Index trend
Previous quarterly editions
Expropriation risk: 54 54 54 54 ► Political violence risk:59 57 57 57 ►Terrorism risk:57 57 57 54 ►Exchange transfer and trade sanction risk: 45 45 45 45 ►Sovereign default risk:47 47 47 47 ►
Overall Risk Temperature: 54 (Medium) TREND ►
Special topic: Gray zone aggression
Degree to which the country relies on outbound gray zone action to achieve its strategic objectives1 = Not at all5 = Gray zone action is a core tactic
3
Impact of inbound gray zone attacks on the country1 = Negligible impact5 = Significant impact on economic growth and/or political stability
2
Thailand is one of only two U.S. treaty allies in Southeast Asia. Unlike the other, the Philippines, Thailand aims to carve out a neutral position for itself between Washington and Beijing. Bangkok opposes a common position on disputes in the South China Sea and declines to join Singapore, the Philippines and the West in condemning Moscow for the 2022 invasion of Ukraine.
Nevertheless, Thailand’s geostrategic position on the Southeast Asian mainland presents challenges to its security. Beijing’s growing domination over Cambodia and Laos, its efforts to reshape the Mekong River to accommodate Chinese trade and its plans to connect Yunnan province to Southeast Asia by new rail networks that will go through Thailand could threaten Thailand’s own role on mainland Southeast Asia and eventually its sovereignty.
Another challenge to Thailand’s security is the three-year-old internal conflict in Myanmar. Although the two countries are not likely to engage in direct conflict with one another, the war between the military and the opposition armed forces occasionally spills across the border. Equally important is the threat to Thailand from drug trafficking and internet scams run by Chinese criminal gangs inside Myanmar.
The most serious conflict in which Thailand is involved is domestic: a decades-long, low-key separatist conflict involving Thailand’s Muslim population in the southernmost provinces. Beginning in 1948, the conflict has changed in recent decades, with larger and more coordinated attacks by separatist groups. In February 2024, the government and separatist leaders reached a tentative agreement. However, similar attempts have failed in the past, in part because Bangkok has refused to consider autonomy arrangements similar to those in the Philippines with the Moro Islamic Liberation Front on the southern island of Mindanao.
There are a number of scenarios for intensified gray zone aggression in Thailand. One is that there is an internationalization of the Muslim separatist conflict, particularly if Iran were to become active in this regard.
A second possibility stems from a Chinese security presence in Cambodia. Thailand and Cambodia have episodic border disputes and overlapping claims for offshore energy resources, which they are attempting to negotiate. However, if China were to establish basing at Ream Naval Base, or if Phnom Penh’s plans to build a canal linking the Mekong River with the Gulf of Thailand materialized that could accommodate Chinese navy patrol boats, the Thai military would likely sharpen its surveillance of the border with Cambodia.
Thirdly, Thailand and Myanmar are unlikely to engage in direct conflict, but Thailand could engage in gray zone measures to protect the Thai border and domestic population against further spillover from the civil war or increased activity from criminal gangs on Thai territory.
TREND ►
In Thailand, the risk of expropriation is usually tied to large infrastructure projects. The immediate risk of that has decreased for the time being with the removal of former Prime Minister Srettha Thavisin by the Constitutional Court in August. Srettha had championed the proposal for a “land bridge” across the Ithsmus of Kra, but that project will likely be sidelined with his departure. His replacement, Prime Minister Paetongtarn Shinawatra, is more focused on populist economic programs to distribute funds to lower-income Thais.
In August 2024, several decisions by Thailand’s Constitutional Court effected a dissolved opposition Move Forward Party and banned its top leadership from politics, removed Srettha from office, and pushed ahead with a petition charging former Prime Minister Thaksin Shinawatra with lèse-majesté (criticism of the monarchy, a crime under Thai law that carries serious penalties).
Srettha’s replacement as prime minister is Thaksin’s 38-year-old daughter, who is widely viewed as a surrogate for her father. Paetongtarn reshuffled the government coalition in Parliament. Although she was elected as prime minister by a two-thirds majority of the legislature, Paetongtarn brings no experience in governance to the position, which has increased speculation that she will be influenced by her father.
This rapid-fire series of political developments places Thailand at greater risk for political violence from two directions. The dissolution of the Move Forward Party and the political decapitation of its leadership will temporarily restrain the broader political opposition, but it also angers the younger generation of voters who were the party’s base. This raises the risk of public demonstrations.
Second, in the reshuffle of the government coalition, the Phalang Pracharath Party, the political party identified with the military, chose not to participate. The military is wary of a return of the Shinawatra political dynasty to power and could move against Paetongtarn as it did when it overthrew Thaksin in 2006 and his sister Prime Minister Yingluck Shinawatra in 2014.
The resumption of the Thai government’s negotiations with Muslim separatist groups in southern Thailand this year decreases the risk of terrorism only slightly, since previous iterations of a peace process have fallen flat. Since the separatists are not believed to be integrated into regional terrorist networks, the dissolution of the Jemaah Islamiyah in Indonesia is unlikely to spark the formation of a splinter group, as it is likely to do in the Philippines.
The current war in Gaza continues to draw protests from Muslim populations in Southeast Asia, but the Thai government’s studied efforts to keep a low profile on this issue, in contrast to Indonesia and Malaysia, lowers the risk of terrorist attacks related to the Middle East at present.
The World Bank forecasts a rise in GDP growth in Thailand to 2.4% in 2024, up from 1.9% in 2023; growth for 2025 is projected at 2.8%. This will be driven by domestic consumption and continued recovery in the tourism sector, particularly among Chinese tourists.
Nevertheless, Thailand remains a lackluster economic performer within the Association of Southeast Asian Nations, and there will be intense pressure on Paetongtarn to improve the country’s economic status.
There are no international sanctions imposed on Thailand at this time. Although Bangkok endeavors to remain neutral on the war in Ukraine, it has no secondary sanctions on it for trade with Russia.
In July, the Thai cabinet approved an additional $7.4 billion in borrowing for the 2024 fiscal year, the bulk of which is expected to be applied to the government’s initiative to give lower-income Thais a “digital wallet.” The Bank of Thailand opposes the initiative, and adding to the national debt to fund it could rebound unfavorably on the newly inaugurated Prime Minister Paetongtarn.
That said, at 65.1% the public debt-to-GDP ratio is forecast to stay below the ceiling of 70% of GDP. Keeping debt below this level is more likely now with the Kra “land bridge” proposal likely to remain on the shelf for some time.
