Thailand gets its Youngest Prime Minister, Her Excellency Paetongtarn Shinawatra
Thailand’s Parliament chose Paetongtarn Shinawatra, 37-year-old, to become the country’s youngest Prime Minister (PM) on 16th August 2024. She is second serving lady PM of Thailand. Thailand received its first female prime minister, Yingluck Shinawatra, in 2011 who is the aunt of present PM.
“My passion is hotel,” she said in an interview in March 2022. “But after having a child, my thinking changed,” she added. “I want to make the country liveable for my children.”
A Legacy of Political Influence
Paetongtarn is the youngest daughter of Thaksin Shinawatra, 75, who was Thailand’s prime minister from 2001 to 2006. Thaksin’s political parties, including the Pheu Thai party that Paetongtarn now represents, have consistently secured electoral victories.
Historical Context
The role of Thailand’s head of government dates back to 1932, initially known as the Prime Minister of Siam. The title changed to “Prime Minister of Thailand” in 1945 and became permanent with the country’s renaming in 1949. The longest-serving prime minister was Field Marshal Plaek Phibunsongkhram, who held office for nearly 15 years, while the shortest tenure was that of Thawi Bunyaket, lasting just 18 days. Notably, M.R. Seni Pramoj was the youngest to assume the office at 40 years old.
Roles and Responsibilities
As Prime Minister, Paetongtarn will serve a four-year term, subject to the 2017 constitution, which limits consecutive or total terms to eight years. The Prime Minister is a key member of several government bodies, including the National Security Council and the Internal Security Operations Command. Additionally, the Prime Minister oversees multiple departments, such as the National Intelligence Agency and the Office of the National Economic and Social Development Board. Importantly, all money bills introduced in the National Assembly require the Prime Minister’s approval.
Challenges Ahead
Paetongtarn faces significant economic hurdles as she assumes office, including a struggling economy, record-high household debt, an aging population, and declining productivity and export competitiveness. Observers have low expectations for substantial structural reforms. While she is expected to continue some of former Prime Minister Srettha’s economic policies, including advocating for lower interest rates and reduced central bank autonomy, skepticism remains due to her relative inexperience in political leadership.
Despite her influential family background, there are concerns about her readiness to lead. Her rise has reignited discussions about her family’s legacy, both positive and negative, with critics questioning her qualifications beyond her family name. In response, Paetongtarn stated, “I have a solid team that once governed effectively. This gives me confidence in my readiness.”
Economic Outlook
The Ministry of Finance forecasts a modest 1.2% to 1.8% boost to GDP from the digital wallet initiative in 2025, though other projections are lower. The Thai economy is expected to grow slightly above 2% this year.
The digital wallet was meant to boost private consumption, a rare bright spot for the economy the past two years as investment and export growth stalled. But consumer spending growth slowed from 6.9% to 4% in the second quarter as inflation ticked up and tourism entered the low season.
In July, the sentiment among foreign, retail, and institutional investors became negative for the period from August to October. This shift was reflected in the Federation of Thai Capital Market Organizations (FETCO) index, which considers factors like geopolitical tensions and anticipated monetary easing by the U.S. Federal Reserve. Additionally, Thailand’s political uncertainty and the ongoing issue with the digital wallet program contributed to this bearish outlook.
Direct Transfers and Policy Implementation
Former Prime Minister Srettha’s notable achievements included attracting foreign investment and implementing energy subsidies that temporarily reduced inflation. However, financing and legal issues have plagued the digital wallet program, which aims to distribute 500 billion baht to 30 million Thais. Srettha’s push for lower interest rates and public pressure on the central bank continues to influence economic policy.
Srettha continued Pheu Thai’s history of enmity with the central bank by heaping public pressure on its monetary policy committee to lower interest rates, which could otherwise curb the effect of the digital wallet stimulus. Thailand’s central bank has kept its policy interest rate at 2.5% since October of the previous year. This decision is influenced by concerns about inflation and the potential risk of encouraging households that are already heavily in debt to borrow even more.
Last September, Srettha’s government introduced energy subsidies, which led to a temporary decrease in inflation, pushing it into negative territory for six months. However, prices began to rise again starting in April, aligning more closely with the Bank of Thailand’s (BOT) target inflation range of 1% to 3% as government financial support eased.
Foreign Policy and BIMSTEC
Thailand has postponed its hosting of next month’s Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) summit of the leaders of seven mostly South Asian countries until after a new administration is formed. BIMSTEC allows Thailand to strengthen its influence in the Bay of Bengal region, promoting regional stability and economic growth.
Thailand has played a prominent role in BIMSTEC, often advocating for greater regional integration and cooperation. The country has hosted several meetings and summits and has been an active participant in shaping the organization’s agenda.
Thailand contributes to various technical and economic initiatives within BIMSTEC. It leverages its economic and logistical strengths to support regional projects and collaborations. By participating in BIMSTEC, Thailand can access new markets, attract investment, and foster economic ties with neighbouring countries.
Paetongtarn’s Stance and Future Outlook
Upon her appointment, Paetongtarn committed to continuing Srettha’s economic stimulus measures, reform efforts, and policies on drug control and universal healthcare, though she has shown some reluctance regarding the digital wallet program. In her initial remarks as Prime Minister-elect, Paetongtarn expressed her dedication to advancing the country with stability and openness to diverse opinions.
Analysts believe Petongtarn Shinawatra will likely be in her father’s shadow, given her inexperience and the mammoth task of heading the government. Ensuring her political survival will be Thaksin’s major challenge given Thailand’s turbulent political history, which has seen 19 coups since the country became a constitutional monarchy in 1932.
The forthcoming cabinet selections and Paetongtarn’s responses to economic and investment challenges will be pivotal in shaping Thailand’s future trajectory.
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