Moody's Flags Thai Economic Outlook Amid Tariff Fears; Analysts Urge Action

Negative outlook reflects concerns over US trade policy and fiscal stability, prompting warnings and calls for strategic government response

 

Moody's has revised Thailand's economic outlook to negative, while maintaining its Baa1 sovereign credit rating, citing external risks, particularly potential US tariffs.

 

This has spurred reactions from Thai institutions and analysts, who largely view it as a critical warning necessitating prudent fiscal and monetary policies and strategic economic stimulus.

 

Patchara Anuntasilpa, Director-General of the Public Debt Management Office (PDMO) at the Ministry of Finance, acknowledged the significant impact on global and regional trade, indirectly affecting Thailand. While the severity is uncertain, the global growth forecast for 2025 has been lowered.

 

Moody's highlighted Thailand's strong external finances and institutional stability but noted slower post-COVID growth compared to peers and vulnerability to economic shocks like tariffs. Concerns were also raised about delayed fiscal consolidation and structural challenges like an aging population and low productivity.

 

Thailand Development Research Institute's Nonarit Bisonyabut clarified the negative outlook is a warning of future risks, urging policies for sustainable solutions, not just short-term fixes, and cautioning against populist measures.
  

The Federation of Thai Industries Chairman Kriengkrai Thiennukul called for a major economic restructuring, noting the reliance on strong reserves while highlighting long-term structural weaknesses. He deemed the stimulus package necessary given lowered GDP forecasts.

 

Thai Chamber of Commerce President Poj Aramwattananont stressed the negative outlook as a confidence concern for investors, pointing to fiscal stability worries but expressing faith in other economic drivers. 

 

University of the Thai Chamber of Commerce President Thanavath Phonvichai saw trade war risks and slow recovery as concerns, noting Thailand's open economy is vulnerable but believes strong fiscal standing and growth potential mitigate investment impact.

 

Tisco Securities CEO Paiboon Nalinthrangkurn downplayed the outlook revision's immediate impact, awaiting US tariff negotiation outcomes, and expressed hope for the government stimulus and debt restructuring in the latter half of the year.
  

The government is reportedly negotiating with the US and planning tax reforms and long-term fiscal burden reduction. While FDI remains strong and tourism is expected to rebound, the need for prudent macroeconomic policies and structural reforms is underscored by the Moody's outlook revision.

(2025/05/01-00:00)