Thailand’s Political Risks Abate: Anutin’s Win Paves Way for Stability

Unexpectedly, Thailand royalist party (the Bhumjaithai) led by Prime Minister Anutin Charnvirakul won an estimated 193 seats, doubling the number of seats won last elections and making it the largest bloc of the 500-member parliament. In contrast, the People’s Party disappointed expectations by trailing in second place at 118 seats, performing worse than previous elections. Former Prime Minister Thaksin’s Pheu Thai party also underperformed, gaining only 74 seats. Overall, markets exhaled big signs of relief, with equities rallying 3.5% and the THB gaining 1.1% versus the USD on 9 February. Prime Minister Anutin’s win means that he will be able to form a coalition and push through his policies, reducing a key risk to Thailand this year as many had feared that a reformist win would lead to policy paralysis. In the past, elections did not resolve Thailand’s political crisis but rather complicated it, as the winning reformist party was not allowed to govern, causing further chaos. The decisive win of the royalist party versus the reformist gives the Bhumjaithai conservative party more legitimacy to push through much-need reforms, or at the minimum longevity in governance. Voters appeared to also vote to reform the constitution, which was drafted under military rule in 2017. Immediately after the poll results showing the reformists trailing, many former lawmakers of a pro-democracy party in Thailand will face a lifetime ban from politics. The nation’s anti-graft agency stated that they had “failed to uphold and maintain the democratic system of government with the King as Head of State” by submitting a petition to amend the lese majestic law. The banning of reformist lawmakers will further disillusion the young.For the economy, we expect a greater mandate to govern, driven by a decided election win that will allow PM Anutin to provide employment and relief for households. The fiscal year 2027 budget is expected to be proposed by November 2027 and will remain large, even if some fiscal consolidation is expected. We expect the government to continue with the half and half subsidy program. Additionally, the government will likely fast-track investment projects to spur growth.Real GDP growth will likely reach 1.9% in 2026 from 2.1% in 2025. The stability of policy continuity will give space for the Bank of Thailand to pause at 1.25%, especially on the back of likely incoming fiscal support and recovery of investment post elections. While short-term relief will support Thai assets and the economy, the Anutin government faces long-term structural issues such as high household debt, worsening demographic transition, and a still large fiscal deficit that is pushing up government debt. All these challenges will continue to leave Thai growth wanting and stuck in lower gear, relative to other EM Asian economies.But for now, Thailand can breathe a sigh of relief – it may have many challenges, but short-term domestic political uncertainty is no longer one of them.