Despite another year of political unrest, Thailand’s economy remains the nation’s top priority for 2025. The Southeast Asian country is once again led by a member of the Shinawatra family after Paetongtarn Shinawatra was appointed the country’s 31st Prime Minister in August.
As she officially assumed office, Paetongtarn Shinawatra, the daughter of controversial billionaire former Prime Minister Thaksin, pledged to strengthen the faltering Thai economy. After a court dismissed the former premier and disbanded the main opposition party, Paetongtarn, the youngest prime minister in the Kingdom’s history at 37, took over, causing further unrest in Thailand’s already fragile political landscape.
She will attempt to avoid the fate of her father and aunt Yingluck, both of whom were overthrown in military coups, despite being the third Shinawatra to hold the position of prime minister. Paetongtarn has urged all Thais to cooperate in order to support the nation’s economy, which has had a difficult time recovering from the COVID-19 outbreak.
“As head of the government, I will work with parliament with an open heart, open to all ideas to help develop the country,” she said during the investiture.
Alongside Paetongtarn’s husband in the front row, 75-year-old Thaksin was a notable guest during the event.
He said, “She must work hard. She’s young, she can ask anyone for help, and she’s humble. Twenty-three years ago, she was standing behind my back, but today I was standing behind her.”
Her Pheu Thai party, the most recent iteration of the political movement her father started in the early 2000s, leads Paetongtarn’s coalition government, which also includes several pro-military organisations that have long opposed Thaksin.
Following the dismissal of former Premier Srettha Thavisin for violating ethical regulations by choosing a Cabinet minister with a criminal conviction, she was promoted to the top position. The Kingdom’s conservative, pro-military, pro-royalist elite and Thaksin and his supporters have been engaged in a power struggle over Thailand for more than 20 years.
Despite winning elections on multiple occasions, parties associated with the former telecom mogul and former Manchester City owner have had their administrations overthrown by coups and court decisions.
Running the hotel division of the family business until late 2022, Paetongtarn is a relative novice. She entered politics before the 2024 general election, in which the progressive upstart Move Forward Party (MFP) unexpectedly defeated Pheu Thai to take second place.
A controversial father
Despite gaining the majority of seats in the previous election, conservative senators nominated by the junta prevented MFP from establishing a government because they were alarmed by its pledge to dismantle strong corporate monopolies and change rules pertaining to royal insults.
This paved the way for Srettha’s rise by enabling Pheu Thai to reach an awkward coalition agreement with pro-military groups that had previously been adamantly opposed to Thaksin and his supporters.
He was removed by the Constitutional Court less than a year later, making him the third prime minister from a party supported by Thaksin. Her father, the most powerful and divisive politician in contemporary Thai history, will be closely observed for indications of his influence over Paetongtarn.
At a press conference, she acknowledged that she would consult Thaksin when necessary but maintained that she had her own thoughts and objectives and was not dependent on him.
“It is not required. I’m becoming older. Since I am 75 years old, she is free to ask me anything,” Thaksin responded when asked if he would formally serve as her adviser.
In the early 2000s, he changed the political landscape of the Kingdom by implementing populist measures that garnered two electoral victories and the long-term allegiance of the rural populace. The conservative establishment and Thailand’s powerful elites, however, hated him because they believed his leadership was corrupt, autocratic, and socially unstable.
When the army ousted Thaksin as prime minister in 2006, he went into exile two years later, but his detractors claim he never ceased making comments about or interfering in national matters. He returned in 2024 on the day Srettha was appointed prime minister, and he was promptly imprisoned on allegations of bribery and abuse of office related to his tenure.
He was given a royal pardon when the King swiftly reduced his eight-year sentence to one year and granted him release due to his advanced age and ill health. However, it is still unclear what kind of policies the ruling Pheu Thai Party will enact and what impact her father, Thaksin Shinawatra, will have.
Following Srettha Thavisin’s removal as prime minister due to an ethical transgression, the Shinawatra family has returned to the position of head of state. Experts, however, questioned Paetongtarn’s level of independence almost immediately.
Thaksin, a highly controversial but significant figure in Thai politics, is the father of Paetongtarn. He has served as prime minister twice and created the Pheu Thai Party. However, he left Thailand in 2008 and lived in self-exile for 15 years after being accused of wrongdoing. In 2023, he returned.
