Keep an eye on Fitch's assessment of Thailand's credit rating; SCB EIC warns that the Thai Ministry of Finance still faces risks.

SCB EIC warns that Thailand shouldn't be complacent after Moody's and S&P gave it the first hurdle, pointing out that the market will still be watching Fitch Ratings' assessment in the second half of the year. It emphasizes that the long-term credibility of monetary policy will determine the cost of funds for the entire country.

29 Jun 2569 Dr. Thitima Chucherd, Senior Director, Macroeconomic Research Division, SCB Economic and Business Research Center (SCB EIC) It was revealed that, although Thailand received positive signals regarding its credit rating from Moody's and S&P in the first half of 2569, the key issue was not with Thailand. "Passed the evaluation" It's possible in the short term, but the question is whether the confidence will be sustainable, because even if negative concerns decrease,

The Thai economy is seen as entering a stabilization phase. Market confidence is recovering, but structural challenges remain, particularly regarding long-term economic growth potential and fiscal sustainability. These are issues that credit rating agencies are increasingly focusing on. In this context, what foreign entities are evaluating Thailand is not simply about... "Does the country's image look better now?" But it is "Is Thailand truly capable of sustainably improving its image?" Fitch's assessment in the second half of this year will therefore be a crucial test for Thailand and the outlook for the country's financing costs going forward.

In the second quarter of 2026, Thailand received a positive signal regarding its credit rating, with Moody's upgrading its outlook from... “Negative” เป็น “stable” And it maintained its Baa1 rating, based on assessments that the impact of the trade war with the US was lower than expected, reduced political uncertainty supports the continuity of economic policies, and domestic investment momentum has returned. This is evident in the figures for investment incentive approvals from the BOI, reflecting the easing of short-term risks, both external and political.

Meanwhile, S&P maintained Thailand's rating at BBB+ with a positive outlook. “stable” Focusing on policy continuity, external stability, and the credibility of the macroeconomic framework, S&P projects the Thai economy to improve in the medium term, returning to around 2.5% growth, with the fiscal deficit narrowing to less than 3% of GDP and the current account surplus continuing at an average of around 2% of GDP.

These developments have alleviated short-term concerns and partially restored investor confidence, especially since Thailand's main risks, such as the impact of the trade war and the use of fiscal policies to support the economy, are not significantly different from those of other countries in the same group. However, this good news may not be the end of the story, as the second half of the year will be the time to begin reflecting the effects and costs of these policies. This will be a turning point, shifting from a restoration of confidence to a true test of the policies' credibility.

While Moody's and S&P place considerable emphasis on short-term economic stability and policy continuity, Fitch's assessment of Thailand may differ. Historically, Fitch's framework has prioritized fiscal sustainability and medium-term public debt trends. The key question, therefore, is not simply whether the Thai economy will recover, but rather, "Can Thailand truly implement fiscal reforms to stabilize public debt and maintain fiscal discipline?"

Going forward, Thailand's credit rating is shifting from a traditional view... "Short-term results" Moving towards evaluation. "Reliability of future direction" In other words, what the market is evaluating about Thailand is not just a policy announcement, but the actual execution of that policy.

Dr. Thitima further revealed that Thailand's challenge at this time is not in having a set of policies, but in management. "Trade-off" The complexities of short-term and long-term economic policies are evident. On one hand, stimulus policies are necessary to sustain growth and mitigate the impact of the Middle East conflict, while long-term policies aim to boost confidence in addressing the country's structural problems. However, on the other hand, increased spending and debt add pressure on fiscal sustainability if revenue reforms are not clearly visible.

The result is that this same set of policies is creating both... "Drivers of Growth" "Credit risk" This is why the market isn't just looking at the numbers today, but is assessing whether Thailand can manage this conflict and how it is viewed. "Policy credibility" In the eyes of investors.

If a country's credit rating changes, the cost of financing across the entire system is re-priced. Changes in credit ratings are not limited to the government bond market but are transmitted throughout the system through various mechanisms. "New Risk Pricing" When fiscal confidence weakens, bond yields rise, private credit spreads widen, and ultimately this is reflected in the borrowing costs for businesses and households.

“Empirical evidence indicates that a credit rating downgrade, particularly a drop from investment grade, can push borrowing costs up by more than 1% in the short term, reflecting a nationwide ‘risk premium.’ In practice, this impact doesn't remain confined to the capital markets but is passed on to the real economy through slower investment, weaker employment, and reduced economic growth.”

In the case of the United States, after Moody's downgraded its credit rating to Aa1 (from Aaa) earlier this year, following the downgrades of two other major credit ratings, it contributed to higher long-term US Treasury yields and was passed on to interest rates on loans such as mortgages and credit cards. Meanwhile, the sell-off in Indonesia during June reflects another dimension of risk, even though the country itself was not downgraded, the questions surrounding its future prospects remain. "The credibility of the policy." This can continuously put pressure on investor sentiment and increase the risk of capital outflow and higher borrowing costs.

Therefore, a change in a country's credit rating is not just a change in perspective, but a transformation. "The cost of the entire system's funds." This will gradually be transmitted through financial markets and real economic activity in the subsequent period. While Thailand may have passed the phase of regaining confidence in the eyes of Moody's and S&P, the key question remains: is this confidence sufficient and sustainable? In this context, Fitch's assessment is not just another perspective on the credit rating, but a test of whether Thailand can make a change. "Short-term confidence" to become "Long-term reliability" And help. "Reduce the country's financial costs." Is it possible in the near future?

Because ultimately, what the country is being judged on is not just its credit rating, but the 'price of the entire nation's money' that will be redefined in the future.

Read news related to the economic situation across Thailand here.