Five months of street protests have failed to dislodge Thai Prime Minister Yingluck Shinawatra. Now, judicial pressure might just succeed in the task. A prolonged power vacuum and heightened risk of political violence will dash hopes of an economic revival in the second half of the year.
On March 21, the country's Constitutional Court annulled the February 2 election, which was boycotted by the opposition Democrat Party and disrupted by anti-government protesters. Although the results were never declared, Shinawatra very likely won a fresh mandate.
But popular support matters less now than judicial legitimacy; and it's the latter that the caretaker prime minister is rapidly losing. She has until March 31 to defend herself in front of Thailand's anti-graft agency, which is investigating her role in a fiscally ruinous rice subsidy scheme. If the commission recommends her impeachment, and the Senate acts on it, she faces a five-year-long political ban. Thailand's second coup against the Shinawatra family - Yingluck's billionaire brother Thaksin was ousted by the army in 2006 - would then be complete.
The middle-class Bangkok establishment, which has always wanted this purge, will have to contend with the Shinawatra supporters - mostly rice farmers in the nation's north and northeast - taking to the streets in the capital city. The central bank's growth target of 2.7 per cent GDP growth for the year, already pared down from 4.8 per cent before the anti-government protests began, will be lowered again.
Large infrastructure projects are in cold storage. So is a mountain of stockpiled rice. Meanwhile, rice farmers are in distress because the caretaker government doesn't have the borrowing authority to pay the higher-than-market prices it has promised.
A recovery in exports is possible because the baht is 9.5 per cent cheaper against the US dollar than a year ago. But that may not be enough to sustain the 11 per cent rally in Thailand's stock market since early January. The outlook for both private investment and consumption is bleak. If Bangkok becomes a battleground, tourism, too, will take a bigger knock than it has thus far. Amidst investor pessimism over emerging markets, the deepening Thai political crisis could just make the economy swoon.
