The Kasikorn Research Center indicates that the recent downgrade of Thailand's credit outlook from "Stable" to "Negative" by credit rating agencies, while maintaining the BBB+ rating, reflects ongoing concerns about Thailand's weakening fiscal position following the COVID-19 crisis. This could become a key factor leading to a potential credit rating downgrade in the next 1-2 years. Lessons from other countries suggest that concrete measures to reduce the fiscal deficit are necessary.

Ms. Natthaporn Treeratnasilkul, Deputy Managing Director of Kasikorn Research Center, stated that compared to other countries with similar ratings (BBB+ or Baa1), Thailand's fiscal position is weaker, particularly due to rapidly increasing public debt and a persistently high fiscal deficit. If Thailand's economy grows at only 2% per year in the near future, the fiscal deficit may remain above -4.0% of GDP, and public debt is expected to approach the 70% ceiling by 2027. The Thai government is currently reviewing its medium-term fiscal plan, which is expected to provide clearer details on deficit reduction strategies.

Dr. Lalita Thienprasit, Head of Research at Kasikorn Research Center, noted that international examples show that countries that successfully avoid credit rating downgrades often implement concrete deficit reduction policies. For instance, Italy managed to reduce its deficit from 8.0% to below 4.0% of GDP within a few years through plans to increase revenue, cut spending, and improve public spending efficiency. In contrast, France faced credit outlook and rating downgrades due to rising fiscal deficits, leading to higher financial costs and downgrades of some government-related entities. However, a country's credit rating downgrade does not necessarily imply a downgrade for the private sector, as it depends on the financial health of individual companies.

Ms. Parichaya Ritsuk, a researcher at Kasikorn Research Center, mentioned that Thailand's approach to reducing the fiscal deficit may involve increasing government revenue, as most expenditures are difficult to cut. In the short term, targeted revenue-raising measures may help stabilize the situation, but in the medium to long term, sustainable fiscal reform will require effective data development to design targeted welfare policies, alongside expanding the tax base and reforming the economic structure.