Fitch Downgrades Thailand Outlook to Negative Citing Political, Fiscal Risks

Fitch Ratings has downgraded Thailand's sovereign credit outlook from stable to negative while maintaining its BBB+ rating, citing rising fiscal pressures, political instability, and weakening growth prospects. Government debt has increased to 59.4% of GDP, near the median for BBB-rated countries, driven by pandemic-related spending and ongoing fiscal deficits. The recent ouster of Prime Minister Paetongtarn Shinawatra and the formation of a minority government with a planned snap election within four months have heightened policy uncertainty and the risk of short-term fiscal stimulus. Thailand's economy is forecasted to grow modestly at 2.2% in 2025 and 1.9% in 2026, below regional peers, with sluggish tourism recovery and export challenges due to global demand slowdown and tariffs. Experts emphasize the need for structural reforms to boost long-term growth, warning that without addressing the low-growth trap, Thailand faces not only a negative outlook but potential further rating downgrades. Targeted fiscal measures aimed at vulnerable groups and improved revenue generation are seen as critical to managing the fiscal deficit and preventing further deterioration.