Thailand’s economy is clouded by ongoing domestic political turbulence on top of lingering tariff concerns. We think these will undermine business and investor confidence, at a time of weak foreign portfolio flows and sluggish private investment. On July 1, the Thai Constitutional Court suspended Prime Minister (PM) Paetongtarn Shinawatra from office pending a ruling on a petition filed by 36 senators. The petition alleges dishonesty and ethical violations, stemming from a leaked phone call between Paetongtarn and former Cambodian leader Hun Sen, in which she criticised the Thai army. Paetongtarn has 15 days to submit her defence to the Constitutional Court. While the timeline of the final verdict is uncertain, the previous two Constitutional Court rulings on PM cases have taken five to seven weeks. Deputy PM Suriya Juangroongruangkit will serve as caretaker PM during the investigation period, but Paetongtarn will remain in cabinet as culture minister, following the reshuffled cabinet’s oath-taking on July 3. If Paetongtarn is removed from office like her predecessor, Srettha Thavisin, the Pheu Thai Party will attempt to retain power by nominating its remaining PM candidate, Chaikasem Nitisiri, but the Pheu Thai-led coalition faces risks due to its slim majority in the lower house. Following the Bank of Thailand’s dovish hold during its June 2025 meeting, we see risks biased towards more accommodative monetary policy should economic growth weaken more than expected in 2H25.
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