Thailand's re-elected government began its term with a strong mandate and a rare opportunity to pursue structural reform, but six months on that opportunity risks being squandered as short-term policy priorities take precedence, according to a note from Capital Economics.

Six months have passed since Thailand's February 8 election, which was widely heralded as a political watershed after a turbulent period that saw three prime ministers in as many years. Prime Minister Anutin Charnvirakul and his Bhumjaithai Party won a resounding victory that boosted investor confidence at the time, entering office as the preferred candidate of both the royalist establishment and the military — reducing the risk of the dubious legal challenges that had previously removed his predecessors — and with a comfortable parliamentary majority behind him.

"Instead, the administration has largely done the opposite," wrote Gareth Leather, senior Asia economist at Capital Economics. The flare-up of conflict in the Middle East drove up global oil prices, pushing up domestic energy costs, and the government responded with a 175bn baht ($5.3bn, around 1% of GDP) "Thai Help Thai Plus" co-payment scheme alongside sweeping household debt-relief programmes. Leather said some protection was needed, but the scheme was poorly targeted: aiming to distribute co-payments to roughly 43mn citizens — the vast majority of Thailand's adult population — rather than focusing on the most vulnerable households, risking spreading fiscal resources too thin.

Infrastructure investment has fared little better. The government accelerated spending on water infrastructure to strengthen water security in the Eastern Economic Corridor, but this has been outweighed by a broader retreat from infrastructure ambition, with three major projects pushed back or cancelled: the Land Bridge project, the second phase of the government's AI programme, and the three-airport high-speed rail project.

The administration has also centralised power, giving the prime minister direct control over eight key economic boards covering infrastructure, industry and energy, on the rationale that cutting red tape will attract international technology firms and speed up decision-making. "Bypassing established civil service checks and balances will lead to less transparency and increased opportunities for corruption," Leather warned.

Anutin's industrial policy has also turned more protectionist: new rules require automakers to source more components locally, with imported battery components no longer counting toward those requirements, while investment incentives in priority industries increasingly push firms to transfer technology to Thai businesses and hire Thai workers rather than relying on foreign specialists. "Rather than promoting innovation, these policy changes risk raising costs and limiting access to the skills, expertise and technology that foreign firms bring," Leather wrote, warning the approach could end up weakening the competitiveness of the very industries the government is trying to develop, while making Thailand a more uncertain destination for foreign investors.