Clouded by several negative factors, including uncertainty stemming from unresolved negotiations with the US on tariff hikes, the Thai economy is likely to miss the government's forecast of 3% growth this year.
Last week, the situation became more worrisome as Moody's Investors Service became the first global credit ratings agency to revise its outlook on Thailand to negative.
This prompted the business sector to push for stronger action from the cabinet -- or even a cabinet reshuffle, particularly in the economic ministries, which have delivered results that are below expectations.
CONTINUITY NEEDED
Kriengkrai Thiennukul, chairman of the Federation of Thai Industries, said it is not the right time for Prime Minister Paetongtarn Shinawatra to reshuffle her cabinet as incumbent ministers overseeing economic affairs need to carry on their jobs with Thailand facing internal and external challenges.
One important task the ministers must complete is negotiations with the Donald Trump administration after it imposed a 36% tariff on Thai goods in response to trade imbalances between the two countries, said Mr Kriengkrai.
Several countries including Thailand were given a 90-day pause from enforcement of the reciprocal tariff, which was initially set to take effect on April 9, in order to negotiate with the US.
"Thailand is in an uncertain position and the country needs to continue negotiations on this complicated issue with no interruptions," he said.
If the Thai government needs to change cabinet members, it can do so after the negotiations are complete, said Mr Kriengkrai.
"We don't want the government to make changes and start things over. That would be a waste of time," he said.
Mr Kriengkrai said the ministers in charge of economic issues are capable of dealing with a range of problems.
In addition to trade policy with the US, Thailand has been plagued by high levels of household debt that caused banks to tighten their lending criteria, dealing a blow to the automotive industry.
Thai economic growth and consumer purchasing power are also weak, he noted.
According to the Office of Industrial Economics (OIE), state economic measures are supporting the national economy to some extent, helping to drive up the Manufacturing Production Index (MPI) in March.
Passakorn Chairat, director-general of the OIE, attributed the 9.2% increase in the MPI from February this year to 105.03 points partially to the government's 10,000-baht handout for the elderly and the "You Fight, We Help" debt relief scheme.
"In terms of confidence about the current cabinet, we trust them because we have talked and worked together on many jobs," said Mr Kriengkrai.
IMPROVING THEIR ROLES
Sanga Ruangwattanakul, president of the Khao San Road Business Association, said regardless of whether the cabinet is reshuffled, restoring ministerial leadership -- including the tourism and sports minister -- is of greater importance.
"The government and the cabinet should function as the country's chief executive, but overall they have yet to demonstrate sufficient leadership to stimulate the economy," said Mr Sanga.
He said he is concerned for Thailand's economy as it braces for Trump's tariff policies and an escalating global trade war, especially after Moody's downgraded the country's outlook from stable to negative.
Mr Sanga said although tourism remains the only sector still functioning in a weak economy, the Tourism and Sports Ministry has yet to make any meaningful progress in restoring tourism confidence following the kidnapping of a Chinese actor in January and the earthquake that rocked Bangkok in March.
Apart from routine events, no stimulus measures have been proposed to respond to these developments and lift the sector, he said.
Foreign tourists, particularly from China, have increasingly shifted from Thailand to other destinations such as Vietnam and Japan.
Mr Sanga said he agreed with the proposal by the Association of Thai Travel Agents to incentivise chartered flights from China, aiming to increase Chinese arrivals.
However, the government must first restore safety and tourism confidence before scheduling the charters, he said.
At the World Expo in Osaka this year, the Tourism and Sports Ministry should collaborate with the Public Health Ministry, which manages the Thai pavilion, to promote more Thai culture and tourism, not only health and wellness, said Mr Sanga.
The government should also explore other markets as substitutes for the Chinese market this year, he said.
KNOWLEDGEABLE INDIVIDUALS
Poj Aramwattananont, chairman of the Thai Chamber of Commerce, said Thailand is grappling with global economic uncertainties, including fluctuations in financial and capital markets.
If the country reshuffles the cabinet, any new ministers must be committed to addressing these issues, said Mr Poj.
"It's crucial to have knowledgeable, capable individuals to navigate us through these difficulties, enabling Thailand to emerge successfully from the crisis," he said.
Mr Poj stressed the importance of collaboration between the public and private sectors to move the country forward.
MORE DIALOGUE
With speculation on a cabinet reshuffle in the headlines, Thaniwan Kulmongkol, president of the Thai Restaurant Association, is calling for greater collaboration from the economic ministries.
She said in recent years commerce ministers have consulted with the private sector. However, as agricultural product prices decline, Ms Thaniwan said she has noticed less dialogue between the government and businesses on this crucial issue.
"If politicians prioritise these problems, civil servants will be more motivated to find solutions," she said.
Ms Thaniwan said the restaurant industry, which contributes hundreds of billions of baht annually to the economy, deserves more attention from the economic ministries.
She called for stronger connections between the public and private sectors and expressed concern over Finance Minister Pichai Chunhavajira's proposal to extend value-added tax (VAT) collection to businesses earning less than 1.8 million baht annually, which could affect small restaurants.
For example, Ms Thaniwan said there has been no communication or guidance for restaurant operators on this VAT proposal from the government.
FINANCE MINISTER
Mongkol Puangpetra, executive vice-president for strategy research at Daol Securities, said the political chatter should have little impact on investment, unless the finance minister is reshuffled.
"Investors are focusing on external factors, especially the trade war," he said, adding Thai equities gained more than 100 points last week as investors responded to easing US-China tensions and global rate cut expectations.
However, external risks such as the US-China trade war remain a concern, with Thai political developments having minimal influence on investor sentiment, said Mr Mongkol.
"Politics no longer carries much weight in the market. Investors aren't expecting much from domestic politics unless there's a change in finance minister, which is the most crucial position in the cabinet. Other economic ministries have a relatively limited impact on investment direction," he said.
Investors are weighing global factors such as geopolitical tensions and trade friction, said Mr Mongkol. The trade war is a major influence on the earnings outlook of Thai listed companies, he said.
Since Trump took office in January, the Thai bourse has declined by more than 400 points, reflecting concerns over global trade dynamics and their long-term implications for the Thai economy and corporate profits.
Mr Mongkol said Thailand has narrowing fiscal space, as treasury reserves have dwindled and the administration lacks the fiscal room to deploy aggressive stimulus measures.
"While cash handouts may provide short-term support, they have reduced the government's long-term fiscal capacity," he said.
Moody's recent downgrade of Thailand's economic outlook to negative was attributed to concerns over fiscal sustainability, but the agency acknowledged Thailand's continued ability to meet its debt obligations, 90% of which are domestically sourced.
Despite these macroeconomic risks, the Thai stock market's recent rebound is seen as a form of relief rally, said Mr Mongkol.
"The 100-point rise in the index this week reflects a market that has already priced in most of the negative news," he said.
Unless new shocks emerge, Daol predicts the SET index to consolidate between 1,200 and 1,300 points. However, the trade war and other external developments could shift sentiment quickly if tensions escalate, said Mr Mongkol.
Tuk-tuk drivers wait for passengers along Ratchadamri Road. The private sector wants the economic ministries to address the weak economy as tourism revenue sags and local purchasing power declines. Bangkok Post file photo
Thai shipments could shrink if the government doesn't reach a compromise on US tariffs. AFP