Moody’s: Thailand’s resilience provides economic stability

Thailand’s economy is tough to beat. Global credit rating agency Moody’s Investors Service affirmed Thailand’s Baa1 rating last week and said that the Kingdom would prove resilient to future shocks thanks to effective policies and its diverse economy

Patricia Mongkhonvanit, Director-General of the Public Debt Management Office, said that Moody’s does expect that Thailand’s government debt will increase and remain higher than the pre-pandemic levels. While that will weaken the government’s fiscal strength for some time, Moody’s said that Thailand’s fiscal metrics will still be stronger than most Baa-rated peers.

The agency added that it expectats Thailand will continue to display economic resiliency to future shocks, because the Kingdom has a large and diverse economy and strong macroeconomic policy effectiveness. That led Moody’s to affirm the Thai government’s Baa1 issuer and local currency senior unsecured ratings.

The rating agency is forecasting that the Thai economy will expand by 3.4 percent in 2022 and 4.8 percent in 2023.

Due to the public health and economic crises caused by the pandemic, the government ran large fiscal deficits in 2020 and 2021, sharply increasing the government debt burden. Moody’s expressed that Thailand’s long history of prudent fiscal policy endowed it with sizeable fiscal space to respond to the economic shock.

Thailand’s economic strength may also benefit from productivity gains. The steady ramp-up of the Eastern Economic Corridor (EEC) advanced development zone may also contribute to that.

Moody’s further added that it expects tourist arrivals to recover from the pandemic damaged to travel, although slowly, with greater gains next year. Tourist arrivals should reach 50 percent of pre-pandemic levels in 2023, which would amount to about 20 million visitors.

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