BY ORATHAI SRIRING
BANGKOK — Thailand’s economy is already on the ropes.
Consumption has remained tepid despite a government stimulus programme, few of its economic engines are firing, and uncertainty wrought by US President Donald Trump’s reciprocal tariffs means that the Thai economy could grow just over 1 percent this year.
Now, Southeast Asia’s second-largest economy faces a fresh challenge: a new round of political chaos that can bring down Prime Minister Paetongtarn Shinawatra or her ruling Pheu Thai party.
“We are currently in a period of economic downturn, with many issues affecting us,” Visit Limlurcha, vice chairman of the Thai Chamber of Commerce, told Reuters.
“This could make things even more complicated.”
The most significant short-term concern is the passage of a 3.78 trillion baht ($115 billion) budget for the 2026 fiscal year, which starts on October 1, that must pass through parliament over the next few months.
That process could get stalled if Paetongtarn, who is under siege for her handling of a festering border row with neighboring Cambodia, dissolves parliament and triggers fresh elections.
“If parliament is dissolved before the budget is passed, the process will be delayed significantly,” said PrakitSiriwattanaket, managing director of Merchant Partners Asset Management.
Finance Minister Pichai Chunhavajira told reporters on Friday that he was optimistic the budget would be approved by parliament by October.
“I’m confident that those who are in charge of this matter know that the budget is very important for Thailand,” he said.
Thailand’s economy has lagged regional peers as it struggles under high household debt and borrowing costs, and sluggish demand from China, which is also a key tourism market.
It expanded 2.5 percent last year, and growth could be further halved this year due to US tariffs, Pichaisaid last month.
Thailand’s stock market .SETI has been the worst performing bourse in Asia so far this year, down 23.4 percent. Industrial sentiment also hit its lowest in eight months in May, even as consumer confidence dropped to a 27-month low.
There is a clear need to press ahead with government spending, which has dropped by over 38 percent annually during April-May 2025, OCBC economists Lavanya Venkateswaran and Jonathan Ng said in a report on Thursday, warning of a “double whammy” for the economy if both government expenditure and exports weaken.
