Finance Ministry shrugs off credit rating slash warning
Points to continued foreign direct investment and dismisses claims that Thailand has fallen behind its neighbours
The Finance Ministry believes Thailand’s economy will continue to grow thanks to a constant increase in foreign direct investment (FDI), despite warnings that the country’s credit rating of BBB+ is at risk of being reduced.
Deputy PM and Finance Minister Pichai Chunhavajira said on Tuesday that statistics showed that FDI in 2024 is the highest in the past 10 years, and the government has continually attracted foreign capital in key industries.
“Foreign companies have applied for investment promotion in projects worth over 2 trillion baht in the past three years. This indicates foreign investors’ strong interest in Thailand, and these projects will help strengthen our economy continually,” he said.
Pichai was responding to an economic forecast by the Siam Commercial Bank Economic Intelligence Centre (SCB EIC), which said that Thailand’s credit rating could be reduced from the current BBB+ level.
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.
Pichai pointed out that the forecast is based on a hypothesis that Thailand’s economy will keep expanding at under 3%, which makes it harder to tackle issues that rely on economic expansion, such as debts of households and SMEs.
He added that as the government aims to balance public debts in the long term, it needs to run a deficit balance in the short term to boost the economy, resulting in some economic problems that could not be solved within one or two years.
“The most urgent thing we need to do is prepare for future investments, as they will help keep Thailand’s economy expanding gradually. It is impossible to expect the economy that has been growing at around 2% every year to suddenly jump by 4%,” he added.
The finance minister added that he did not believe Thailand is lagging behind neighbouring countries as the forecast suggested. However, he believed Thailand could do better in setting a clear policy for new investments to attract potential investors.
“I am confident that everything will start to improve, as reflected by the commercial banking sector now showing strong profits, and that we will see other positive developments in the last quarter,” Pichai said.
