To The Moon

Thailand heads to the polls this Sunday, 8 February 2026, at a time of heightened political and economic strain. The snap election follows Prime Minister Anutin Charnvirakul’s decision to dissolve parliament in mid-December, after the People’s Party signalled a no‑confidence motion that threatened to topple his minority government.

Politically, Thailand has cycled through 10 prime ministers in the past two decades. This frequent turnover has contributed to delays in budget approvals and hampered long-term policy planning.

On the economic front, the country is expected to be the slowest-growing major economy in Southeast Asia outside of Myanmar this year, with the International Monetary Fund (IMF) forecasting GDP growth of just 1.6 percent in 2026. Domestic consumption is weakening, constrained by high household debt and soft income growth. Meanwhile, tourism recovery remains sluggish, and Thai exports face pressure from rising competition and tariff headwinds.

Against this backdrop, Sunday’s vote carries the potential to reset Thailand’s economic trajectory. For investors, greater clarity around Thailand’s government spending plans and measures to support the economy will be key areas to watch.

Plausible election outcomes

Recent assessments point to an increasingly competitive three-way race between the People’s Party, Pheu Thai Party, and Bhumjaithai Party. With no major party currently positioned to secure an outright majority of more than 250 parliamentary seats, the composition and stability of the next governing coalition will likely matter more than the identity of the winning party.

At this juncture, we think the most plausible outcome appears to be a Bhumjaithai Party–led government, supported by the Pheu Thai Party. This pairing is the most likely to command a workable parliamentary majority while advancing a pragmatic, broadly palatable policy agenda.

While other scenarios such as a coalition led by the People’s Party remain possible, we view their probabilities as meaningfully lower.

What to expect under the new government

Regardless of which party ultimately leads, we expect the new government to move quickly on near‑term stimulus within its first 100 days. A co‑payment programme aimed at supporting lower‑income households and encouraging consumption appears likely. With an estimated budget of around THB 40 billion, this initiative could add 0.1–0.2 percentage points to GDP.

However, fiscal room remains constrained. Public debt is approaching the 70 percent of GDP ceiling, limiting the scope for large‑scale government spending. As a result, we anticipate the new administration will emphasise structural measures, particularly in the following areas:

• Consumption support and cost‑of‑living relief

• Faster public investment disbursement

• Stronger foreign direct investment (FDI) channels through the BOI FastPass

• Targeted tourism stimulus

• Policies to enhance equity‑market competitiveness and long‑term savings

Risks to watch

While we do not expect a repeat of the sharp market moves seen after the previous election, we note that volatility could resurface if the People’s Party secures more than 200 seats. Such an outcome could prompt markets to reassess the potential speed and scope of institutional reforms.

The timing of government formation will also be crucial. If the new administration is established by May 2026, fiscal operations and budget disbursement should continue smoothly, supporting our baseline GDP growth projection of 1.6 percent. However, delays in appointing the cabinet could create a temporary policy vacuum. In such a case, slower public spending would weigh on near‑term activity, potentially reducing GDP growth to around 1.2 percent.

Sectors likely to benefit post-election

As political risk eases after the election, several areas of the Thai market could benefit from improving confidence and clearer policy direction.

Utilities

The utilities sector remains well-supported by Thailand’s long‑term push into renewable energy under the Power Development Plan (PDP). Lower global energy prices should help reduce input costs, improving profitability for many operators.

Non‑bank financial institutions

Non‑bank lenders, such as consumer‑finance companies and leasing firms, stand to gain from the expected decline in interest rates. Lower borrowing costs can help lift loan demand and ease repayment pressures for households, leading to better asset‑quality trends.

Tourism‑related businesses

Tourism is an important driver of the Thai economy, and the next government is widely expected to introduce targeted measures to reverse the recent slowdown in tourist arrivals. This includes programmes to attract visitors to secondary cities, promote wellness tourism, and boost event‑driven travel. If implemented effectively, tourism firms, especially hotel operators, should see higher demand.

Construction firms

Infrastructure-linked firms may benefit from an uplift in project activity. We believe the new government is likely to accelerate public investment disbursements and move ahead with FDI-related manufacturing projects. In addition, upcoming renewable energy auctions under the PDP could create new work pipelines.

Thai equities remain on solid footing

The benchmark Stock Exchange of Thailand (SET) Index has risen more than 5 percent in January, marking a strong start after a difficult 2025. We believe this momentum can continue if the election delivers greater political clarity and results in a stable governing coalition, which would help support capital flows into Thai assets.

More broadly, equity valuations remain compelling. Thailand is currently trading at its lowest price‑to‑earnings ratio relative to global markets in sixteen years, offering an appealing entry point for investors.

Corporate earnings are also showing early signs of stabilisation. Consensus EPS forecasts for 2026 have been revised slightly higher over the past month, while the breadth of earnings upgrades is at its strongest since June 2024. At the same time, downward revisions have eased significantly, indicating that analysts see limited downside to earnings from here.

Taken together, these trends position Thai equities for a constructive first half of 2026.

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