Moody's Investors Service has raised the outlook on the Thai government's issuer ratings to positive from stable and affirmed the Baa1 issuer and senior unsecured ratings.
The decision to change the outlook to positive reflects Moody's view that investment in physical and human capital, in the context of a lengthening track record of a predictable and stable macroeconomic environment, may over time boost Thailand's competitiveness.
Such developments could partially offset the drag on the country's growth potential from gaps in human capital development and an ageing population, said Moody’s on Friday.
The upgrade came after Fitch Ratings raised Thailand's outlook to positive last week.
Moody's said Thailand is building a long track record of transparent and predictable fiscal and monetary policies that maintain a broadly stable and low government debt burden, low and stable inflation and financial stability.
Long-standing macroeconomic stability through economic and political cycles supports competitiveness.
In recent years, competitiveness has been hampered by delays in infrastructure investment and a lack of skills, preventing Thailand's economy from moving to higher value-added sectors, said Moody’s.
The affirmation of Thailand's Baa1 ratings reflects the country's strong public and external finances, providing significant room to counter shocks. Thailand's large and diverse economy also supports shock absorption capacity and the rating.
The Baa1 rating also takes into account credit constraints from lingering, albeit easing, political risk, and longer-term structural challenges related to an ageing society and labour skills shortages that weigh on growth potential, said Moody’s.