Japan Credit Rating Agency optimistic on Thai economy.

Thailand’s economy should grow by as much as 3 percent this year, according to the Japan Credit Rating Agency (JCR), which affirmed the Kingdom’s A- sovereign credit rating with a stable outlook.

Japan is the largest investor in Thailand, and so its assessment of the state of the Thai economy is essential to the Kingdom’s recovery. In 2019, Japan accounted for over 34 percent of all foreign investment in Thailand. The United States ranked fourth with 6.7 percent of all investment.

The JCR said it assessed Thailand as having a stable outlook based on the Kingdom’s solid economic fundamentals that were focused on exports, the stability of its banking system and its solid international trade balance.

Although the Thai economy suffered greatly during the pandemic, the JCR said it had begun recovering after bottoming out in the second quarter of 2020. This was partly due to the effects of the government’s large-scale financial and fiscal package worth roughly $600 billion, equivalent to 12 percent of gross domestic product (GDP).

The JCR noted that Thailand’s public debt-to-GDP ratio increased significantly due to the implementation of the massive fiscal package. But the JCR said it was confident the ratio would be kept at manageable levels because of legal requirements that the ratio was kept lower than 60 percent.

The country’s foreign currency reserves, excluding gold, remained high at $245.3 billion at the end of February 2021. The reserves were four times the country’s short-term external debt. The JCR said this indicated that Thailand was still resilient to external shocks.