Moody’s affirms Thailand’s rating at Baa1 and revises the outlook upward to “Stable”, signaling potential for the country to successfully implement tangible structural reforms.

Moody’s affirms Thailand’s sovereign credit rating at Baa1 and revises the outlook upward to “Stable”.

Moody’s revised Thailand’s credit rating outlook upward to “Stable”, from three key factors:
(1) reduced economic risks from U.S. tariff barriers; (2) an improved investment outlook in Thailand, which lowers the risk of very weak long-term economic growth; and (3) reduced political volatility following the election. Moody’s also noted that, although Thailand’s economic outlook remains weak and the public debt trajectory continues to rise, these factors remain broadly in line with peers with similar credit ratings. The Thai government still maintains strong debt repayment capacity, while the external sector remains a key strength.

SCB EIC assesses that Thailand’s credit rating outlook going forward will depend on progress in economic and fiscal reforms, including upgrading the 4T policy framework to 4T Plus by incorporating Transparency.

SCB EIC views that three key factors contributed to Moody’s decision to revise Thailand’s credit rating outlook upward this time:
(1) a proactive communication strategy led by the Deputy Prime Minister for economic affairs; (2) the 4T policy package, which represents a public spending strategy focused on Targeted, Transition, Transform, and Together; and (3) the Medium-Term Fiscal Framework as of November 2025, which reflects the current government’s efforts to pursue fiscal reform.

SCB EIC recommends that the government:
(1) upgrade the 4T policy framework to 4T Plus by incorporating Transparency and Anti-corruption, as this issue has long undermined the competitiveness of the Thai economy and is used by credit rating agencies as part of their assessment of a country’s credit metrics; and
(2) on fiscal stability, should the government issue an emergency decree for additional borrowing or raise the public debt ceiling to support households affected by the impact of the war in the Middle East, this could be undertaken under three conditions to strengthen confidence in fiscal discipline:
(2.1) strategic spending — in the short term, spending should be targeted toward those affected, while investment should support transition and transformation to enhance the economy’s long-term growth potential;
(2.2) concrete fiscal reform — through broadening the tax base, reducing unnecessary expenditures, and improving the efficiency of government spending or measures; and
(2.3) transparent communication — with a clear implementation plan and continuous monitoring of key performance indicators (KPIs).

Looking ahead, if the government can make visible progress in advancing reform policies, alongside short-term economic support measures, there may be an opportunity for Fitch to revise Thailand’s outlook upward to Stable in the second half of this year, after downgrading Thailand’s outlook to Negative last year. If Thailand can implement national reform policies with sustained and tangible results, this would strengthen the medium-term fiscal position and enhance the country’s ability to withstand economic risks going forward.