High stakes: Thailand’s fragile recovery at risk amid PM suspension, US tariff pressures

[BANGKOK] Thailand’s political crisis deepened on Jul 1 as the Constitutional Court suspended Prime Minister Paetongtarn Shinawatra over a leaked phone call with Cambodian leader Hun Sen – a move that may temporarily defuse protests, but injects fresh uncertainty into an already-flagging economy.

While the court’s 7-2 ruling may have calmed tensions on the streets, it does little to dispel the deeper anxieties over Thailand’s longer-term political and economic woes, with investors and businesses now bracing themselves for months of limbo. This adds downside risk to a growth outlook already clouded by uncertainty over US tariffs.

“The immediate aftermath of these court decisions is usually heightened uncertainty regarding policy continuity. The sustainability of the government and its associated policies will need to be addressed sooner rather than later,” remarked Lavanya Venkateswaran, OCBC’s senior Asean economist, in a recent note.