Success of the opposition parties
On May 14th, legislative elections were held in Thailand to renew the 500 members of the House of Representatives. The "democratic" parties have presumably won more than 300 seats. The two main opposition parties, Pheu Thai and Move Forward, have won more than 290 seats. The opposition parties are discussing to recommend one nominee for the position of Prime Minister.
Tense political climate
That being said, it is very likely that the elected Prime Minister will come from a broad coalition, not limited only to the opposition. According to the Constitution enacted in 2017, favourable to the military government in place since the coup in 2014, the majority of votes of the Congress is required to become Prime Minister. It means both the House of Representatives and the Senate whose 250 members have been appointed by the current government. Parties will have to form alliances to obtain the 376 required votes.
In that context, we expect some tough negotiations and a tense political climate in the weeks to come. The time taken to form a government will have a main impact on the next budget since it has to be submitted to the Parliament very soon. In Thailand, the fiscal year begins in October.
Tourism arrivals recovery
Despite political tensions, our growth expectations remain quite high for the current year. GDP growth should reach 3.5% sustained by household consumption and government support and a much-awaited tourism recovery encouraged by the end of the Chinese zero-COVID policy. Nevertheless, the inflation rate will remain high, above 2%. Exports will hamper growth given a downturn in global demand and the indirect effects of commercial tensions between the United States and China.
The political risk remains high. The buzz about the elections should not have an impact upon the strategic and investment policy in the next five years. For the time being, all parties seem to be determined to carry out the measures taken by the current government in terms of infrastructures and development in particular.
