Scepticism towards Pheu Thai’s economic reforms persists in Thailand

On September 5, Thailand introduced its new cabinet, forming a coalition government that brought together the self-declared pro-democracy Pheu Thai Party and parties aligned with the military.

For both factions, this collaboration was seen as a pact with conflicting interests. Pheu Thai aligned itself with the same military that had ousted its government in 2014 and played a role in a predecessor party’s leadership in 2006, which had suppressed its supporters during protests in 2010. On the military’s part, entering into a government with a political group it had previously sought to keep out of power raised questions about its interventions and the upheaval of the past 18 years.

Pheu Thai promised reforms

Six months later, there are no indications that Pheu Thai has implemented policies and reforms necessary to garner support from a reform-minded public amidst such a controversial compromise. Analysts say there is probably a sizeable core of Pheu Thai voters who remain loyal to the party and the Thaksin brand and who would stick to the party regardless of the deals it cut, referring to former Prime Minister Thaksin Shinawatra, ousted in the 2006 coup.

The Move Forward Party (MFP), advocating for more extensive democratic reforms and a coalition partner of the Pheu Thai Party in the opposition, secured the majority of seats in parliament. However, it had problems in forming a government due to opposition from the military-appointed Senate.

The MFP garnered criticism from conservatives for its commitment to reform the country’s stringent lese majeste law, which criminalizes criticism of the king. In contrast, Pheu Thai distanced itself from such contentious proposals and eventually severed ties with the MFP. Pheu Thai went on to establish a government and shortly afterward, obtained pardons for Thaksin and his sister Yingluck Shinawatra, who was ousted in a military coup in 2014. Thaksin was released from the hospital, where he had been serving his prison sentence, just last month.

Pheu Thai failed to improve the economy

Pheu Thai and its predecessor parties were renowned for implementing economic policies that benefited impoverished farmers and contributed to broader economic revitalization. Presently, the Pheu Thai government appears to pin its hopes on achieving similar economic progress to mitigate the political compromises it has made, encapsulated by the campaign slogan, “Democracy you can eat.”

However, these aspirations have yet to materialize. The central bank has impeded the party’s key campaign promise of a 10,000 baht ($279) digital wallet for individuals earning below a specified monthly salary. Additionally, initial economic indicators have fallen short of expectations.

Economic growth last year was very sluggish at only 1.9%. For a party that campaigned on its economic competence, that has not been a good look.

But economists expect Thailand’s GDP to strengthen this year as government spending normalizes. They also anticipate increased infrastructure spending and a boost to Thai exports from China’s domestic stimulus package, while trade with the United States and European Union will remain resilient. Thailand’s real GDP growth is expected to be around 3.4% in 2024.

Yet, achieving economic success may not be sufficient for Pheu Thai to secure a return to office in the upcoming 2027 election, especially given the increasing scepticism surrounding the party’s commitment to democracy and human rights.

Pheu Thai still trails behind MFP in polls

Analysts say that MFP and Pheu Thai can find common ground on certain issues. Despite acknowledging significant improvements under the Pheu Thai government, they express reservations, noting that the government includes political parties that previously supported the military and suggesting hesitancy by Pheu Thai to pursue reforms that might upset the military.

The uncertainty lies in whether Pheu Thai would collaborate with the army in a more pronounced crackdown on MFP. Legal challenges, potential arrests of leaders, or party dissolution loom over Pheu Thai, similar to what happened to its predecessor, the Future Forward Party. Many anticipate MFP’s victory without undemocratic intervention, as the Senate is not eligible to vote for the next prime minister.

Neither Pheu Thai’s successes nor failures have significantly shifted public opinion, which overwhelmingly favours MFP. In the 2023 popular vote, MFP outpaced Pheu Thai by 10%, and recent polls, conducted after Pheu Thai allied with pro-military parties, showed MFP maintaining a 20% lead.