Economic repercussions of the Thailand bombings

Economic repercussions of the Thailand bombings

In the wake of a number of bombings across Southern Thailand, Thai authorities have been quick to rule out international terrorism as the cause. Despite this move to protect vital tourism revenue, domestic instability might still have a negative impact on the country’s economy.

Between 11 and 12 August, a series of bomb blasts ripped through a number of popular tourist provinces in Southern Thailand.

Bomb blasts in the southern provinces

The blasts began on the 11 August in the tourist hotspot Hua Hin, where one Thai woman was killed and a number of people were injured. Bombs continued to detonate the next morning, with explosions occurring in Trang, Phuket and Surat Thani.  

Overall, at least four people are believed to have lost their lives, with numerous people injured.

Thailand is no stranger to bomb attacks. In August 2015, a large bomb was detonated inside the Erawan Shrine in Bangkok, killing 20 people and injuring many more. Two more bombs exploded outside the Siam Paragon shopping mall in February 2015.

In both the August 2015 bombing and the recent bombings in the Southern provinces, Thai authorities were quick to claim that the attacks were instances of “local sabotage”, and were likely politically motivated. They denied any possibility that the attacks could be the result of international terrorism.

The potential instigators

The timings of the recent bombings are significant. The blasts came less than a week after Thailand’s constitutional referendum. On 7 August, 61 percent of voters backed a military draft constitution. It is seen by many as an attempt by the military to tighten its control over the country, after it seized power in May 2014.

Supporters of the ousted Prime Minister Yingluck Shinawatra opposed the draft constitution. The red-shirt movement has been a focus of military attention in the wake of the bombings.

The attacks are also symbolic in that they took place on the eve, and day, of Thailand’s Queen Sirikit’s birthday. Hua Hin, where the first blast occurred, is home to the Klai Kangwon royal palace. The royalist-military had organised a number of celebrations to honour the occasion, which the bombings ultimately overshadowed.

The armed forces have also been unable to rule out, but have sought to minimise, any potential links to Malay-Muslim separatist insurgency groups fighting at the Thai-Malaysian border. What is clear from both the timing and location of the bombings is that whoever is responsible has sought to embarrass the military, and to undermine its claim that it has restored stability and order to the country.

The economic repercussions of the bombings

The economic repercussions of the bombings cannot be understated. It is notable that the explosions occurred in provinces favoured by tourists. Thai authorities have sought to minimise any potential damage to tourism, in an attempt to safeguard vital revenues.

Indeed, Thailand’s economy is heavily reliant on tourism. In the first quarter of 2016, tourism revenue accounted for 13.2 percent of Thailand’s GDP. Visitors numbers nearly doubled between 2010 and 2015, with Thailand ranked 6th globally in 2015 for tourism receipts. In the aftermath of the August 2015 bombing, tourism dropped 17 percent. Initial reports do not yet appear to reflect a similar drop. However, it is arguably too early to tell.

According to Anusorn Tamajai, dean of Rangsit University’s Faculty of Economics, the attacks could cost the country as much as 33.4 billion baht. Whilst other experts have disputed this prediction, it is clear that any further attacks or evidence of instability could have a major detrimental effect.

Instability also has a negative impact on investment. Following the 2014 military coup, foreign investment in Thailand dropped significantly. According to reports, total foreign investment between January and November 2015 dropped 78 percent from the year earlier, with a notable drop in investment from Japan, the EU and the United States. With foreign investor confidence already low, evidence of attacks and political instability will only hinder this further.

A need for stability  

Considering the substantial economic repercussions of continued attacks in Thailand, in addition to the tragic cost of human life, it is vital that the Thai authorities develop some degree of stability in the country. In the short term, this will involve identifying those that carried out the bombings. In the long term, it will involve seeking a resolution to separatist violence in the Southern province, and developing unity amongst the country’s various political groups.

This is clearly no easy feat. However, Thailand’s economy will continue to falter until some degree of stability is achieved.

About Author

Laura Southgate

Dr Laura Southgate is a Lecturer in Politics and International Relations at Aston University in Birmingham, United Kingdom. She has a PhD in International Relations from the University of Otago, New Zealand, and an MA in International Relations and Security, and a BA in Law and Politics, from the University of Liverpool. Her research focuses on the Association of Southeast Asian Nations (ASEAN) and the international relations and security of Southeast Asia.