Thailand's sovereign credit has been rated at Baa1, or equivalent to BBB+, by Moody’s Investors Service, which maintained the country’s outlook at stable, Patricia Mongkhonvanit, director-general of the Public Debt Management Office (PDMO), said on April 8.

According to the Moody’s report, the affirmation of the Baa1 ratings reflects Moody’s expectations that Thailand will continue to display economic resiliency to future shocks, underpinned by its large and diverse economy and strong macroeconomic policy effectiveness.

“The rating also takes into account material downward pressure on the economy’s growth potential from rapid population ageing and likely long-term economic scarring from the pandemic,” said the report.

“While Moody’s expects Thailand’s government debt to increase and remain markedly higher than pre-pandemic norms, leaving the government with weakened fiscal strength for some time, Thailand’s fiscal metrics will still be stronger than most Baa-rated peers. Further, Moody’s assesses it likely that the government will quicken its pace of fiscal consolidation in the next two to three years once the economic recovery takes hold.

“The stable outlook indicates balanced risks to Thailand’s credit profile. Thailand’s economic strength may benefit from productivity gains, including through the ramp-up of the Eastern Economic Corridor to a greater extent than Moody’s currently expects. By contrast, the economic and social costs of ageing and Thailand’s capacity to absorb them have yet to be tested,” added the report.

“Meanwhile, the authorities’ track record of effective macroeconomic policies, including prudent fiscal policies, despite noise in the political landscape, contributes to the stable outlook,” the report said.

“Moody’s expects Thailand’s real GDP [gross domestic product] growth to come in at above potential rates for the next two to three years, as the effects of the pandemic fade and the tourism industry is slowly recovering,” said Patricia.

“The rating agency has, therefore, projected the economy to expand by 3.4 per cent in 2022 and 4.8 cent in 2023, which is not far from the estimation of the Asian Development Bank, which recently forecast that Thailand’s GDP will grow by three per cent this year and 4.5 per cent in 2023.”