Fitch Ratings has affirmed Thailand’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB+’ with a Stable Outlook. The rating balances sustained external finance strengths and sound macroeconomic policy framework against weaker structural features compared to peers.
Key takeaways
- Fitch reaffirms Thailand’s ‘BBB+’ rating, citing strong external financials balanced by structural limitations, like lower income per capita and moderate governance scores.
- Fitch forecasts GDP growth acceleration to 3.1% in 2025, driven by tourism recovery and increased public spending, supported by an upwardly revised FY25 budget.
- Fitch expects public debt stabilization if fiscal plans are followed, but notes risks from potential additional stimulus and demographic challenges, alongside high but stable household debt levels.
The company highlighted a balance between Thailand’s external financial strengths and structural limitations.
Despite solid macroeconomic policies, the agency noted that Thailand faces challenges compared to peers in the same rating category, such as lower per capita income and moderate scores on the World Bank’s Governance Index.
Fitch projects that Thailand’s public debt will stabilize around the median levels of its peers after relative deterioration, conditional on the government’s adherence to fiscal consolidation plans following the fiscal year ending in September 2025 (FY25).
However, risks remain if the government implements further stimulus measures in the coming years, especially given demographic headwinds that present additional challenges.
Thailand’s growth prospects are optimistic, with Fitch forecasting GDP growth acceleration to 3.1% in 2025, driven by tourism recovery and increased public spending.
The FY25 budget, revised upward, along with revived capital investment, supports this expectation. Still, uncertainties persist, including global demand, geopolitical tensions, and the impact of recent floods in northern Thailand, which a new government relief package could counter.
On the fiscal front, Fitch estimates the government deficit will rise to 4.5% of GDP in FY25, up from 3.8% in FY24, with the government expected to use available resources to stimulate the economy.
Total public debt (GGGD) is projected to reach 61.2% of GDP by the end of FY26, a moderate burden compared to the financing costs of other ‘BBB-rated countries.
Externally, Fitch highlights Thailand’s robust position, with a current account surplus estimated at 2.9% of GDP for 2025, supported by increased service income and healthy reserve levels.
While household debt remains high, dropping below 90% of GDP at the end of Q2 2024, Fitch maintains a neutral outlook on Thailand’s banking sector, supported by solid bank capital and liquidity.
In terms of governance, Thailand scores high in political stability and regulatory quality, although political volatility remains a challenge to investor confidence and policy continuity over the long term.
