Political uncertainty affects investor confidence and credit ratings

Experts are closely watching potential political developments in Thailand, especially regarding the possible early dissolution of parliament by Prime Minister Anutin Charnvirakul, which could be announced on December 12, 2025. This, along with delays in the trade negotiations between Thailand and the United States, poses significant risks to the Thai economy.

According to analysts, if the worst-case scenario occurs, Thailand's GDP growth in 2026 could fall to as low as 0.5% to 1%, much lower than previously projected. Both the political uncertainty surrounding the dissolution of parliament and the lack of progress in trade negotiations are likely to dampen investor confidence, causing a slowdown in both domestic and foreign investments.

The economy has already been facing challenges in the final quarter of 2025, despite the government’s efforts to stimulate economic activity through the "Let's Go Halves Plus" initiative, which aims to reduce the cost of living for citizens. However, factors such as severe flooding in the southern provinces and the looming threat of an early election have added pressure on the economy.

The delay in U.S.-Thailand trade negotiations is also a major concern, especially after the U.S. Trade Representative (USTR) suspended trade talks with Thailand indefinitely. The ongoing uncertainty in trade relations could further strain Thailand's export sector, particularly to the U.S., and delay the achievement of trade agreements.

Visit Limlurcha, Vice President of the Thai Chamber of Commerce, shared his concern that an early dissolution of parliament on December 12, 2025 (a month and a half earlier than initially expected) could negatively affect both domestic and foreign investor confidence. This uncertainty could lead businesses to delay investment decisions as they wait for clearer political direction and government policy.

Despite these challenges, the government has made efforts to improve the economy by bringing in professionals from outside the political arena to help manage the economy, such as Ekniti Nitithanprapas as Deputy Prime Minister and Finance Minister and Suphajee Suthumpun as Minister of Commerce. These steps indicate a focus on addressing economic issues and preventing political interference.

In addition to economic difficulties, the uncertainty surrounding the political landscape is affecting the country's credibility and could lead to a potential downgrade in Thailand’s credit rating by global agencies such as Moody’s, S&P, and Fitch Ratings. This downgrade would increase the country's financial costs, further exacerbating economic challenges.

Associate Professor Dr. Aat Pisanwanich, an expert in international economics and ASEAN affairs, pointed out that the combination of the parliament dissolution and stalled trade talks could lead to economic stagnation or very low growth in the first half of 2026. Investment and trade would likely slow down due to the lack of clarity in government policy, and it might take until the second half of the year for the new government to establish a clearer economic strategy.

In the best-case scenario, if trade talks with the U.S. are successfully concluded by the end of 2025, the economic impact may be less severe, but it remains a critical issue to monitor in the coming months.