By Bloomberg
Paetongtarn Shinawatra said yesterday she accepts the court鈥檚 ruling but gave little clarity on her future. (AP pic)BANGKOK: Thailand鈥檚 ruling coalition was already fraying when a court suspended prime minister Paetongtarn Shinawatra yesterday, raising fresh doubts about her survival, the country鈥檚 economy and the future of a dynasty that has loomed over the Southeast Asian nation for decades.In a blow to a country long plagued by political instability, the constitutional court sidelined the 38-year-old leader over a complaint linked to a leaked phone call in which she appeared to criticise the army and side with Cambodia in a border dispute 鈥 a potential breach of conduct under the constitution.She has 15 days to respond.For now, deputy prime minister Suriya Jungrungreangkit leads a shaky coalition.The developments couldn鈥檛 come at a worse time for Thailand: once feted as an Asian Tiger economy for its export-led growth, the country is mired in slow growth relative to its peers, with households burdened by debt, a budget bill outstanding and the imminent threat of Donald Trump鈥檚 tariffs weighing down expectations.The government slashed its 2025 growth forecast by a full percentage point to 1.3% in May.Over at the central bank, governor Sethaput Suthiwartnarueput is due to leave Sept 30 and a successor has yet to be named.鈥淣o one is at the helm and the Thai ship is going nowhere,鈥 said Thitinan Pongsudhirak, a professor of political science at Chulalongkorn University in Bangkok.鈥淭he budget bill has to be passed, so that鈥檚 coming up with the wobbly, weak coalition government.鈥滱mid all the turmoil, the Bhumjaithai Party, the ruling coalition鈥檚 biggest partner, exited last month following weeks of infighting, and there鈥檚 no guarantee now others that had promised to stay won鈥檛 follow.The court has yet to say how long it will deliberate, while a prolonged delay risks deepening the political vacuum, said Napon Jatusripitak, acting coordinator of the Thailand Studies Program at ISEAS-Yusof Ishak Institute.鈥淭hailand appears destined for a prolonged struggle to find a new prime minister and a political deadlock that could jeopardise the country鈥檚 already fragile economic situation,鈥 he said.Looming over everything is Thailand鈥檚 influential military, which has led about a dozen coups since the kingdom鈥檚 absolute monarchy was abolished in 1932 and has long been a key power broker in the country.The military and pro-military political parties were the key forces behind Paetongtarn鈥檚 eventual ascension to power after a key opposition party couldn鈥檛 secure enough support to form a government following national elections two years ago.That uneasy alliance paved the way for Paetongtarn鈥檚 father, Thaksin Shinawatra, to return from a long exile.Even with the court鈥檚 suspension, Paetongtarn isn鈥檛 totally sidelined from power.Hours before the ruling yesterday, she was named culture minister in a reshuffle expected to keep her in government.The new cabinet will be sworn in tomorrow.But the damage may be permanent.A recent poll showed Paetongtarn鈥檚 approval rating at 9.2%.Thousands have protested, calling for her resignation.Paetongtarn said yesterday she accepts the court鈥檚 ruling but gave little clarity on her future.鈥淚鈥檓 still a Thai citizen,鈥 she said.鈥淚 will continue to work for the country while my duties are suspended.鈥滶ven so, fears are growing the government could collapse before the next budget passes.The 2026 fiscal plan, due by August, is at risk.Burin Adulwattana, chief economist at Kasikorn Research Center, said a lame-duck government would add uncertainty, hurting the baht and stocks.鈥楤ig trouble鈥橳housands have protested in Thailand calling for the prime minister鈥檚 resignation. (AP pic)鈥淎 key impact will be felt if the political turmoil leads to a budget delay,鈥 he said.鈥淲ithout it, the economy will have big trouble.鈥漈he baht fell 0.1% today.The yield on Thailand鈥檚 benchmark 10-year bonds was little changed after declining three basis points a day earlier.The benchmark stock index, the world鈥檚 worst-performing major equity market globally this year, rallied 1.9% yesterday on expectations that Paetongtarn鈥檚 suspension will help reduce political tension.Whether things play out that way is far from certain.鈥淭his suspension exerts further downside risk to a growth outlook already mired in uncertainty from US tariffs,鈥 said Lavanya Venkateswaran an economist at Oversea-Chinese Banking Corp in Singapore.鈥淭he real question is what next. That needs to be answered sooner rather than later considering the stakes.鈥漃ayong Srivanich, chairman of the private sector joint standing committee for commerce, industry and banking, said tariff talks with the US are likely to miss next week鈥檚 July 9 deadline and that broader political uncertainty could affect budget spending.If the court ultimately rules against Paetongtarn, she will be removed from office, triggering a parliamentary vote to pick a replacement from a list submitted before the 2023 election.Along with her father and aunt, Yingluck, Paetongtarn would be the third of the Shinawatra clan to be removed from office.Potential replacementsPossible successors include the Pheu Thai party鈥檚 Chaikasem Nitisiri, Bhumjaithai鈥檚 Anutin Charnvirakul, United Thai Nation鈥檚 Pirapan Salirathavibhaga, and the Democrat Party鈥檚 Jurin Laksanawisit.Former prime minister Prayuth Chan-ocha 鈥 who led the last coup 鈥 is also eligible.And while a military takeover is always possible in Thailand, frustration over the country鈥檚 economic performance under Prayuth ultimately pressured his government to allow for elections.鈥淭he decision by the court today has heightened the coup risk a bit,鈥 said Thitinan of Chulalongkorn University.But 鈥渢he last time they had a coup, they did not do well鈥.