Thailand's mourning for King Bhumibol Adulyadej may soften economy temporarily

 As Thais begin a year of mourning for their king, parties and celebrations will be toned down, particularly over the November, temporarily crimping consumer and tourist spending in an economy that has been struggling for traction in recent years.

With the government asking for people to "refrain from festivities" for 30 days, and embassies advising tourists to show restraint after the death of King Bhumibol Adulyadej, even Bangkok's bustling bars and the country's famous holiday resorts could go unusually quiet. Longer term, analysts say a smooth transition to the king's heir and the military government maintaining political stability would support the economy, although growth would remain subdued.

Even as the country began its official mourning, Prime Minister Prayuth Chan-ocha urged businesses to stay active, and on Friday most Bangkok shops were open, including the city's shopping malls. "There will not be celebrations. If it's business-related that shouldn't be a problem as people still need to have meals,"said Sumate Sudasna, president of Thailand Incentive and Convention Association, an industry body which organises events.

"If there's festivities, it will most likely be scaled down in terms of entertainment," he said, saying that in the first month of mourning it was unlikely that alcohol would be available at performances and events.

NO WEDDING

Grissarin Chungsiriwat, due to be married in Bangkok in early November, said her wedding was likely to be postponed. "The venue said we can't have a wedding until November 15," she said.

Thailand's economy grew an annual 3.5% in the June quarter, its fastest pace in more than three years, helped by strong tourism and government spending. Vishnu Varathan, economist at Mizuho Bank, said there was a risk that consumer confidence "which has been recovering at a gradual pace since June may slip in the near term as the population mourns their beloved King".

Tropical Thailand, with its beaches, Buddhist temples and infamous night life, had been expecting a record 33 million tourists in 2016. Tourism accounts for about 10 percent of Thailand's gross domestic product, and the business has been a rare bright spot for an economy that has struggled for years as consumption and exports, another pillar, have been weak.

The Australian government's travel advisory said that full-moon and half-moon parties, popular with younger travellers in Thailand's southern beaches and islands, had been cancelled in October and future ones could also be cancelled.

SMOOTH SUCCESSION

Simon Baptist, chief economist at the Economist Intelligence Unit, said there was likely to be a significant disruption if businesses closed temporarily, which could affect growth in the fourth quarter and into 2017. A smooth succession, however, would leave the longer-term outlook unchanged, he added.

Ronnachit Mahattanapreut, senior vice president for finance of hotel and food chain operator Central Plaza Hotel Pcl , said all festive events would be cancelled. But he also said demand for travel and accommodation could rise as Thais in the provinces may want to come to Bangkok to pay their respects to the late monarch.

In anticipation of an inflow to Bangkok, state-run bus operator Transport Co Ltd said on Friday it is increasing the number of buses on all routes by 25%.

Christine Shield of Oxford Economics said a near-term economic pause is likely as Thailand mourned, but saw no reason to change growth forecasts of 3.1% in 2016 and 2017. "One key reason why we have not changed our growth forecast is that it is already fairly subdued, with lacklustre investment and soft consumption amid cautious sentiment, partly due to the long-standing political uncertainty," she said.