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As Bangkok ‘shutdown’ looms, Thailand’s ‘Teflon’ economy put to the test

It has been nicknamed "Teflon Thailand" – an economy seemingly impervious to any lasting effects from regular spasms of violent political unrest.

But with protesters vowing to "shut down" Bangkok on January 13 in their two-month-old bid to topple Prime Minister Yingluck Shinawatra, the nickname seems more like a taunt.

(Read more: Thai political strife is far from over)

For while Southeast Asia's second-largest economy has proven surprisingly resilient to past unrest, analysts see signs of deeper damage this time that could pose longer-term problems for a country already grappling with slowing growth and outflows of global capital from its fragile financial markets.

Tourism is taking a hit, infrastructure spending is delayed and investors and consumers are uneasy over a political crisis that promises more violence but no real solution.

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The stock market is the worst performer in Southeast Asia and the currency has been falling since October.

"It's clear the economy is slowing down and you cannot rely on fiscal policy any more because we don't really have a government right now," said Kampon Adireksombat, senior economist at TISCO Securities in Bangkok.

The turmoil sent Thai consumer confidence to a two-year low in December, a ninth straight month of decline, a survey showed on Thursday, and the trend is likely to continue. Consumer spending propped up the economy when exports were weak in 2012 and 2013.

The government's planned infrastructure investments will be postponed until the next budget year, which begins in October, Finance Minister Kittirat Na Ranong said on January 3. But with a new administration unlikely to be put in place soon, the plans could be delayed further.

(Read more: Political protests spook Thai central bank)

"It is very clear the infrastructure project is unlikely to be implemented this year," said Kampon at TISCO.

Election uncertainty

Political turbulence is not always a drag on Thailand's economy, which has weathered eight years of on-off turmoil that has seen governments toppled, protesters shot, buildings and buses set ablaze, and airports and shopping malls seized by demonstrators.

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