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Thailand Defence and Security Report Q4 2010
Business Monitor International, Oct 2010, Pages: 78
The Thailand Defence and Security Report provides industry professionals and strategists, corporate analysts, defence and security associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Thailand's defence and security industry.
The security situation in Thailand remains an ongoing concern from several points of view. Most publicly, the political situation is unresolved. Thailand’s period of emergency rule was extended for another three months on July 7. Our view is that Prime Minister Abhisit Vejjajiva will not call elections until he has a chance of victory at the polls and this means there will not be an election this year. Despite the successful actions in May that put an end to the very public demonstrations against the government, there have still been recurring incidents of anti-government attacks. The risk of a successful high profile attack remains real. Such an incident would threaten confidence in the economy. The extension of emergency rule risks creating divisions within the military. While we do not foresee an imminent risk of a military coup, a delay in reconciliation efforts may exacerbate existing tensions within the military.
Not unexpectedly, the crucial tourism sector has suffered badly as a result of the violence. Tourist arrivals fell by more than half form 1.8m in December 2009 to just 0.m in May 2010 and the extension to emergency rule is a threat to Thailand’s long term image within the tourism market. Less in the public eye internationally than the events in Bangkok, but still a major issue, attacks linked to Muslim separatists continue in the southern part of the country. More than 3,500 people have been killed in these attacks since 2004. At the same time insurgencies in neighbouring Myanmar, Cambodia and Laos all impinge on Thailand’s border areas.
In terms of a local defence industry, most of the companies involved have their main focus on commercial operations and only a partial involvement in defence manufacture.
Economically, Thailand recovered from the impact of the global financial crisis with an impressive 12.9% y-o-y growth in real GDP in Q110. However, much of this was attributable to inventory rebuilding. Partly due to softening export earnings, especially but not only from tourism, we are maintaining our forecast for real GDP growth to come in at 3.6% for 2010 and increase only very marginally to 3.7% in 2011. While we believe the Bank of Thailand may begin to raise interest rates we do not see them doing so aggressively. Instead we see what might be called a ‘normalisation’ of rates following the cuts made in response to the global financial crisis.
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