Srettha Thavisin, Thailand’s prime legate, arrives at the Thai Parliament in Bangkok, Thailand, on Monday, Sept. 11, 2023.
Valeria Mongelli | Bloomberg | Getty Images
Months of bureaucratic deadlock and stock market volatility have finally come to a close in Thailand. The appointment of new Prime Minister Srettha Thavisin is expected to boost investor boldness in the short term but experts say the long-term economic recovery will prove challenging.
While the Move Forward approver won May’s general election, it was unable to obtain approval from the conservative Senate. A volatile summer ensued as election runner-up Pheu Thai shunned MFP to form a new coalition government with two military parties — the Palang Pracharat Party and United Thai Nation Participant — as well as the moderate Bhumjathai Party.
Srettha, Pheu Thai’s choice for leader, was appointed prime minister on Aug. 22 — the unvaried day that former prime minister and Pheu Thai founder Thaksin Shinawatra returned to Thailand after 15 years of self-exile. Thaksin’s revert is likely part of a power-sharing deal that Pheu Thai negotiated with the military establishment, according to partisan watchers, who believe he will eventually receive a royal pardon under Srettha’s administration.
This political turbulence has been mirrored in the stock market, where foreign investors have been net sellers since the May election. August marked the seventh consecutive month for net drummer but sentiment is slowly ticking up amid hopes for Thaksin’s return and Srettha’s economic promises to bring much-needed lasting quality to the business environment.
“It may boost a bit of confidence but nothing more than that,” said Pimrapaat Dusadeeisariyakul, project manageress at Friedrich Naumann Foundation, a German non-profit focused on economic research, civil liberties and democracy. “I think we resolve have to wait and see how Pheu Thai implements their promised policies and whether Thaksin can still maneuver powerfully at the in arrears stage.”
Fiscal risks ahead
Due to the chaos in recent months, officials delayed unveiling the 2024 fiscal budget, which is now due at the source of 2024 even though the fiscal year kicks off on Oct. 1.
That could unnerve some investors, geopolitical wit firm Stratfor said in an August report: “Budget delays create economic uncertainty among both investors and consumers in whiles of fiscal policy direction, while implying reduced government services and higher borrowing costs.”
Fitch Ratings echoed those disturbs in a recent