Thailand’s political landscape in June 2025 has become increasingly unstable, raising concerns about the country’s economic future. Prime Minister Paetongtarn Shinawatra’s government is under pressure following internal coalition disputes and external investigations. A leaked phone conversation between the Prime Minister and Cambodian Senate President Hun Sen led to the Bhumjaithai Party withdrawing its support, reducing the coalition’s parliamentary majority to 255 out of 500 seats. This development has triggered public protests and an investigation by the National Anti-Corruption Commission (NACC), with potential legal action pending from the Constitutional Court.
Despite these challenges, Thailand’s economy continues to show resilience. S&P Global Ratings maintained the country’s BBB+ credit rating with a stable outlook, citing strong tourism performance and government stimulus measures. In 2024, Thailand welcomed 35.5 million tourists, representing a 26% increase from the previous year. The government’s 157 billion baht Digital Wallet initiative aims to support infrastructure and small-to-medium enterprises (SMEs).
Geopolitical risks remain significant. U.S. retaliatory tariffs on Thai exports, which account for 15% of GDP, pose a threat to long-term growth. Investor confidence has been shaken, as evidenced by a 4.9% drop in the SET Index during the week ending June 19, although it later recovered slightly to 1,067.63 on June 20.
The Thai baht (THB) has maintained strength despite the political turmoil, supported by substantial foreign reserves ($259 billion) and a steady policy rate of 1.75% from the Bank of Thailand (BoT). Analysts at Standard Chartered predict the baht could strengthen to 34.50 THB/USD by year-end, up from approximately 35 THB/USD currently.
Investors are advised to approach the market cautiously. Sectors such as tourism (e.g., Minor International) and infrastructure (e.g., CK Life Sciences) may offer relative stability due to government spending. Thai government bonds, offering a 2.8% yield, are seen as a safer alternative compared to negative rates in Europe or Japan. Currency fluctuations remain a concern, particularly if political instability escalates.
In summary, while Thailand’s economy remains fundamentally sound with strong tourism and fiscal discipline, political uncertainty adds complexity. Investors should focus on diversification, monitor NACC findings and Constitutional Court rulings, and stay alert to geopolitical developments.
— News Original —
Thai Political Turmoil: Navigating Geopolitical Risks in a Fragile Economy
The political crisis engulfing Thailand in June 2025 has thrown the kingdom’s stability—and its economic trajectory—into sharp relief. Prime Minister Paetongtarn Shinawatra’s government, already strained by coalition fractures and regional tensions, faces mounting pressure from investigations, protests, and the specter of a coup. For investors, the question is clear: Can Thailand’s economic resilience withstand its political fragility?
A Government on the Brink
The crisis deepened on June 18, 2025, when the Bhumjaithai Party withdrew its support from Paetongtarn’s coalition, citing a leaked phone call between her and Cambodian Senate President Hun Sen. In the call, Paetongtarn criticized a Thai military commander overseeing the Cambodian border, sparking outrage over perceived disloyalty. The defection reduced the coalition’s parliamentary majority to just 255 seats in a 500-seat House, destabilizing her government.
The fallout has been swift. Public protests, led by Yellow Shirt factions and nationalist groups, have drawn thousands to Bangkok. Meanwhile, the National Anti-Corruption Commission (NACC) has launched an investigation into Paetongtarn for ethical breaches, and the Constitutional Court is advancing a petition to disqualify her, with a ruling expected by early July. Should she be removed, Thailand could face snap elections—or worse, a military coup.
Economic Resilience Amid Political Chaos
Despite the turmoil, Thailand’s economy shows signs of underlying strength. S&P Global Ratings reaffirmed the country’s BBB+ credit rating with a stable outlook, citing robust tourism and government stimulus. In 2024, Thailand welcomed 35.5 million tourists, a 26% increase from 2023, and the government’s 157 billion baht Digital Wallet initiative aims to boost infrastructure and SME support.
However, geopolitical risks loom large. U.S. retaliatory tariffs on Thai exports—accounting for 15% of GDP—threaten long-term growth, while political instability has already shaken investor confidence. The SET Index, Thailand’s key stock market benchmark, fell 4.9% in the week leading to June 19, though it rebounded slightly to 1,067.63 on June 20 amid hopes of policy stability.
The Baht’s Contradictory Strength
The Thai baht (THB) has defied the political headwinds, bolstered by strong foreign reserves ($259 billion) and the Bank of Thailand’s (BoT) steady policy rate of 1.75%. Analysts at Standard Chartered project the baht could appreciate to 34.50 THB/USD by year-end, up from its current rate of ~35 THB/USD.
Yet risks remain. A prolonged political crisis could deter foreign investors, particularly in export-heavy sectors like automotive and electronics. Meanwhile, the Cambodian border dispute—sparked by May’s clash that killed a Cambodian soldier—adds regional tension.
Investment Considerations: Caution and Opportunity
Equities: Proceed with Caution
The SET Index’s volatility reflects geopolitical uncertainty. Investors should prioritize sectors insulated from political fallout, such as tourism stocks (e.g., Minor International) and infrastructure firms (e.g., CK Life Sciences), which benefit from government spending. However, avoid export-reliant industries exposed to U.S. tariffs.
Fixed Income: A Safe Haven
Thai government bonds offer a 2.8% yield—attractive compared to negative rates in Europe or Japan. Their stability contrasts with equity markets, making them a prudent hedge.
Currency: Monitor Geopolitical Triggers
The baht’s strength may wane if the Constitutional Court removes Paetongtarn or a coup occurs. Investors in export-oriented sectors should consider hedging against currency fluctuations.
Final Analysis: Riding Out the Storm
Thailand’s economy is not yet in crisis. Strong tourism, fiscal discipline, and foreign reserves provide a buffer. But political instability—coupled with external risks like U.S. trade policy—adds layers of uncertainty.
For investors, the key is diversification. Focus on domestic sectors with stable demand, keep an eye on the NACC’s findings and Constitutional Court ruling, and remain alert to geopolitical developments. Thailand’s long-term fundamentals remain intact, but navigating the short-term storm will require patience—and a clear-eyed view of risk.
In the end, Thailand’s political theater may yet resolve itself. But for now, the kingdom’s investors are left dancing on a tightrope between opportunity and peril.