BANGKOK (Reuters) - Delays in final results from Thailand’s first election in five years have added to uncertainties facing the slowing economy,

Reporters wait for the general election results in Bangkok, Thailand, March 24, 2019. REUTERS/Soe Zeya Tun

raising the risk of political gridlock that could disrupt government spending and keep foreign investors away.

Thailand’s first election since a 2014 military coup was thrown into disarray with accusations of cheating and both a pro-army party and the opposition claiming to form a government. It may take weeks until the results become clear.

That dashed hopes for a quick transition to a stable administration that would continue economic policies and investment projects to keep Southeast Asia’s second-largest economy ticking.

“We think political uncertainty will remain elevated, as it appears forming a government will likely be a long, drawn-out and difficult process,” said Charnon Boonnuch, economist of Nomura in Singapore.

“This represents a downside risk to growth, as it would result in a weaker investment outlook,” he said.

Both the pro-army party seeking to keep coup leader Prayuth Chan-ocha on as prime minister and the opposition party linked to self-exiled former premier Thaksin Shinawatra have claimed they can form a coalition government

Kobsidthi Silpachai, head of capital markets research of Kasikornbank, said a delay in outlining the make-up of the next administration “would adversely affect the disbursement of government capex budgets and result in a decline in the velocity of money” in the $515 billion economy.

Government spending is already short of the targets. That is holding back private investment, which is crucial to growth as exports sag and consumption is curbed by high household debt.

Initiatives such as the ambitious $45 billion Eastern Economic Corridor project to draw investment into the country’s industrial east could be delayed as the transition plays out.

There are also concerns that whether the pro-junta or anti-junta camp forms the next government, it will be an unstable one, which is not good for the economy and financial markets, fund managers said.

“This should put pressure on the Thai stock market over the next 3-4 months,” said Kamonyos Sukhumsuwan, fund manager at Asset Plus Asset Management.

“Even if (pro-army) Palang Pracharat can form a government, which is positive for the market, in the longer term there, there are risks of stability and difficulty in driving policies.”

The Thai stock market ended up 0.4 percent on Tuesday, after falling 1.2 percent on Monday, but foreign investors are still selling shares, having sold a net 12.9 billion baht ($407.71 million) worth this year.

The baht eased by 0.2 percent against the dollar on Tuesday, bucking gains elsewhere in Asia.[EMRG/FRX]

Thailand reported its strongest economic growth in six years in 2018, at 4.1 percent, but still lagged the Philippines’ 6.2 percent, Indonesia’s 5.17 percent and Malaysia’s 4.7 percent.

For 2019, the central bank last week cut its GDP growth forecast for a second time in three months, to 3.8 percent from 4.0 percent, citing increased global risks.

Businesses are not too pessimistic, however.

“Investors can accept whoever will be the next government only if they can make the political stable, said Sanan Angubolkul, vice chairman of the Thai Chamber of Commerce.

“Still, they may wait for six months to see what the new administration’s policies will be,” he said. “What they don’t want to see is unrest or a coup.”