“How can we be sure that Paetongtarn, as prime minister, answers to the Thai public and not her father?” Napon Jatusripitak, a visiting fellow at Singapore’s ISEAS-Yusof Ishak Institute, told VOA in August.
Political scientist and international relations professor Thitinan Pongsudhirak of Bangkok’s Chulalongkorn University thinks the elder Thaksin’s function is clear.
“After 15 years in exile, he is now like an overseeing chairman running the country with his daughter Paetongtarn as chief executive and prime minister. 2024 was another wasteful year following a much-anticipated election that installed Srettha as prime minister, who got the boot for uncompelling reasons,” he stated to VOA.
After the Move Forward Party, Thailand’s election victor, was disqualified from holding the position of prime minister in 2023, Pheu Thai took control. After the Constitutional Court determined that the Move Forward Party’s pre-election campaign promises were intended to overthrow the monarchy, the party was disbanded in August 2024.
On August 7, in Bangkok, former Move Forward Party leader Pita Limjaroenrat arrived at the party headquarters following the ruling of Thailand’s Constitutional Court in a case that sought to dissolve the opposition group for calling for lese-majeste reform.
The People’s Party, which was established in 2024 as Move Forward’s replacement, will likewise have difficulties in the coming year. Similar to its predecessors, the People’s Party has pledged to alter Thailand’s royal defamation statute. The development of this newly established opposition party will be monitored by political analysts in the run-up to Thailand’s 2027 elections.
However, Thitinan stated that Thailand’s attention must now be on the policies of the ruling Pheu Thai Party due to the recent political unrest and nine years of military administration.
“Despite shortcomings behind a heavily doctored government formation, 2025 could see a semblance of stability amid anti-government noises that allow the Thai economy and Thailand’s international standing to perk up to a point after years of mismanagement under a military-based regime,” he added.
The second-biggest economy in Southeast Asia, Thailand, will once more be closely examined. Compared to many of its regional neighbours, it grows more slowly each year.
According to the finance ministry, the country’s GDP is expected to expand by 2.7% in 2024, up from the initial 3.0% estimate.
Since thousands of enterprises have shuttered in recent years, Thailand’s manufacturing sector—one of its core economic sectors—is struggling. Some Thai companies, such as the baby clothing retailer Pretty Baby in Bangkok, are worried about inventory problems.
The economic difficulties were described by Kiatanantha Lounkaew, a lecturer in economics at Bangkok’s Thammasat University.
“Our competitiveness has been declining since 2000 because our economy has been running with the same framework. Compared to our regional partners, we are unable to compete in the municipal [foreign direct investments] market,” he told VOA earlier in 2024.
Thaksin even offered his opinion on the matter due to the economic concerns. The former prime minister outlined a 14-point plan to improve the nation’s economy, which included employing locally produced goods, promoting tourism, building entertainment complexes, and overhauling the public debt and farm sector.
According to Thitinan, Thailand has to focus on digitisation.
“The dial has moved on; they have to be talking about much more digitalisation, digital economy, AI, machine learning, education reform,” he stated to VOA in August.
The introduction of the contentious Digital Wallet programme, which gives around 50 million citizens a one-time distribution of $280 in digital currency to spend locally to boost the economy, has been one of the main economic initiatives.
Experts have questioned the programme’s potential benefits, but Paetongtarn has carried on Srettha’s approach.
The Paetongtarn government’s policies seem to be more rapid-fire than Srettha’s. Tita Sanglee, an associate fellow at the ISEAS Institute, told VOA that although both are intently focused on the economy, Paetongtarn has the advantage of a larger team and more resources because she is the leader of the Pheu Thai Party and Thaksin’s daughter.
“This seems to have allowed her government to push Pheu Thai’s initiatives more actively, things like cash handouts, a three-year debt suspension for farmers, discussions on casino legalisation, and efforts to boost tourism and attract foreign investments,” she stated.
However, experts predict that because of Thailand’s evolving social policies, the country will experience a historic year after the marriage equality bill was enacted by parliament and went into effect on January 24.
“Even social programmes with obvious economic effects include the marriage equality law and the plan to provide stateless people permanent residency and nationality. The former strengthens Thailand’s standing as a pioneer in LGBTQ inclusion, increasing its allure as a travel destination,” Tita continued.
