down by over 66 percent from normal rates.
With no end in site to the crisis, the Thai stock market has lost everything it had gained in 2010, and it is recommended by those who know the market and region to sit it out for awhile until things work themselves out.
A note to clients from Julius Baer Research advised them that “Under the current uncertain situation, we recommend investors to stay along the sidelines at the moment as we could see a possibility of another 5 percent drop in the near term.”
The most recent violence came from the response to anti-government protesters who went to the streets calling for the removal of Thai Prime Minister Abhisit Vejjajiva.
Over the long term, the situation came from a coup in 2006 which removed Thaksin from office. The protesters, along with calling for the removal of the prime minister, are also calling for early elections, which the government has responded to by suggesting December as a time to open polls, and possibly as early as October.
In spite of all this, the government says the Thai economy should grow by about 4.5 percent this year, but Finance Minister Korn Chatikavanij said that is probably a more optimistic figure than what economic growth really will be.
