Measures urged to prevent Thailand’s credit rating from being slashed
Thai Chamber of Commerce urges government to address the three weaknesses identified by leading economists
Concerned at Siam Commercial Bank Economic Intelligence Centre (SCB EIC)’s forecast that Thailand’s credit rating could be reduced from its current BBB+ level, the Thai Chamber of Commerce (TCC) has urged the government to urgently implement measures to strengthen the country’s economy.
SCB EIC said last week that Thailand is displaying three weaknesses that could lead to rating cuts. The first, a structural problem, is that low income per capita and the country’s demographic structure are slowing economic growth. The second weakness is the high debts of the private sector, while the third, is the continuing increase in government debt and fiscal deficits.
The EIC noted that the three problems are weakening the kingdom’s fiscal policies, resulting in an increasing public debt-to-GDP ratio, which is in contrast with other countries in the region that have successfully reduced the debt ratio since the Covid-19 pandemic.
Sanan Angubolkul, chairman of the TCC, said on Monday that to prevent the credit rating from being slashed, the government must implement measures to bolster the economic strength in two areas:
1. Ensure an effective and efficient use of fiscal policy and budgets to stimulate the economy. In addition to the 10,000-baht handout scheme that has already been implemented, the TCC suggested additional measures such as the co-payment shopping schemes, Easy e-receipt, and other tax measures that do not require budget expenditure to increase people’s purchasing power.
This would enhance the Thai economy, encouraging greater consumer spending, improving government tax collection, reducing household and public debt-to-GDP ratios, and supporting Thai economic growth of 3.5-4.0% next year.
2. Strengthen political stability, which is one of the key factors supporting the economic system and investors’ confidence. The government should use the parliamentary platform to set the direction for addressing economic and political issues. If political risks arise, there should be a seamless transition point to ensure that economic policies can continue to progress.
“It’s crucial to preemptively prevent the credit rating from being slashed, as a lowered rating would affect the confidence of foreign investors, triggering the outflow of funds in the capital and bond markets, and eventually decreasing the country’s financial liquidity,” he said.
Earlier this month, The World Bank reduced Thailand's GDP growth forecast for 2024 to 2.4% and 3.0% in 2025, down from the April report's projections of 2.8% and 3.0% respectively.
The bank pointed out that Thailand's GDP growth has averaged just 2.6% annually since 2010, lagging behind regional peers. Investment and productivity growth have been relatively weak, structural transformation has stalled, and inequality remains significantly high. Furthermore, a rapidly ageing population means fewer working-age individuals to support future growth.
