Fitch forecasts Thailand’s economy to grow by 3.1% in 2025
Ratings agency gives ‘BBB+’ rating with stable outlook
Fitch Ratings has affirmed Thailand's long-term foreign-currency issuer default rating (IDR) at 'BBB+' with a stable outlook, the international ratings firm reported on Friday.
Fitch said Thailand's ratings balance its sustained external finance strengths and sound macroeconomic policy framework against weaker structural features compared with that of 'BBB' category peers, such as lower per capita income and World Bank Governance Indicator scores.
The firm expects Thailand's government debt metrics to gradually stabilise at levels close to peer medians, following a period of relative deterioration in the past four years, assuming the government will follow through on its fiscal consolidation plans after this fiscal year ending September 2025 (FY25).
A continuation of sizeable stimulus measures in the years ahead would pose risks to the medium-term fiscal outlook, especially since Thailand already faces demographic headwinds, it said.
Fitch forecasts that Thailand’s economic growth will accelerate to 3.1% in 2025, from an estimated 2.6% in 2024. Stronger growth prospects will be propelled by a continued tourism recovery, stepped-up government spending and improvements in private consumption.
Tourism arrivals in 2025 will recover fully to pre-pandemic levels, driven by supportive policy initiatives, the company said, adding that the upward revision of budget expenditure for FY25 and a normalisation of capital budget disbursement following significant delays in FY24 bode well for stronger domestic demand.
Fitch expects the growth gains of the first government-funded 145-billion-baht (0.8% of GDP) cash handout to vulnerable groups to mitigate the damage caused by recent floods in northern Thailand. Stronger tourist arrivals and private investment than its baseline assumption, potentially led by greater investor confidence and reduced political volatility, may boost growth.
Thailand’s downside risks include weaker global demand, such as a sharp growth slowdown among Thailand's major trading partners, heightened geopolitical tensions, and uncertainty over the US post-election trade strategy, the company added.
