Thai finances solid and resilient says Fitch Ratings
Thailand’s external and public finances are solid and its outlook is stable, enhancing its resiliency to economic shocks, Fitch Ratings said last week, affirming the Kingdom’s BBB+ IDR rating, as the International Monetary Fund also said the Thai economy is improving but its gains need to be more broad-based.
The Kingdom’s strong exports have contributed to a large current account surplus and rising foreign reserves, both of which bode well for financial stability and the ability to withstand external shocks. With Thailand’s economic growth mainly dependent upon exports, however, Fitch said rising trade protectionism among some of Thailand’s trading partners is a risk that needs to monitored and considered.
Fitch said it “expects the current-account surplus to remain large on the back of strong goods and tourism services exports, but to narrow modestly to 8.1 percent of GDP (gross domestic product) by 2019, from 10.6 percent in 2017, as improved domestic demand spurs import growth.
“Sustained current-account surpluses and higher capital inflows over the past several years have driven an appreciation of the Thai baht and facilitated the accumulation of foreign reserves to $213 billion in May from $156 billion in 2015,’’ the agency said.
Fitch forecast that the Thai economy will grow by 4.2 percent this year, a slightly more conservative prediction than that of some banks and economists who have voiced the opinion the growth could reach 4.5 percent on better-than-expected exports, robust tourism and public investment. The agency pointed out that 4.2 percent growth is well above the average growth rate of 3 percent for countries rated in the BBB range.
Fitch predicted that Thailand’s growth will slow slightly in 2019 because it expects global growth to slow. But the Kingdom is in a strong position to weather a slight decline.
“The country’s net external creditor position has continued to improve, reaching 46.3 percent of GDP in 2017, according to Fitch estimates, substantially higher than the BBB and A medians,’’ Fitch said.
The international Monetary Fund (IMF) was also largely positive about the Kingdom’s economy in its latest assessment, which it published last week.
“The authorities have taken important measures to strengthen financial stability, and enacted reforms that bode well for medium-term fiscal management and credibility. Under the 12th National Development Plan, the government’s program aims to address the impediments to growth and scale up infrastructure to enhance Thailand’s position in global value chains and propel the economy into the digital age,’’ the IMF said.