Could Thailand’s coup damage Asia?

Thailand’s latest military coup hardly improves the odds of solving its protracted political crisis, says Andy Mukherjee on Breakingviews. The stand-off has already sent the economy into recession: it shrank by 2.1% in the first quarter from the previous three months.

Consumers and businesses have been severely rattled. Private investment fell by an annual 7.3%; household consumption by 3%. The last coup, in 2006, meant that Thailand fell behind the rest of the region. It’s set to be a similar story this time.

The good news, however, is that the rest of Asia should barely be affected by Thai turmoil, says Capital Economics. Thailand is not an important export market for the region; it accounts for 2%-3% of emerging Asia’s foreign sales. Malaysia has the largest exposure, at 5% of exports, but intermediate goods (which are shipped on) make up most of the total.

Asia’s solid external finances also make contagion unlikely. Malaysia and Vietnam, meanwhile, tend to gain tourists from Thailand during periods of turmoil.

Longer term, foreign investors deterred by political instability and stalled reform efforts seem likely to opt for Indonesia and the Philippines instead, as these countries have been closing the competitiveness gap with Thailand in recent years.

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

MoneyWeek magazine

Latest issue:

Magazine cover
Why you should worry about Greece

...and how to protect your wealth

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

From ADRs to Z scores – all the terms you wish you understood, but were too embarrassed to ask about.

Gervais Williams: if you want real dividend growth, buy small-cap stocks

Merryn Somerset Webb interviews small-cap stock expert Gervais Williams about how penny shares outperform blue chips 'again and again'.


Which investment platform is the right one for you?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from, with varying fees and charges. Find out which is best for you.


2 July 1928: Women given equal voting rights with men


On this day in 1928, the Representation of the People (Equal Franchise) Act extended equal voting rights to women, lowering the voting age to 21.


Anatomy of a Grexit: how Greece would go about leaving the euro

Jonathan Loynes and Jennifer McKeown, economists at Capital Economics, look at the key issues and challenges of a Grexit, how it might be best managed, and set out a timetable for change.