Thailand's Latest Coup May Scare Away Investors

Thailand, once prized in Southeast Asia for its relative economic stability, is in danger of inheriting the “Sick Man of Asia” tag. The latest coup by the military to end a stalemate between Yingluck Shinawatra’s government and its opponents threatens to send investors scurrying to other countries in the region.

The economies of Vietnam, Indonesia, Malaysia, and the Philippines are expected to grow more than 5 percent this year, while Thailand, whose gross domestic product shrank by 0.6 percent in the first quarter, may fall into a recession. Credit Suisse Group recently forecast that Thai stocks will underperform other markets in the region for one to three years, saying the May 22 “coup leaves investors little reason to stay.” Moody’s Investors Service estimated that economic growth could drop 2 to 3 percentage points from its precrisis 4.5 percent if the political instability lasts for a year.