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Moody’s has upgraded Thailand’s sovereign credit outlook from negative to stable, while keeping the country’s sovereign credit rating at Baa1, according to Bloomberg. The agency said the change reflects a reduced risk from U.S. tariff shocks to Thailand’s economy and improved domestic investment momentum.
Moody’s said the outlook upgrade is based on its view that risks from a severe and prolonged tariff shock have abated after the United States reduced tariffs on Thai exports to levels in line with regional peers.
Moody’s also noted that while higher oil prices linked to tensions in the Middle East could weigh on growth and debt, the potential impact on Thailand would be comparable to that faced by other economies with the same rating.
A year ago, Moody’s downgraded Thailand’s outlook to negative due to U.S. tariff shocks. That earlier move prompted a strong response from the Thai government, which accused Moody’s of acting hastily.
This time, Moody’s said the upgrade also signals that Thailand’s investment momentum has shifted more positively, lowering the risk of slower growth over the long term.
Moody’s pointed to improving private sector capital conditions, supported by a series of projects and streamlined approval processes. It said that in 2025, both the number of permit applications and projects implemented rose.
Moody’s said the upgrade places Thailand near the investment-grade threshold in Southeast Asia with a stable outlook, which could help attract capital inflows. However, it highlighted medium-term sensitivities including high oil prices, rising public debt, and weak long-term growth prospects.
It also reiterated that Thailand’s Baa1 rating reflects a strong foreign exchange position and relatively comfortable debt-servicing capacity, balanced against weaker long-term growth and the potential for higher government debt in coming years.
Moody’s decision could ease pressure on the Thai government as it considers issuing a special decree to raise 500 billion baht and increase the debt ceiling. Thai authorities are seeking to mobilize funds to shield households from global energy shocks, even as fiscal space narrows.
Moody’s said the formation of a ruling coalition with a comfortable majority in Parliament after Prime Minister Anutin Charnvirakul’s landslide victory has helped reduce political risk. The agency added that these positive political developments could support policy adoption and implementation in a stable manner, improving the outlook for economic reform.
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