Business leaders are eager to know the direction of Thai economic policies after the Pheu Thai Party leader Paetongtarn Shinawatra was elected prime minister, which could cause a dramatic shift in the country's political landscape.
The House of Representatives on Friday confirmed Ms Paetongtarn's nomination, making her the youngest prime minister in the country's history at just 37 years old. She is the daughter of former prime minister Thaksin Shinawatra.
This has heightened concerns over Thailand's political stability and cast a shadow over the country's economic outlook, which already faces numerous challenges.
POLICIES IN FOCUS
Amonthep Chawla, chief economist at CIMB Thai Bank, said the political transition is occurring rapidly, following the dismissal of former premier Srettha Thavisin on Wednesday.
"From now on, attention should focus on monitoring the new government's policies," he said.
"I anticipate the new administration may cancel the digital wallet scheme and is likely to introduce new stimulus measures aimed at supporting lower-income individuals and enhancing liquidity in vulnerable segments of the population."
However, the establishment of a new government may delay the approval of the fiscal 2025 budget, though this is not expected to have a significant impact on the economy, said Mr Amonthep.
For the remainder of this year, external factors, particularly the slowdown in key global economies such as the US and China, could pose downside risks, he said.
"The new government should be prepared to address the potential challenges of a global economic slowdown, which could adversely affect the Thai economy," said Mr Amonthep.
Vorapol Sokatiyanurak, an economist and former secretary-general of the Securities and Exchange Commission, said the new prime minister, who is coming into office according to democratic principles, is believed to have a certain level of capability.
However, he said the new premier would face significant challenges, particularly on economic issues, making it was necessary to assemble a team to assist her.
According to Mr Vorapol, Ms Paetongtarn must address Thailand's declining competitiveness, as local industries are lagging because the country does not have a strategy for industrial development.
He said the lack of development of skilled personnel, especially in science and technology, is preventing Thailand from producing goods the modern world demands.
The household debt level is another urgent task for the new premier to tackle, said Mr Vorapol. Household debt in Thailand exceeds 16.3 trillion baht as of the fourth quarter last year, which represents 91.3% of GDP.
Thailand needs to reduce monopolistic practices and bolster small and medium-sized enterprises, which would help increase income levels, he said. Debt problems can be addressed through higher incomes, said Mr Vorapol.
Yuthasak Supasorn, board chairman of the Industrial Estate Authority of Thailand (IEAT), said he believes a government led by Ms Paetongtarn should raise hopes the government's key policies will remain intact, which will help to improve the Thai economy.
These policies include the government's push for investments in targeted S-curve industries in the Eastern Economic Corridor (EEC) and the controversial policy to develop the Land Bridge megaproject.
The former is aimed at making the EEC, which covers parts of Chon Buri, Rayong and Chachoengsao, the country's high-tech industrial hub, while the latter aims to build a logistics network connecting Ranong on the Andaman Sea to Chumphon on the Gulf of Thailand.
Despite the change in government, Mr Yuthasak said it should not cause a significant negative impact to investor confidence because the authorities have launched many measures to promote investment.
The latest measure is the IEAT's investment promotion campaign called "Now Thailand", which is expected to boost investment via the development of industrial estates.
Kriengkrai Thiennukul, chairman of the Federation of Thai Industries, said he was not surprised after learning Ms Paetongtarn was elected prime minister.
He wants to see whether the government will launch new stimulus measures to help the economy, which remains stagnant this year.
IMPROVED SENTIMENT
Ratasak Piriyanont, senior vice-president of macro strategies at Kasikorn Securities, said the stock market reacted positively to the news, with investors hoping many of the current economic policies would continue.
Investors were encouraged by the quick and smooth process that identified a new premier after the Constitutional Court disqualified Mr Srettha and his cabinet from office, he said.
"Ms Paetongtarn's background is in the private sector, with her company involved in the property, hotel and tourism-related industry, so she has an understanding of the business sector and the economy," Mr Ratasak said.
The mother of two helped run the hotel arm of the family's business empire before entering politics in late 2022.
"The hospitality business has recently become a key driver of the Thai economy," he said.
"Ms Paetongtarn's expertise could help support the growth of this industry to drive the economy going forward."
Rakpong Chaisuparakul, senior vice-president at KGI Securities (Thailand), had a similar view, noting that investors seem to be optimistic regarding the rapid formation of a coalition government if Ms Paetongtarn is endorsed as the country's new premier.
"It looks like construction of the new cabinet will be quick, meaning downside risks to economic growth are limited," said Mr Rakpong.
KGI believes the new cabinet may focus on consumption stimulus that is more conventional and easier to access, he said.