The economy has historically relied heavily on foreign travel, and the upcoming year is predicted to bring historic outcomes.
At its height in 2019, 11.5% of the nation’s GDP came from tourism. A record-breaking 40 million visitors are expected to arrive in Thailand in 2025, up from 34 million in 2024. Making it simpler for foreign visitors to enter the nation is the goal of easing visa entry requirements and introducing new visa programmes.
Experts predict that Thaksin will have an impact on Thailand’s New Year plans regardless of the outcome. Once an adversary of Thailand’s conservative and royal regimes, Thaksin is now 75 years old and has re-entered Thai politics, albeit in an unofficial capacity.
“The year 2025 could see a reset in motion as Thaksin is allowed to run Thailand from the back with Paetongtarn as figurehead with the royalist establishment’s uneasy approval, due to fears of reform-minded People’s Party succeeding the dissolved Move Forward,” Thitinan stated.
Tita said, “I would pay close attention to Thaksin’s involvement in Thailand’s foreign relations.”
Concerns over conflicts of interest may be heightened by the fact that he has personal connections to numerous regional leaders. Any intervention by Thaksin is significant given the current geopolitical unrest and mounting criticism of Thailand’s foreign policies.
Experts chart the road ahead
Thailand’s economy is at a pivotal moment as it battles sluggish growth and structural issues that are expected to cap GDP growth at 2.7% in 2025. Despite strengthening tourism and agriculture sectors, a vast informal economy, declining exports, and global headwinds remain threats to the Southeast Asian country’s progress.
Supavud Saicheua, chair of the National Economic and Social Development Council (NESDC) and advisor at Kiatnakin Phatra Financial Group, said that while inflation remains low, the economy’s growth languishes at below 3%, creating difficulties in maintaining stability within acceptable parameters. The best bet would be to cap the policy rate at 2% to ease borrowing constraints and stimulate growth.
“I believe the policy rate, which is described as neutral and not overly aggressive, is high—particularly given that our GDP growth is less than 3%. While inflation is expected to return to target, it has not and will not do so due to low inflation in larger countries, such as China, and a negative producer price index for 18 months. Plus, banks are not issuing loans, so where will the inflation come from?” he stated.
Pipat Leuangnaruemitchai, chief economist at KKP Financial Group, said the newly appointed United States President Donald Trump’s potential policies would have both negative and positive implications for Thailand’s economy.
Notably, he said, the absence of Long-Term Equity Fund (LTF) measures diminished the Thai market’s appeal. While acknowledging strong investor interest in this initiative, he emphasised the need for balanced policies to ensure social harmony while exploring economic opportunities.
At the heart of Thailand’s economic challenges lies its huge informal economy, which accounts for a staggering 48% of the GDP. Household debt, meanwhile, has soared to 104% of the GDP, with informal loans further exacerbating the issue.
Dr. Pacharapoj Nantaramas of Krungthai Bank warned that this shadow economy requires urgent integration into the formal sector to enhance the nation’s economic potential. While the automotive industry faces declining production by more than 15% from historical averages, Thailand’s agriculture and tourism industries have good growth potential.
Supavud further stated that China’s limited agricultural capacity, less than 10% of global arable land, presents an opportunity for Thailand to enhance its agricultural and food production capabilities and exports.
As per Pacharapoj, efforts to create “man-made destinations” will help attract high-spending tourists, potentially increasing pre-visitor spending by 19% to 58,300 baht per person per trip. Exports are projected to grow by just 2% in 2025, down from 4% in 2024. Both Krungthai and KKP experts say that this decline reflects global trade tensions and tariff risks. The return of Trump as the Republican president could worsen the situation, with increased barriers for Thailand.
The government has introduced tax cuts and targeted financial aid to stimulate consumption, though experts warn that these may only have short-term effects. Public investment is expected to grow by 5.1%, contrasting with private investment, which lags at 3%. The global minimum tax on multinationals poses further hurdles to foreign investment.
To overcome these economic challenges, experts have said Thailand should prioritise the integration of the informal economy, while innovating tourism to attract high-value visitors. Semiconductor industries should also prioritise competitiveness, manage debt, and create a favourable environment for foreign investment under global tax regulations.