Bangkok: Thailand’s credit rating outlook has been downgraded to negative, intensifying pressure on the baht and raising concerns over the country’s economic trajectory.

According to Thai News Agency, the downgrade from “stable” to “negative” by Fitch Ratings highlights the economic slowdown and challenges within the government’s fiscal position. Siam Commercial Bank’s Financial Markets Division predicts the baht will trade within a range of 31.00-32.00 baht per dollar by the end of 2025.

Mr. Wachirawat Banchuen, Senior Financial Markets Strategist at SCB Financial Markets, noted that the baht depreciated by nearly 20 satang following the downgrade. This depreciation coincided with weaker-than-expected Thai export figures for August, further suggesting significant economic slowing in the coming quarters. External factors, including a stronger US dollar and rising US Treasury yields, also contributed to the baht’s weakening. Thai government bond yields increased slightly in response to the revised outlook. Fitch Ratings expressed concerns about Thailand’s fiscal buffer and economic outlook, noting that public debt reached 59.4% of GDP in August 2025. Despite these challenges, Thailand’s strong external stability and ability to finance government debt repayments have prevented a downgrade from BBB+.

Factors that could lead to a credit rating downgrade include the macroeconomic outlook slowing in the medium term, with expected growth only at 1.8% this year and potentially declining further. The export sector is likely to slow due to US import tariffs, while private consumption and investment face challenges from low household income, high debt, and weak domestic demand. The government’s fiscal position also remains weak, with an increasing fiscal deficit projected at 4.6% of GDP this fiscal year and 4.3% next fiscal year. The lack of clear policies to reduce the fiscal deficit further complicates the situation.

Failure to address structural issues and promote sustainable growth could result in a credit rating downgrade. Moody’s revised Thailand’s outlook negatively in April, suggesting a possible downgrade in the coming year. The downgrade reflects structural and long-term challenges that are difficult to resolve. Political uncertainty, with elections expected early next year, adds to the concerns as fiscal policy may prioritize short-term measures over long-term solutions.

However, if the Thai government implements a plan to improve fiscal discipline and communicates it effectively, it may prevent a credit rating downgrade. Moody’s review of Thailand’s credit rating in October will be closely watched for further developments.