BANGKOK – A Thai court will this week decide if the South-east Asian nation will continue business as usual or be tipped into a renewed period of political uncertainty, when it assesses whether tycoon Srettha Thavisin should continue as prime minister.

       The Constitutional Court will rule on whether Mr Srettha violated “ethical standards” by appointing to Cabinet former lawyer Pichit Chuenban, who was jailed for contempt of court following a bribery attempt. The petition against Mr Srettha was brought originally by a group of 40 senators, who claimed the appointment was grounds for his disqualification under the charter.

       Mr Pichit has since resigned, and Mr Srettha, who is yet to complete a year in the job, has maintained his innocence. In a sign that he expects to be exonerated, the Prime Minister’s Office went ahead and published his official business for the second half of August – with the Premier scheduled to make trips across Thailand to oversee water management and drug suppression efforts, among others.

       Mr Srettha will not be in court to hear the verdict due to his busy work schedule, he told reporters on Aug 13. Instead, the premier will be represented by his secretary-general Prommin Lertsuridej.

       The nine-member court voted six to three to accept the petition for consideration, while voting five to four against suspending Mr Srettha’s duties in the meantime. With the verdict due to be read out at 3pm on Aug 14, here is how the situation could play out:

       A favourable court ruling for Mr Srettha would simply mean business as usual for South-east Asia’s second-largest economy, as it eliminates any immediate risk for his coalition government. The ruling Pheu Thai Party will get to keep the top political office, trumping a conservative coalition partner that is suspected to have encouraged the senators’ petition against Mr Srettha.

       A not-guilty verdict would also be welcome news for foreign investors, who have been on the edge over implications for political stability, given that a civilian-led government was a hard-fought win for Thailand that has been ruled by military-backed establishments for nearly a decade through 2023.

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       Foreign funds have pulled more than US$3 billion (S$3.97 billion) from local markets in 2024, sending Thailand’s benchmark SET Index to a four-year low. It is now one of the worst performers of all global bourses tracked by Bloomberg in the past year.

       Given Mr Srettha was not suspended while the court deliberated the case in the first place, he is then free to focus on rolling out the government’s about US$14 billion cash handout programme to boost consumption and stimulate the economy. The success of the programme will decide the popularity of his government and the ruling Pheu Thai Party, which has seen its approval rating decline in recent months.

       An unfavourable verdict for Mr Srettha means that he and his Cabinet would step down, setting off a scramble among coalition parties to negotiate and agree on the next prime ministerial candidate.

       The House of Representatives would then convene to vote on a new premier, with no time limit assigned to the selection of the new leader – a risk that exposes the economy to policy paralysis.

       Political and legal experts are split on whether there needs to be a caretaker or acting prime minister in the meantime, and whether that needs to be Mr Srettha or one of his six deputy prime ministers, since the Constitution does not offer clarity on the issue.

       This scenario opens risks to economic growth, especially if political horse-trading among the coalition parties drag on and leave a potential power vacuum. Foreign investments may grind to a halt as markets await more clarity on who leads the nation. Mr Srettha will be leaving behind an economy with a decade of sub 2 per cent annual growth rate, and markets that were spooked by his spat with the central bank over the interest-rate path.

       “On the economic front, the most immediate concerns are the potential for disruptive protests and delays to the FY2025 budget,” said Ms Krystal Tan, an economist at Australia and New Zealand Banking Group. As for the fate of the digital wallet scheme, she said: “If Pheu Thai is unable to retain the premiership, that would open up materials risks of a delay or cancellation.”

       Six other candidates in the coalition are eligible to become prime minister.

       Pheu Thai still has two eligible candidates for the premiership: Ms Paetongtarn Shinawatra, the daughter of former premier Thaksin Shinawatra, and 75-year-old Chaikasem Nitisiri. Both are believed to be long shots, as Ms Paetongtarn is widely deemed unready for the job and Mr Chaikasem has had serious health issues in recent years.

       Mr Anutin Charnvirakul of the second-biggest group Bhumjaithai Party is seen as the top contender. Mr Prawit Wongsuwon, from the military-backed Palang Pracharath Party, and Mr Pirapan Salirathavibhaga from the royalist United Thai Nation, are other options from the conservative camp. BLOOMBERG