Siam Paragon – Bangkok’s upscale shopping mall – said it had lost sales totalling 60 to 70 million baht due to the occupation of Ratchaprasong intersection by the anti-government protesters on Saturday.

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Paragon puts losses at B60-70m

Thananvath Phonvichai, director of the Center for Economic and Business Forecasting at the University of the Thai Chamber of Commerce, estimated losses from the rally at 200 to 300 million baht from the closure of shopping malls at the Ratchaprasong intersection.

Businesses in the area have definitely been affected, but the long-term impact on the economy would be small if the protests ended quickly, he said.

siam paragon closed
Thananvath Phonvichai, director of the Center for Economic and Business Forecasting at the University of the Thai Chamber of Commerce, estimated losses from the rally at 200 to 300 million baht from the closure of shopping malls at the Ratchaprasong intersection. Picture : Camilla Davidsson

The Ratchaprasong intersection is home to some of the capital’s most exclusive malls and hotels, including Siam Paragon, CentralWorld and Gaysorn, as well as Siam Centre, Siam Discovery and Central Chidlom. All closed operations yesterday as traffic access to the area was completely blocked.

The tourism sector worldwide and in Thailand is likely to grow modestly next year

The medium-term outlook is sobering, with growth expected at 3.5 percent in 2010 and likely remaining below potential for the next three years. Because the Thai economy is largely dependent on final demand in advanced economies, a return to pre-crisis rates of economic growth (a full recovery vs. a rebound to pre-crisis levels) will require a combination of (a recovery of demand from advanced economies and a rebalancing of the sources of growth to reduce Thailand’s dependence on demand from advanced economies. Neither process is likely to be swift. Recovery from a financial crisis is a lengthy process that involves the rebuilding of balance sheets, and the IMF estimates that half of the losses in the financial system in advanced economies are yet to be recognized.

The market’s views on export performance in 2010 of Thailand have improved

The key risk to the global recovery lies in the need to get the timing of withdrawing fiscal and monetary stimulus just right. Withdrawal of fiscal stimulus too early may lead to another negative demand shock and a negative expectations spiral, whereas withdrawing the stimulus too late may lead to high inflation, further weakening of the US dollar, and possible asset price bubbles. In Thailand, for example, more than ten years since the 1997/1998 financial crisis banks still have bad loans in their books and the government still holds a large amount of debt related to the recapitalization of financial institutions. Given the expected length of recovery, it is important not to withdraw stimulus programs too soon, before the recovery is on a firm footing. On the other hand, macroeconomic imbalances are accumulating and eventually fiscal and monetary authorities, especially in the US, must consolidate their fiscal position and withdraw liquidity.

Boris Sullivan

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