Thailand's political turmoil which culminated in the weekend's running street battles is starting to take its toll on tourism, the lifeblood of the economy.More than 40 countries have issued travel warnings amid reports of thousands of tourists cancelling trips.
The Ministry of Finance said growth in gross domestic product, once estimated at 3.5 to 4.5 per cent for 2010, would be cut by 0.2 to 0.5 per cent because of the unrest. Eknitti Nitithanprapar, executive director of the macro-economic policy bureau at the finance ministry, said tourism and consumption-related industries would be hardest hit.
The severity of the blow was felt on the stock market on Monday, where shares in the travel and leisure sector were hard hit. Thai Airways shares were down 13.6 per cent, contributing to a market fall of 3.6 per cent.
The SET Index, which until last week had proved remarkably resilient to the month-long anti-government demonstrations, has now lost 6.4 per cent since the government of Abhisit Vejjajiva, the prime minister, invoked a state of emergency last Wednesday.
Tourism, which draws visitors to the temples of Bangkok, the beaches of the Andaman Sea and the mountains of northern Thailand, accounts for almost 7 per cent of GDP, and is an important source of employment.
The family of Tomas Oyarzun, a 19-year-old from Chile, who arrived on Saturday to stay in Bangkok's Khao San Road on the fringe of the fighting, are cutting short their holiday and going to Bali.
"It feels strange here," said Mr Oyarzun, echoing the feelings of many other visitors interviewed by the Financial Times on Monday in the wake of the violence that left 21 people dead.
Tourists party near shrines for Bangkok protest dead
Vichit Prakobgosol, president of the Thai-Chinese Tourism Alliance Association, told the Bangkok Post the violence had led to cancellations of all charter flights from China. Charter flights for holidays during this week's Thai Songkran new year festival had already dropped to just 30 from 100 even before the violence.
"But now all charter flights from China have been cancelled," he said. "We don't want to talk about it any more. Violence is not the right answer and is not good for the country. Everyone, the red shirts included, will be affected."
iReport: Were you there? Send your images, video
Dale Lawrence of the Pacific Asia Travel Association said there was "a dark cloud hanging over the travel and tourism industry. You can't blame people for making alternative plans -- there is no end in sight."
But Mr Lawrence pointed out that Thailand's tourism market had proved robust in the past. Tourist numbers last year were marginally up on 2008 despite the global downturn and the closure of Bangkok's two main airports by protests in December 2008.
Mr Lawrence said the 'Mice' market -- meetings, incentive travel, conferences and exhibitions -- is likely to have been badly hit. Many companies are unable to get insurance to send executives to countries with travel bans in place.
iReport: Watch an eyewitness video of protests
The Thai government set up a scheme over the weekend offering coverage of up to $10,000 for loss of life or a limb and up to $100 a day for losses or damages.
The demonstrators who took on troops on Saturday have been campaigning for a month for Mr Abhisit's resignation. The street battles erupted when soldiers moved in to clear one of the main protest sites near the Khao San Road.
One end of the road still looks like a warzone, with a shrine marking where a protester died. But 40 yards away, western backpackers on Monday were celebrating Songkran with music and water-pistol fights. Businesses said it was a quieter festival than normal, but it was going ahead.
Mr Oyarzun, when asked if he would come back to Thailand after what he had seen, gave a one-word answer: "Definitely".
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