Asia Briefing has long marvelled at the resilience of the Thai economy in the face of political turbulence as south-east Asia's second- largest economy shrugs off signs of instability and continues to expand.
But the most recent bout of unrest, which pits the yellow-shirted supporters of former deputy prime minister Suthep Thaugsuban against the red-shirted supporters of reigning prime minister Yingluck Shinawatra has generated an unusual amount of uncertainty, partially because the outcome is so difficult to call.
Against this background, the stock market has fallen more than 10 per cent since the start of November, when the protests began.
Whether the army will intercede, whether a fresh round of elections will come or whether the country could split along north-south lines is rattling investors, including regional giant China, which has pulled out of a deal to buy 1.2 million tonnes of rice from Thailand because of an ongoing probe into a controversial policy where the government has promised to pay farmers for rice at above market rates.
A key opposition complaint is that the government is trying to buy votes using populist policies and a key element of this is the rice purchase scheme.
Last week, the Thai Rice Exporters Association said it expected the country to export 7.5 million tonnes of rice this year, up about 14 per cent from the 6.6 million tonnes shipped last year.
The embattled government is desperately trying to fund the scheme, which helps Ms Yingluck’s chances among her rural power base. However, the future of the scheme is uncertain after she held an election boycotted by the opposition and disrupted at the ballot box.
"We expect the government to release a substantial amount of rice from state warehouses so we would have more supply for exports this year. But prices are likely to fall," the rice export association president Chareon Laothammatas said.
The deal between Thailand and Chinese state firm Beidahuang was signed last November and delivery was due to begin in December, but it was delayed after Ms Yingluck dissolved parliament in that month.
Losses
The World Bank has estimated annual losses of 200 billion baht (€4.5 billion) since the scheme was introduced in 2011. The government has struggled to sell the rice because of its high price at a time when global demand is thin. Some farmers have been waiting months for their money.
Government efforts to borrow money have foundered too. Some 500 employees of the state-owned Krung Thai Bank took to the streets to pressure the bank not to give the government a loan.
The instability has also hit the Bangkok government's plan to equip every school child with a tablet computer, after a Chinese supplier, Shenzhen Yitao Intelligence Control Co, terminated a contract with the Thai authorities.
Shenzhen Yitao had won an auction to supply more than 800,000 tablet computers in Thailand, at a cost of over more than €30 million.
The company failed to produce the computers, and then sent a letter late last month saying political instability was the reason, along with contractual issues.
Meanwhile the country’s central bank has warned of “substantially increased” risk to economic growth after the recent disrupted general election did basically nothing at all to restore stability in Thailand. The Bank of Thailand’s monetary policy committee (MPC) warned of the effect of a prolonged crisis on the country, which is heavily reliant on tourism.
“The committee agreed that the downside risks to growth have increased substantially,” the panel said, adding that “growth impact could be more pronounced if a prolonged unrest were to cause a switch of export orders to other countries, with a potential knock-on effects on domestic spending”.
Last month, as reported in Asia Briefing, the committee slashed its economic growth forecast for this year to around 3 per cent from 4 per cent.
Then, just one week later, central bank governor Prasarn Trairatvorakul said growth could be even lower than 3 per cent because the unrest had affected consumption and investment.
