S&P retains Thailand’s sovereign credit BBB+ rating
S&P Global Ratings (S&P) has retained Thailand’s sovereign credit rating for 2022 at BBB+, with a stable outlook, similar to last year, according to Public Debt Management Office director-general Patricia Mongkhonvanit.
S&P’s ratings report, published on Wednesday, said the Thai economy is accelerating after an extended slowdown stemming from Covid-19. The lifting of restrictions on domestic movement and border controls is helping to normalise economic activity.
Crucially, this easing of restrictions is speeding up recovery of Thailand’s tourism sector, which plays a key role in its services-oriented economy, said S&P.
The ratings agency expected Thailand’s real GDP growth to quicken to 2.9% in 2022, versus 1.5% in 2021, and forecast an average real GDP growth rate of 3.2% from 2022 to 2025.
The tourism sector could outperform higher-end expectations for approximately 10 million international visitors this year, increasing from 428,000 visitors in 2021, the report said.
S&P said the government is maintaining an emphasis on capital expenditure projects, including work on the Eastern Economic Corridor, as well as transport infrastructure under a master plan.
Ongoing investment in these areas will restore the competitiveness of Thailand’s economy, which has been characterised by relatively weak productivity growth in recent years, the report added.
Regarding finance, S&P projected the country’s fiscal deficit and accumulation of debt to fall gradually over the next three years, as pandemic-related stimulus fades and revenue performance improves.
The budget is likely to improve in fiscal 2023, after the economy begins to recover. Revenue growth will be stronger, and the need for stimulus spending will abate.
S&P said Thailand’s current account, which fell into deficit during the first quarter of 2021 and has remained there since, will benefit materially from the lifting of pandemic-era border restrictions.
Meanwhile, tourism revival will help to moderate the country’s services exports deficit, and is likely to result in a modest current account surplus from 2023.
The agency expected the current account to average a surplus of 2.1% of GDP from 2023 to 2025.
“S&P remarked that factors that require close monitoring are the global financial situation and political stability in Thailand, which could affect the performance of socio-economic policies,” Patricia pointed out.