Business sentiment fell again in March after recovering in February, with the business sector fretting over the country's unclear political outlook.
The Thai Chamber of Commerce's (TCC) confidence index, a gauge of nationwide business sentiment, edged down to 48.4 last month from 48.5 points in February, which was up from 48 points in January, the lowest in three months.
Kalin Sarasin, chairman of the TCC, said despite signs of the economic tension between the US and China easing, the return of Chinese tourists and a weakening baht, business people remain concerned about the new government's formation, the country's uncertain political prospects and the central bank slashing Thailand's economic growth forecast.
The Bank of Thailand recently cut its outlook for economic growth this year from 4% to 3.8%. The revision assumes the results are endorsed by the Election Commission's deadline of May 9.
If a new government can be formed by June, the economic growth rate will not be affected as investment would resume in the second half of the year.
Investment under the state budget for fiscal 2020, starting on Oct 1 this year, would be affected if the formation of the new government is delayed until August or September, said Veerathai Santiprabhob, the central bank governor.
Such a delay would affect public investment projects and the economy as a whole as it could cause a delay in investment decisions in the private sector, particularly projects under public-private partnerships in the Eastern Economic Corridor.
Mr Kalin said foreign investors themselves are waiting for the new government no matter which parties will lead the formation.
"The TCC has received a number of inquiries from foreign investors about Thailand's political situation," he said. "They don't care which parties will lead the formation of the new government, as Thailand held its general election, but rather the policies of a new government so they can decide on further investment."
Mr Kalin said most foreign investors are still upbeat about Thailand's economic outlook and many of them who won promotional privileges from the Board of Investment have commenced their investments.