Thai Business Leaders Warn of Economic Risks Following Prime Minister's Dismissal
Constitutional Court ruling removes Paetongtarn from office, sparking fresh concerns over investor confidence and policy continuity
- Thai business leaders warn that the prime minister's dismissal creates political instability, which undermines the confidence of both domestic and foreign investors.
- The leadership transition threatens to disrupt long-term economic policy, potentially halting the 2025 fiscal year budget disbursement and delaying key investment projects.
- The political vacuum could worsen an existing economic crisis by causing a slowdown in investment and tourism, and hindering the government's ability to manage other pressing issues like trade negotiations.
Thailand's leading business organisations have warned of mounting economic risks following the Constitutional Court's decision on Friday to dismiss Prime Minister Paetongtarn Shinawatra from office, calling for urgent cooperation between public and private sectors to restore investor confidence.
The Federation of Thai Industries (FTI) cautioned that the ruling represents a significant shift in political stability that could undermine both domestic and foreign investor confidence whilst disrupting long-term economic policy planning.
"The Constitutional Court's decision to remove the Prime Minister from office is a reality we must accept—that political stability has changed, affecting the confidence of investors both domestically and internationally, and impacting long-term economic policy planning," said Kriengkrai Thiennukul, Chairman of the Federation of Thai Industries.
Kriengkrai warned that the government transition could potentially halt disbursement of the 2025 fiscal year budget, including various investment projects.
However, he maintained that Thailand's economy still has recovery opportunities if public and private sectors collaborate to implement timely support measures.
The FTI chief analyst highlighted that Thailand's economy faces additional risks in the latter half of the year, including the prolonged Thai-Cambodian border conflict, which has significantly impacted economic activities and trade.
In June 2025, total trade value reached 10.9 billion baht, declining 32.29% month-on-month and 23.3% year-on-year.
Further challenges include potential export tax adjustments and ongoing negotiations with the United States, which could affect key export products such as electronics, rubber, gems and jewellery, automobiles and parts, and electrical appliances.
International competition may cause Thailand's GDP growth in the second half to fall below previous projections.
"If the formation of a new government is delayed, it will impact the implementation of crucial policies such as tax negotiations with the US, border problem resolution, flood management, and economic issue resolution—particularly projects requiring a government with full decision-making authority," Kriengkrai stated.
The Thai Chamber of Commerce echoed these concerns following the court's ruling that Paetongtarn lacked proper qualifications and committed serious ethical violations related to a leaked phone conversation with former Cambodian Prime Minister Hun Sen on 18 June 2025.
Dr Poj Aramwattananont, Chairman of the Thai Chamber of Commerce and the Board of Trade of Thailand, acknowledged that whilst all sectors must accept the court's judgment, the decision highlights Thailand's political instability and could exacerbate the existing economic crisis.
"Today's political uncertainty remains a significant factor undermining confidence. Economic momentum is particularly concerning because we're already facing a severe economic crisis," Dr Poj remarked.
He outlined multiple economic challenges facing Thailand, including declining purchasing power, high household debt, US trade tariffs, tense global geopolitics, international conflicts, and border problems with neighbouring countries—all directly affecting business, investment, and tourism sectors.
"Private sector and foreign investors are closely monitoring Thai politics. If political instability continues, confidence will be more severely shaken. Investors will hesitate, tourism will slow down, and everything will be disrupted in a chain reaction," Dr Poj warned.
Both business leaders emphasised that political factions must urgently find a new prime minister in accordance with the constitution to ensure the country has leadership capable of continuing work swiftly.
They stressed that national recovery requires stable politics and genuine private sector participation in designing problem-solving measures to restore confidence amongst society and investors.
"Cooperation between public and private sectors in situations like this is crucial. If we plan and implement measures continuously, even with political instability, Thailand's economy can still recover, create growth opportunities, and maintain investor confidence," Kriengkrai concluded.
