Hong Kong Thursday opened the door for tourists from the former British colony to return to Bangkok by lowering its two-month-old travel alert on the Thai capital.
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Thailand is among the region’s more open economies, with exports accounting for around 65% of gross domestic product (GDP)
The Government adopted expansionary fscal and monetary policies to temper the contraction. Private consumption fell by 2.4% year on year in the frst half of 2009, the result of a weakening labor market, a fall in export prices of agricultural commodities that hurt rural incomes, and feeble consumer confdence, particularly during times of political turmoil. Antigovernment street protests in April, which followed an extended period of rising political tensions, led to a temporary state of emergency in the capital, Bangkok. In contrast to the fall in private consumption, government consumption rose by 4.8% in the frst half of 2009 as the Government quickened the pace of its budget disbursement and raised wages for its employees, and rolled out its first fiscal stimulus package from March.
The same protest group occupied Government House for nearly three months beginning last August, effectively crippling the workings of two different Thaksin-affiliated governments. A modicum of stability has returned with the formation of Abhisit’s coalition government, which is believed to have military backing and has prioritized restoring foreign confidence.
Investor confidence has not yet fully recovered from the military appointed administration’s surprise move in December 2006 to impose and then retract capital controls on foreign equity, bond and currency transactions. A nationalistic motion the following year to amend the Foreign Business Act spooked Japanese investors, many of whom have their Thailand operations structured in a way legislators aimed to ban.
Electronics and electrical components account for nearly 35% of total exports.While official unemployment figures were still low at 1.5% as of December, they are expected to climb potentially twice as high in the months ahead as cash-strapped employers opt to save costs by cutting staff rather than reducing worker hours. Whether rising unemployment will translate into significant new rounds of social unrest and political disruption is unclear.