Businesses have expressed their mounting concerns about the ongoing political strife, saying the escalating protests are rubbing salt into wounds of an economy that has already been battered by the pandemic.
According to the latest business survey on Thailand's political activities conducted by the University of the Thai Chamber of Commerce (UTCC) during Oct 20-22, the business sector sees domestic political risk as a vital factor that may compound damage to the economy, on top of the deadly outbreak.
"With escalating anti-government street protests, the business sector's confidence has started to be shaken. The majority of businesses do not want to see any violence or political clashes. They want the conflicts to be addressed by parliament," said Thanavath Phonvichai, president of UTCC.
"If the protests are prolonged or continue to intensify until year-end, overall purchasing power and sales will fall, which will spill over to profit and operation costs as well as the financial liquidity of firms. This may also delay the country's economic recovery from the projection for the third quarter of next year."
According to Mr Thanavath, although the university is maintaining its economic forecast at -7.5% to -8.5%, it is keeping a close watch on the political situation, which is seeing more frequent student-led protests.
Earlier last week, Moody's Investors Service said rising political tensions cloud prospects for rapid economic recovery and foreign investment in Thailand.
Despite Thailand's track record of economic and financial resilience to political turmoil, any indication the protests might lead to violence, such as during the 2013-14 and the 2010 protests, would hurt Thailand's attractiveness as a tourism destination, curb foreign investment and have a negative effect on the sovereign's credit profile, Moody's said.
Increased political risk will test Thailand's institutional effectiveness, which has been weakened by cabinet reshuffles and delays in implementing the previous fiscal year's budget, said Moody's.
According to Mr Thanavath, in light of Thailand's economic and political situation, the survey also found small-scale business operators can sustain their business for 4.3 months, while medium-sized businesses said they could tolerate 4.9 months.
Large corporations said they could keep up business smoothly for 5.1 months.
"What the business sector wants the most from the government is credit lines to help boost their liquidity followed by aid measures to help lower existing debts, an increase of domestic tourists, new markets, business tax reduction and consumption stimulus," he said.
A separate survey by the UTCC has revealed consumer spending during Loy Krathong is expected to be less active this year, especially in Greater Bangkok, because of the poor economy and concerns about a second outbreak and escalating political protests.
Spending during the annual full-moon celebration, which this year falls on Saturday, is expected to drop by 1.5% to about 9.42 billion baht, the lowest level in nine years since 2012.
According to Mr Thanavath, the survey also found people saw the tourism stimulus measures, the co-payment scheme and the Shop and Payback tax rebate scheme unlikely be able to stimulate the economy and spending significantly.
The majority of consumers remain cautious about their spending plans because of the poor economy, he said.