{"id":40226,"date":"2025-09-03T05:57:07","date_gmt":"2025-09-03T05:57:07","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/40226\/"},"modified":"2025-09-03T05:57:07","modified_gmt":"2025-09-03T05:57:07","slug":"thailands-economy-faces-pressure-amid-political-turmoil-with-potential-interest-rate-cut","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/40226\/","title":{"rendered":"Thailand’s economy faces pressure amid political turmoil, with potential interest rate cut"},"content":{"rendered":"


\nThailand’s credit rating at risk of downgrade<\/strong><\/p>\n

Nomura Holdings Inc. has warned that Thailand’s credit rating may be downgraded by Moody’s in the coming quarters, citing growing political uncertainty and ongoing economic stagnation. Previously, Nomura had predicted that Thailand\u2019s interest rates would fall below 1% by the end of 2025, but now there are concerns over the potential impact of these issues on the country\u2019s credit standing.<\/p>\n

In April 2025, Moody’s lowered its outlook on Thailand’s credit rating from stable to negative, citing the potential impact of US import tariffs on Thailand\u2019s trade and economic growth, alongside rising global uncertainty and challenges to economic recovery. However, Thailand\u2019s Baa1 credit rating remained intact after the Constitutional Court ruling on the Prime Minister\u2019s case.<\/p>\n

In its latest analysis, Moody’s pointed out that Thailand\u2019s divided politics, with a fragile coalition government and frequent changes in leadership, is holding back investment and hindering essential structural reforms.<\/p>\n

Despite these challenges, Bloomberg reported some positive news for Thailand, as the House of Representatives passed the 2026 fiscal budget of 3.78 trillion baht on September 1, with the Senate expected to approve it on Tuesday. This move is expected to alleviate concerns among investors over potential budget delays, as occurred in 2019.<\/p>\n


\nBureaucracy supports national stability<\/strong><\/p>\n

S&P Global Ratings noted in its latest statement on September 1 that the political volatility following the Prime Minister\u2019s removal should not significantly impact Thailand\u2019s credit outlook. S&P also predicted that the Thai government\u2019s operations would likely remain stable due to the strong role of the bureaucratic system, which has upheld the country\u2019s stability since the 2006 political crisis.<\/p>\n

However, ongoing trade negotiations between Thailand and the US could be affected by political unrest, particularly if there is a House dissolution, as parts of the agreement, such as import tax reductions on US goods, require parliamentary approval.<\/p>\n

Burin Adulwattana<\/strong>, Managing Director and Chief Economist at Kasikorn Research Centre, warned that Thailand\u2019s economy could face setbacks across multiple areas if political paralysis ensues. \u201cBudget disbursement, investment projects, and trade agreements with the US will stall if political paralysis takes hold,\u201d said Burin. \u201cThere is no good news on the horizon.\u201d<\/p>\n


\nPolitical instability could impact Thailand\u2019s credit rating<\/strong><\/p>\n

Amonthep Chawla<\/strong>, Assistant Managing Director and Head of Research at CIMB Thailand, warned that Thailand’s credit rating could be downgraded amid the country\u2019s ongoing political instability and stagnant economic growth.<\/p>\n

He explained that the current political situation, coupled with Thailand\u2019s economic slowdown, presents risks to the country\u2019s credit outlook. While the US credit rating agency Moody\u2019s has not yet made any drastic moves, the ongoing political uncertainty could lead to a negative outlook on Thailand\u2019s economy, with potential consequences for its credit rating in the future.<\/p>\n

\u201cIt’s not just about the political issues directly, but rating agencies are closely observing the relationship between politics and the economy,\u201d he said. \u201cIf the situation leads to prolonged delays in government operations or further budgetary issues, these could negatively affect Thailand’s credit rating.\u201d<\/p>\n

He also pointed out that while political changes, such as a new Prime Minister or House dissolution, would not automatically trigger a credit rating downgrade, they do contribute to growing concerns. With Thailand\u2019s economy experiencing low growth for a prolonged period, the structural factors behind this stagnation mean that political uncertainty is becoming a more significant concern for credit agencies.<\/p>\n

Furthermore, Amonthep added that the delay in government action and the potential disruption in the disbursement of government budgets could serve as a signal for credit agencies to re-evaluate the country’s outlook. While the 2026 budget has already passed the Senate, the actual disbursement process and its impact on economic growth need to be closely monitored.<\/p>\n

\u201cThis situation is not new,\u201d said Amonthep. \u201cIt\u2019s not just TIS that has lowered its outlook, but S&P and Fitch have also previously downgraded Thailand\u2019s outlook.\u201d<\/p>\n

In terms of economic impact, Amonthep believes that a downgrade may not cause an immediate capital outflow, nor would it result in significant depreciation of the Thai baht or a mass sell-off of stocks. However, he warned that it remains a trend to watch and Thailand must remain vigilant in addressing these challenges.<\/p>\n","protected":false},"excerpt":{"rendered":" Thailand’s credit rating at risk of downgrade Nomura Holdings Inc. has warned that Thailand’s credit rating may…\n","protected":false},"author":2,"featured_media":40227,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[174],"tags":[30723,4932,9,79,30721,179,18,19,17,30722,30724],"class_list":{"0":"post-40226","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-bank-of-thailand","9":"tag-bloomberg","10":"tag-breaking-news","11":"tag-business","12":"tag-credit-rating","13":"tag-economy","14":"tag-eire","15":"tag-ie","16":"tag-ireland","17":"tag-moodys","18":"tag-the-monetary-policy-committee-mpc"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/40226","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=40226"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/40226\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/40227"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=40226"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=40226"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=40226"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}