Focus On: Turmoil in Thailand, impacts on economy and insights from the ground

On January  the 22nd the Central Bank Monetary Policy Committee decided to maintain the policy interest rate at 2,25% per annum, even though there was the possibility of another rate cut after the first one occurred the previous November.

The street protests have worsened during the month and the government decided to call a snap general election, scheduled for 2 February. The opposition has already announced that they’re going to boycott the elections. This means that political deadlock and protests are unlikely to end with the elections.

People who live and do business in Thailand, especially in Bangkok, are quite used to demonstrations and disorder.
Companies are manufacturing their goods as usual in industrial zones far from downtown Bangkok and the protest sites. The two factions, the red shirts and the yellow shirts, have not yet clashed face to face because the Government has managed to keep them under relative control. If elections proceed there are widespread fears that tensions could escalate.
Some foreign companies such as Honda Motor which overcame catastrophic flooding in 2011 still have a positive outlook going beyond 2014. It is likely political instability will prevent investment flow this year.
The main effect of the political crisis in the short term could be the six to twelve month delay of public infrastructure investment.