Fitch raises Thai outlook as IMF urges monetary expansion

Fitch Ratings raised Thailand’s long-term currency outlook to positive because of its sound macroeconomic management, while the International Monetary Fund (IMF) urged the Thai government to adopt expansionary policies to shield growth from global trade tensions.

Fitch affirmed its BBB+ rating for Thailand’s long-term foreign-currency issuer default rating while revising its outlook upward to positive. That represents a vote of confidence in Thailand. Fitch said, however, that Thai policymakers have been taking the right approach and the country should be able to weather the global economic and trade turmoil.

“This is demonstrated by the sustained strength of external and public finances over the past several years, which has resulted in greater resilience to macroeconomic and financial shocks,” Fitch said.

Thailand has avoided investors’ recent aversion to emerging markets because its external position is “robust,” the agency said. Fitch forecast that the country’s current account surplus would remain high relative to peers at 5.6 percent of gross domestic product in 2019 and 4.9 percent in 2020.  Tourism inflows and a goods surplus would support growth despite slowing exports.

The IMF went a step further and recommended that Thailand counter the global cool off and protectionism by adopting expansionary economic policies.  The IMF cited monetary easing and fiscal reforms as tools Thailand could use.

It advised that the government “front load” public investments in 2020 to help stimulate domestic demand to overcome weak demand in many of Thailand’s export markets.

The government is already planning large investments in infrastructure over the next several years.

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