updated 1/2/2007 2:42:37 PM ET 2007-01-02T19:42:37

The unprecedented New Year’s Eve bombs in central Bangkok shattered the festive mood of revelers and the high hopes for 2007 of Thailand’s key tourism industry, tour operators and economists said on Tuesday.

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“This is a big shock, hitting us at the peak of our high season when tourists, especially Europeans, are pouring in,” said Suparuak Surangkura, president of NS Travel and Tours, a Bangkok-based operator for European and Asian tourists.

No one has claimed responsibility for the eight bombs that killed three Thais and wounded nine foreign holidaymakers when they exploded in central Bangkok on New Year’s Eve.

Prime Minister Surayud Chulanont, appointed after a Sept. 19 coup against Thaksin Shinawatra, has pointed the finger at politicians “who had lost power,” but said that did not mean exclusively Thaksin’s ousted administration.

Australia, the United States and Britain quickly issued travel advisories, urging their citizens to avoid all public gatherings and to remain extra vigilant in the sprawling capital of nine million.
On the Khao San Road, Bangkok’s famed backpacker travel hub, most tourists were taking events in their stride.

“We’ve had bombs in London and you’ve just got to carry on as usual,” said 32-year-old Kate Perry from Brighton in southern England.

However, some complained that the extra security imposed after the bombs forced the cancellation of New Year’s Eve street parties was putting a dampener on the perennial party spirit and causing bars to close early.

“There are lots of police now and it feels kind of uncomfortable,” said Kevin Ostrowski, 23, from Vancouver. “But hopefully it will all die down and Bangkok will become fun again.”

Sun-soaked beaches
After SARS, the Indian Ocean tsunami and bird flu in the last few years, Thailand’s tourism industry, which attracts 12 million visitors a year and accounts for 6 percent of gross domestic product, was hoping for a golden year.

But tour operators said foreign travel warnings would make it difficult to hit the growth target of 10-12 percent for 2007.

“Advisories of various countries to avoid Thailand are quite damaging as tour groups that ignore them do not get safety insurance coverage,” said Apichart Sangka-aree of the Association of Thai Travel Agents, which speaks for 350 firms.

The full extent of the impact would only become clear on Wednesday when tour operators reopened after the New Year break, he said, although if the blasts turned out to be a one off, the fallout would not be disastrous.

Economists said an expected loss of revenue in an industry that raked in $13 billion in 2006 -- the fourth biggest foreign exchange earner after electronics, electrical appliances and cars -- could lead to annual growth at the bottom end of forecasts.

Coming so soon after the central bank’s disastrous imposition of capital controls in a bid to stem the baht’s rise against the dollar, the effect could be even greater.

“The economy is getting a double-hit in less than a month,” Somphob Manarangsan of Bangkok’s Chulalongkorn University said.

Singapore-based analyst Leslie Khoo of Forecast Pte, who cut GDP growth forecasts for 2007 to 4.0 percent after the capital controls were introduced in December, said the blasts and political instability only made the outlook less rosy.

“The bombings just increase the probability of the 4 percent growth forecast,” he said. 

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