Prime Minister Prayut Chan-o-cha has welcomed confirmation by the Japan Credit Rating Agency (JCR) that the Thai economy’s outlook is stable despite the economic impact of Covid-19.
The JCR announced on Monday that Thailand had been rated as having a stable outlook and said that reflected the country’s strong economic base focused on exports, the stability of its banking system and its solid international trade balance.
The Thai economy contracted 6.1% in 2020 due to a slowdown in its exports and a large decline in the number of foreign tourists caused by the pandemic, the agency acknowledged.
However, it said the economy had begun recovering after bottoming out in the second quarter of 2020 partly thanks to the effect of the government’s large-scale financial and fiscal package worth 1.9 trillion baht, equivalent to 12% of GDP.
While the resurgence of the pandemic needed to be closely watched, the economy was expected to return to growth of about 3% in 2021, said the JCR.
The public debt-to-GDP ratio increased significantly due to the implementation of the massive fiscal package but the JCR was confident the ratio would be kept at manageable levels in the future. This was due to the government’s commitment to the law that requires the ratio to be kept lower than 60%.
The agency also applauded Thailand for remaining loyal to fiscal discipline, with both the fiscal balance and government debt kept at sound levels in GDP terms.
Although the trade surplus expanded last year mainly due to a faster fall in imports than exports, the current account surplus in GDP terms declined from 7.0% to 3.3% in 2019 due to a bigger service account deficit mainly resulting from a reduced number of foreign tourists.
The country’s foreign currency reserves (excluding gold) stayed high at USD 245.3 billion (7.69 trillion baht) at the end of February 2021 due to an accumulation of current account surpluses.
The reserves were 4 times the country’s short-term external debt and this indicated that Thailand remained resilient to external shocks, said the JCR.
With sufficient funds in hand, Gen Prayut has affirmed the government’s readiness to proceed with implementing more Covid-19 relief measures for all affected parties as well as economic stimulus packages, said a government spokesman.