Thailand sees no clear path forward following inconclusive polls

Thailand sees no clear path forward following inconclusive polls

  • The 2023 Thai polls saw a large-scale realignment of voters disinclined towards military rule, as the reformist Move Forward was welcomed as an alternative to Pheu Thai.
  • Move Forward leader Pita Limjaroenrat is attempting to position himself as a prime minister-in waiting, but the politics of coalition formation are not in his favour.
  • Much depends on the military-appointed senate and how far they will go in blocking an opposition-aligned coalition government. Expect further political turbulence.
  • While politicians are fiddling, formidable economic challenges are waiting to be solved.

Tech sector difficulties persist but long-run potential remains

  • Technology-related markets will continue facing unfavourable consumer dynamics, with sales of devices sharply contracting in 1Q23 across most major economies.
  • Even in the difficult economic environment, chip firms are reporting that pockets of resilience are apparent, such as those used for automotive and industrial applications.
  • Expectations of future demand and policies to relocate chip production mean that large-scale capital expenditure plans are still on despite the short-term slump.
  • The long-term growth potential of the sector remains intact despite the cyclical slump.

Regional updates

  • Taiwan’s 2024 presidential election is shaping up to be a three-horse race. Beijing will likely tone down its hawkishness to avoid spooking voters towards voting for the DPP.
  • China’s recovery momentum is losing steam quickly. The needed reforms to restore economic dynamism are not forthcoming as Beijing pursues ideological pet projects.
  • Malaysia’s external sector performance worsened significantly and suggests that the first quarter’s current account difficulties may persist in the short-term future.
  • India’s domestic sector exhibits continued strength, although muted industrial production is a concern. A move to de-circulate bank notes is unlikely to cause major disruption
  • Singapore’s trade showed tentative signs of bottoming out despite ongoing difficulties.
  • Thailand’s 1Q23 GDP showed welcome signs of an economy getting back on its feet.

Read more: CAA-weekly-22-may-2023.pdf