Thailand Economy Faces Political Turmoil, Budget Risks

Thailand's economy is facing multiple threats amid a fragile recovery marked by weak consumption, high household debt, and sluggish demand from China. The looming reciprocal tariffs imposed by U.S. President Donald Trump are expected to reduce Thailand's growth to just over 1% this year, down from 2.5% last year. Political turmoil surrounding Prime Minister Paetongtarn Shinawatra, who is under pressure due to border tensions with Cambodia, risks delaying the approval of the critical 2026 fiscal budget and could lead to a parliamentary dissolution and fresh elections. Such political instability threatens to derail government spending, disrupt trade negotiations, and further erode investor confidence in Thai assets, with the stock market already being the worst performer in Asia this year. Finance Minister Pichai Chunhavajira remains hopeful the budget will proceed on time, but analysts remain cautious given the economy's vulnerability to both external shocks and internal political chaos. The combined effects of these economic and political challenges could deepen Thailand's financial malaise and stall its recovery efforts.