The Bank of Thailand (BoT) governor has raised concerns about the economic impact of a possible delay in the formation of a new government.
Investment under the state budget for the 2020 fiscal year, 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 governor.
Such a delay -- if it happens -- would affect public investment projects and the economy as a whole as it could cause a delay of investment decisions in the private sector, particularly projects under Public-Private Partnerships (PPP) schemes in the Eastern Economic Corridor (EEC).
Investors and business operators are also waiting to see the policies of the new government, especially a minimum wage policy which several parties campaigned to increase, said Mr Veerathai.
In addition, several trade negotiations with other countries are also pending a decision from the new government.
The central bank has forecast the impact of political factors under several scenarios, he said.
The Bank of Thailand previously revised down the country's economic growth rate this year from 4% to 3.8%.
The revision includes the assumption that election results are endorsed in time by the Election Commission's deadline on 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.
"If everything goes according to the time frame, it would build up investors' confidence and business activities, leading to economic growth improving in the second half of the year compared to the first," said Mr Veerathai.
Some analysts believe politics is moving towards deadlock as two major political camps, the pro-military Palang Pracharath Party and Pheu Thai Party, fiercely compete for a chance to lead a coalition government. Over the past weeks, negotiations and bargaining have become tense.
Both camps seem neck-and-neck in gaining MP seats for their coalitions. Given this bleak outlook, the idea of a national government has been floated by some politicians to save the country from political deadlock.
In addition, parties are still waiting on a decision from the Constitution Court on party-list MP seats.
This comes after the Election Commission petitioned the court to intervene over its method of calculating and allocating party-list seats.
The court has not said when it will announce its ruling.
Deputy Prime Minister Wissanu Krea-ngam insisted on Friday that no law permits a national government or a "reconciliation" government to be formed to break a political impasse.
However, he said a mechanism does exist which can move the country forward regardless of any deadlock.
Parliament could vote for a prime minister from among candidates on the lists proposed.
If no candidate from the lists receives enough support to be prime minister, a Senate vote will help in the selection of someone, who is not on the list, to be premier.
Democrat Party MP-elect Thepthai Senapong said Section 272 should be invoked if the situation culminates in deadlock.
In such a situation, senators could join MPs in proposing a motion to suspend the rule requiring that prime ministerial candidates must come from party lists, paving the way for an outsider prime minister to be selected.
But an outsider prime minister must be supported by parties who form a "reconciliation" government together. Between them, there will be sufficient votes to achieve stability.
On Friday, Buddhipongse Punnakanta, the Palang Pracharath Party's chief election strategist for Bangkok, denied the party has bankrolled MPs-elect of other parties to back his party's coalition line-up in forming the next government, as coalition talks between various parties continue.