Fitch Assigns Thailand a ‘Negative’ Outlook, Citing Political and Fiscal Risks
Credit rating remains at BBB+ but outlook shift underscores concerns over government instability and rising debt
Fitch Ratings has changed Thailand’s outlook to Negative from Stable, while affirming its BBB+ long-term foreign-currency issuer default rating.
The move reflects growing unease over the combined pressures of political volatility, deteriorating public finances, and lackluster economic momentum.
The rating agency flagged that Thailand’s general government debt has reached about 59.4 percent of GDP, drawing close to the median for ‘BBB’-rated peers.
This level marks a marked increase from before the COVID-19 pandemic and heightens the risk of future fiscal strain as borrowing costs—domestic and external—face upward pressure.
On the political front, Fitch pointed to instability arising from the recent removal of Prime Minister Paetongtarn Shinawatra by the Constitutional Court.
The process of forming a new government, expected to culminate in a general election within four months, has raised questions about policy continuity and legislative support.
Economically, the agency projects Thailand’s GDP growth at 2.2 percent in 2025 and 1.9 percent in 2026—well below the ‘BBB’ category median of 2.7 percent.
The rebound in tourism and exports has lagged expectations, contributing to sluggish private demand and limited fiscal headroom.
While Thailand retains strengths in external buffers and resilience in key sectors, Fitch warns that the outlook shift signals increased susceptibility to shocks.
Credit markets and investors will now watch how the new government addresses structural fiscal reforms, supports economic recovery, and restores confidence in Thailand’s medium-term trajectory.
The move reflects growing unease over the combined pressures of political volatility, deteriorating public finances, and lackluster economic momentum.
The rating agency flagged that Thailand’s general government debt has reached about 59.4 percent of GDP, drawing close to the median for ‘BBB’-rated peers.
This level marks a marked increase from before the COVID-19 pandemic and heightens the risk of future fiscal strain as borrowing costs—domestic and external—face upward pressure.
On the political front, Fitch pointed to instability arising from the recent removal of Prime Minister Paetongtarn Shinawatra by the Constitutional Court.
The process of forming a new government, expected to culminate in a general election within four months, has raised questions about policy continuity and legislative support.
Economically, the agency projects Thailand’s GDP growth at 2.2 percent in 2025 and 1.9 percent in 2026—well below the ‘BBB’ category median of 2.7 percent.
The rebound in tourism and exports has lagged expectations, contributing to sluggish private demand and limited fiscal headroom.
While Thailand retains strengths in external buffers and resilience in key sectors, Fitch warns that the outlook shift signals increased susceptibility to shocks.
Credit markets and investors will now watch how the new government addresses structural fiscal reforms, supports economic recovery, and restores confidence in Thailand’s medium-term trajectory.
