The repeated delay in the next parliamentary vote for selecting Thailand's prime minister is postponing the approval of the state budget planning for the fiscal year 2024, triggering concerns about a negative impact on the economy.

"The final result on (the selection of) Thailand's next prime minister is likely to remain uncertain within this month and the delay in the approval of state budget for fiscal 2024 will be hard to avoid," said Huang Bin, head of the Chinese department at Kasikorn Research Center.

On July 13 and July 19, the leader of Move Forward party Pita Limjaroenrat failed to gain majority support from the members of Parliament.

The third vote, scheduled for last Friday, was canceled by Parliament Speaker Wan Muhamad Noor Matha.

The move came after the Constitutional Court put off its decision on whether to accept a petition seeking its ruling on the parliamentary decision on July 19 about rejecting the renomination of Pita as prime minister as being constitutional.

If the process of establishing the new government drags on, Huang said plans to make budget allocations for boosting the economy may be affected.

He also said some major construction projects, including high-speed rail lines connecting the three biggest airports with urban Bangkok, are waiting for the new government's approval.

"Other infrastructure construction projects that are expected to foster the country's development will be suspended. There are also risks of unexpected economic fluctuations as the caretaker government has no authority to provide new measures to stimulate the economy," he said.

Recovery path

Thailand's economy is still on a post-pandemic recovery path. A recent forecast from the International Monetary Fund said the country will see 3.4 percent growth this year.

In July, the Asian Development Bank estimated that Thailand's economy will see growth of between 3.3 and 3.5 percent this year — the biggest revision for any country in the region.

If the new government can be formed by August, it would bolster confidence among business people, foreign investors as well as Thai citizens, said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries.

Business and investors' confidence will be dampened if it takes a longer time to form a new government, he said, adding that if the situation continues for a longer period, for example, a half year, foreign investment will shift to other regions.

Expressing concern over the demonstrations resulting from political uncertainty, he said that such activities will affect business confidence, which could inflict serious damage to the Thai economy. It could slash GDP growth to 1 to 2 percent, he said.

After its "divorce" on Aug 2 from its former partner, the Move Forward party, the Pheu Thai party, which is likely to win the prime minister's seat, announced on Monday that it is joining hands with the Bhumjaithai party to form the new government.

Together, the two parties have 212 House seats. They are inviting more parties to join their coalition. Under the Constitution, a PM candidate needs the support of at least half the 750 members of both the lower and upper chambers of Parliament, or 376 votes.

The Pheu Thai, which together with Bhumjaithai is trying to form a new government, on Wednesday added six more parties to the coalition and declared that they now had a clear majority in the lower house.

Though the coalition's eight parties accounted for only 228 seats in the 500-seat House, Pheu Thai leader Cholnan Srikaew affirmed that the alliance has the support of at least 251 seats, giving it a clear majority.