Economic Perils Loom for Thai Business Sector after Prime Minister's Removal

The political landscape in Thailand has taken a turn following the Constitutional Court's ruling against Prime Minister Paetongtarn Shinawatra, with the Thai Chamber of Commerce and the Board of Trade expressing concerns about the resulting uncertainty.

The court's decision has dismissed Prime Minister Shinawatra from office, leading to a political vacuum that has undermined the confidence of both domestic and foreign investors. This instability threatens to disrupt long-term economic policy, potentially halting the 2025 fiscal year budget disbursement and delaying key investment projects.

Dr Poj Aramwattananont, Chairman of the Thai Chamber of Commerce and the Board of Trade of Thailand, has stated that this political uncertainty is a significant factor undermining confidence and could exacerbate the existing economic crisis. He has outlined multiple economic challenges facing Thailand, including declining purchasing power, high household debt, US trade tariffs, tense global geopolitics, international conflicts, and border problems with neighbouring countries.

Kriengkrai Thiennukul, Chairman of the Federation of Thai Industries (FTI), shares similar concerns. He has warned that the government transition could potentially halt disbursement of the 2025 fiscal year budget, including various investment projects. He also emphasised that if the formation of a new government is delayed, it will impact the implementation of crucial policies such as tax negotiations with the US, border problem resolution, flood management, and economic issue resolution.

Both business leaders have stressed that national recovery requires stable politics and genuine private sector participation in designing problem-solving measures to restore confidence amongst society and investors. They have urged political factions to find a new prime minister in accordance with the constitution to ensure the country has leadership capable of continuing work swiftly.

The People's Party, the largest party in parliament, has not yet decided whom it will nominate as the new prime minister. A parliamentary vote could happen this week if parties agree on a candidate, but no firm decision or date has been announced so far. The process may be prolonged due to shifting political alliances and no strict deadline for government formation exists.

The economic data reflects the concerns of the business leaders. In June 2025, total trade value reached 10.9 billion baht, declining 32.29% month-on-month and 23.3% year-on-year. Potential export tax adjustments and ongoing negotiations with the United States could affect key export products such as electronics, rubber, gems and jewellery, automobiles and parts, and electrical appliances.

The private sector and foreign investors are closely monitoring Thai politics. If political instability continues, confidence will be more severely shaken, leading to a potential slowdown in tourism and hesitation in investments. Dr Aramwattananont has concluded that cooperation between public and private sectors in situations like this is crucial, and if they plan and implement measures continuously, even with political instability, Thailand's economy can still recover, create growth opportunities, and maintain investor confidence.