Statistically, it is often observed that after a general election, the stock index experiences a significant jump, reflecting the heightened confidence of investors once the political scene becomes clearer.
However, the recent election results, in which the Move Forward Party (MFP) secured an unexpectedly high number of seats, led to a continued decline in the stock market. While some may attribute this decline to uncertainties surrounding the MFP's ability to form a government, as its leader Pita Limjaroenrat needs sufficient support from appointed senators or MPs from opposing parties to surpass the 376 parliamentary-vote threshold, the situation is more complex than meets the eye.
The MFP won more than 14 million votes in this election, suggesting the 250 senators possibly will follow the voters' will, in which case there is a likelihood that Mr Pita will ascend to the position of prime minister. However, the decline in the stock market following the election is indicative of broader concerns about economic direction under the MFP's leadership.
The MFP, firmly rooted in what the party describes as "the progressive movement", requires drastic changes and policy u-turns in social and economic policies. These policies include increasing the minimum wage every year, reviewing crucial state concession contracts, introducing a wealth tax and advocating fiscal budget decentralisation. While these measures may be well intentioned, they have created an air of uncertainty regarding economic prospects under the new government.
Unlike several other parties, the MFP does not have a well-defined economic team in place. In Thailand, it is customary for the ruling party of a coalition to oversee key economic ministries, particularly the Finance Ministry, which plays a pivotal role in controlling budget expenditure and formulating the budget. The absence of a clear economic team within the MFP further exacerbates the uncertainties surrounding Thailand's economic trajectory, particularly in light of ongoing global economic and geographical challenges.
As the Thai economy is still at an initial stage of recovery after the severe impact of the pandemic, the formation of a strong and proficient economic ministerial team is of paramount importance for the new government. Restoring public and investor confidence hinges on the ability of this team to chart a smooth path towards recovery.
The expectations of the public leave little room for the new government to manoeuvre. Although the MFP is often seen as the party of the new generation, it is perceived to lack the requisite expertise and experience in economic matters. Therefore, it is imperative for the party to recruit the best and brightest individuals without pressure of political quotas to oversee and drive economic policies. The economy cannot afford to be treated as an arena for trial and error.
The Finance Ministry is among most important ministries which requires a charismatic and experienced leader to inspire public confidence both internally and externally. It is vital for the party to identify its strengths and concentrate on missions that align with those strengths, leveraging areas where it can have the greatest positive impact.
Although there have been some encouraging signs, such as an April rebound in exports and growth in private consumption, sustaining momentum is crucial. This can be achieved through the expertise of a proficient economic ministerial team in government.