The University of the Thai Chamber of Commerce (UTCC) expects a prolonged delay in the selection of a prime minister and formation of a new government, leading to protests that, if violent, will significantly affect tourism revenue, causing a loss of 500 billion baht, or a one percentage point decline in GDP.
Thanavath Phonvichai, president of the UTCC, said on Thursday the vote to select the prime minister is considered a crucial indicator of Thailand’s economic recovery, citing recent business surveys by the university that reflect concerns about the prolonged formation of the government, which could delay the implementation of new economic policies for recovery.
“Both businesses and consumers are closely watching the prime ministerial selection, which could require several votes,” said Mr Thanavath.
The UTCC predicts minimal economic impact if the selection of a prime minister and formation of a new government happens in August or September, because this falls within the existing budget framework, allowing various investment plans to proceed.
He said if the government formation extends beyond October, the budgeting process may be postponed to the second quarter of next year, which could hinder economic expansion. Local authorities are being encouraged to continue with existing projects, while government agencies should utilise budget allocations to ensure cash flow, said Mr Thanavath.
“If the prime ministerial selection and government formation proceed smoothly without intense protests, enabling the implementation of investment initiatives, the economy could grow by 4%,” he said.
“However, if the selection process and government formation face severe demonstrations, leading foreign countries to issue travel warnings, the number of foreign tourists in the second half of the year could potentially drop by 10 million. This would lead to a loss of 500 billion baht in tourism revenue and a 1% decrease in GDP, which would be undesirable.”
Source: Bangkok Post
