2 June 2015
The Government is confident that it is now on the right track in laying the foundations for Thailand’s sustainable economic growth.
Deputy Government Spokesman Major General Sansern Kaewkamnerd quoted the recent report by Moody's Investors Service that Thailand's stable BAA1credit rating is supported by a very strong government financial position.
He said that Prime Minister General Prayut Chan-o-cha had been informed of the report and thanked all sectors of Thai society for their efforts to help stabilize the Thai economy, so that it has been well-recognized internationally. The Government intends to introduce political and economic reforms for sustainability, instead of establishing populist policies that would lead to negative impacts in the long run.
According to Moody’s credit analysis, Thailand's well-diversified economy and high foreign reserves are additional credit strengths. Manufacturing, wholesale and retail trade, and agriculture accounted for around 52 percent of nominal GDP in 2014, and 66 percent of employment. The services sector was the single largest source of GDP growth in 2014, whereas the contribution from agriculture was negligible.
Increased public investment spending will be the key to Thailand's growth recovery in 2015 and 2016, whereas sluggish external demand recovery and constraints on private consumption spending due to high household debt may act as a drag on growth. In Moody's view, infrastructure improvements are likely to help improve Thailand's regional competitiveness.
The rating agency also says that the military coup on 22 May 2014 restored public order and stemmed economic uncertainty. The stable rating outlook means that credit strengths and weaknesses are balanced.
Meanwhile, the Bank of Thailand issued a report on the economic and monetary conditions for April 2015. The report says that the tourism sector and public spending continued to play an important role in supporting the economy. Thailand’s tourism industry continued to expand well, thanks to Chinese and Malaysian tourists.
Public spending, particularly on capital expenditure for transportation and irrigation, continued to be disbursed well, despite a slight decline after acceleration in March 2015. Meanwhile, government revenues increased significantly from the same period in 2015.
On the stability front, the unemployment rate declined slightly, thanks to improving employment in the production sector after a continuing drop since the beginning of the year. Inflation decreased on the back of domestic retail oil prices, following the lower government oil fund levy and lower prices for meat and eggs.
The current account registered a surplus, mainly because of import contraction. The capital account also registered a surplus from inflows of foreign direct investment. Overall, the balance of payments continued to record a surplus, and the ratio of international reserves to short-term external debt remained high.