Thailand’s economy affected by global headwinds: Fitch Ratings

Fitch Ratings has warned that Thailand’s economic recovery could be constrained by a global slowdown while the new coalition government’s economic stimulus policies could lead to higher government debt.

The credit rating agency said Thailand is not immune to the weaker global backdrop, with merchandise exports contracting year on year since October 2022 and tourist arrivals, while rising, remaining well below pre-pandemic levels.

The recent formation of the multi-party coalition government could encourage consensus-led policymaking, but wide-ranging views within the coalition will complicate the process and may delay the budget for fiscal 2024, which begins on October 1, 2023, Fitch said.

It noted that fiscal consolidation is likely to be constrained by parties’ campaign pledges to raise social spending. This would support growth in the short term, though it could put upward pressure on government debt relative to GDP unless the pick-up in growth is sustained.

Fitch expects the environment in Thailand over the next two years to become more conducive for banks to grow profitably and generate capital despite the risk of further impairments on restructured loans. The agency held that major banks have an appetite to seek opportunities for growth domestically in non-bank segments, as well as abroad.

Source: Vietnam News Agency