By Orathai Sriring
BANGKOK, Feb 9 (Reuters) – Thai Prime Minister Anutin Charnvirakul’s big surprise win in Sunday’s election, and the likelihood of a strong coalition government, could provide temporary relief to a stuttering economy that has faced repeated bouts of political instability.
The key challenge for the 59-year-old leader’s incoming administration, which is packed with technocrats in a bid to prove its governance ability, will be to follow through with structural reforms that Southeast Asia’s second-largest economy badly needs to deliver medium-term growth.
“Thailand’s election result should help reduce political risk in the near term but does little to change the challenging economic outlook,” Gareth Leather, senior Asia economist at Capital Economics, said in a note on Monday.
“The real test for the next government will be whether it can move beyond short-term political populism and begin tackling the deeper constraints holding back Thailand’s long-term growth.”
Anutin, who was in power for less than 100 days before announcing a snap election, and his conservative Bhumjaithai Party secured 193 out of 500 seats at stake, trouncing the reform-minded People’s Party and populist Pheu Thai Party.
The election result sent Thai stocks up more than 3%, hitting their highest level in more than a year.
With 2.2% GDP growth estimated for last year, Thailand’s economy has lagged regional peers, partly due to a combination of slowing consumption from burgeoning household debt, an ageing population, U.S. tariffs and a strong currency. The finance ministry predicts 2% growth this year.
“Moreover, stiffening regional competition for tourism and foreign direct investments puts the Thai economy at a crucial crossroads,” OCBC Group Research said in a note.
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On the campaign trail, Bhumjaithai vowed to boost growth to above 3% through a “10-Plus Plan”, including support for small businesses and low-income earners.
“Anutin and Bhumjaithai are generally considered business-friendly,” said Laura Schwartz, senior Asia analyst at risk intelligence company Verisk Maplecroft.
However, the party’s establishment credentials suggest limited appetite for sweeping structural reforms, she added.
In his first comments since the election result, Finance Minister Ekniti Nitithanprapas said the incoming government would convert state-promoted and approved projects, worth 480 billion baht ($15.39 billion), into actual investment this year.
The government is also working on the second phase of a consumer subsidy scheme, said Ekniti, that would follow an initial round worth about 44 billion baht to subsidise half of the cost of some food and consumer goods for an estimated 20 million people.
“The programme is being designed and will await a new government,” he said.
Thailand’s new government will likely take office by the end of April, a government official said on Monday.
The government may also expand a scheme offering a three-year debt moratorium with suspended principal and zero interest, which was initially earmarked to help 2.36 million small non-performing loan accounts, said Tim Leelahaphan, senior economist at Standard Chartered.
Still, economic growth will remain subdued at least until mid-year, and the budget for the 2027 fiscal year that starts in October could be delayed by several months, leading to disbursements likely starting only in late January next year, according to Tim.
The private sector is concerned that the economy may grow slowly this year, likely adding more pressure to address household-level economic issues, said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries, a major industry group.
“The government must work in parallel – fixing people’s livelihood problems, stimulating the short‑term economy, and addressing corruption,” he said.
($1 = 31.1900 baht)
(Additional reporting by Panarat Thepgumpanat; Writing by Devjyot Ghoshal; Editing by Anil D’Silva)
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