Thai Prime Minister's Suspension Deals Fresh Blow to Economy

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00:00Talk about Thailand, certainly that's really come front and center when you look at business sentiment,

00:03you look at the markets where and that hole that equity markets are in.

00:06See if the Constitutional Court suspending the Prime Minister,

00:09well it reviews this petition seeking her permanent removal over alleged ethical misconduct.

00:16Let's bring in Patpicha Tanaka Sampipat here, our bureau reporter in Bangkok,

00:19for us to get us through what the latest is today.

00:22This seems to be a very fast-moving story, Patpicha.

00:24David, the Prime Minister will now have to fight for her political survival.

00:32She has been given 15 days to respond to the allegations,

00:35while the Constitutional Court deliberates on the case, which could take weeks or months.

00:40But in the meantime, the Thai government will still be able to operate under an acting leader,

00:44and the newly reshuffled cabinet will be sworn in on Thursday and begin its duty as soon as that is done.

00:52While that is expected to ensure a degree of policy continuity,

00:57a slower decision-making may be expected as the government will be distracted with the ticking time bomb

01:03that is the Constitutional Court verdict.

01:06And there is really legitimate cost for concern,

01:08as this is not the first time that the court will have a say over the Thai leader's political future.

01:16So until that verdict comes through, what are some of the key watch points that we need to be mindful of?

01:22Sure. The court decision has thrown Thailand deeper into this ongoing political crisis, Yvonne.

01:31And so the key watch point and the next big question is whether this coalition,

01:36which has already been sitting on the brink of collapse for weeks,

01:39will actually fall apart this time.

01:41Because if any of the coalition parties decide that this is a sinking ship and then they jump,

01:45that will have huge ramifications on the fate of the next fiscal budget

01:50because the budget bill is not expected to be passed by Parliament until the end of August.

01:56And also a key watch point would also be the escalation of protests and political temperature on the ground

02:02as that could raise risks of military intervention.

02:05And also, lastly, the impact of political instability on the U.S. trade talks will be a key watch point.

02:15The Thai finance minister is in Washington, D.C. this week,

02:19and any progress or headway on that matter will really be a shot in the arm for the government,

02:24which has been struggling to boost growth as well as regain investor confidence.

02:28Well, speaking of investor confidence, we know this year has been extremely challenging for local markets there.

02:35But we did see a pop and a rebound in the set index yesterday.

02:39What gives, Papicha?

02:43Exactly. The set actually rallied 1.9 percent yesterday, I think,

02:47because the investors heaved a sigh of relief,

02:50thinking that the constitutional court case would lead to the de-escalation of protests.

02:57And it remains to be seen if this is just a relief rally for now,

03:01because as we have seen, the set is still the worst performer among major global markets this year,

03:05having declined to more than 20 percent and even plunging to a five-year low

03:10earlier at the beginning of this political turmoil.

03:13The BAT is also expected to be affected by the crisis,

03:18even after it has been supported earlier by the decline in the dollar,

03:21as well as retreat in oil prices.

03:23And, you know, we have to watch out for whether foreign investors will sell off more tight assets this year

03:31as they have sold more than $2 billion so far.

03:35Join us for different things.

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