Thailand 20250926
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Here is your Mekong Memo Thailand for this week.
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Headlines:
Fitch Downgrades Thailand Outlook
Baht Surge Squeezes Tourism, Exports
Government Sets Four‑Month Agenda
Household Debt Hits Four‑Year High
IMF Pushes Prudence, Return to Lower Debt Cap
Power Output, LNG Imports Slide
Factories and Clean Energy Draw Cash
Border Tensions with Cambodia Simmer
Anutin Pushes Regulatory Guillotine
Senate Puts a Knife in the Casino Plan
Charter Rewrite Push Picks Up Momentum
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Fitch Downgrades Thailand Outlook
Fitch Ratings has held Thailand’s national credit rating at BBB+, but downgraded the credit outlook to negative because of risks from political uncertainty and flaccid (our word, not theirs) growth. Government debt has risen to almost 60% of GDP, close to the BBB median, because of stimulus spending that hasn’t been backed by tax receipts. The Thai economy is only expected to grow a meager 2% this year, a figure that’s borderline embarrassing compared to regional peers like Indonesia, the Philippines, and Vietnam. New Prime Minister Anutin Charnvirakul is on a tight leash to tidy up the books while on a tight (four-month) timeline to promised elections.
Read more: Bangkok Post (Credit Rating), Investing.com (Fiscal Challenges), Bloomberg (Economic Outlook), MarketScreener (Political Factors)
Baht Surge Squeezes Tourism, Exports
The baht has risen in value by nearly 8% against the US dollar since the start of this year and has now become Asia’s strongest currency and a distinct threat to national competitiveness. The government is setting up a team, including the finance ministry and Bank of Thailand to try to manage the baht’s rise, but it’s going to be an upstream swim. Tourism numbers have dropped sharply this year (about 7.4%); forecasts call for full-year arrivals to be only 33.4 million. Export growth slowed to 5.8% in August, below forecasts, as US tariffs and the strong baht reduced competitiveness. The slowdown was especially pronounced in ag exports. Imports rose by nearly $30 billion, resulting in a trade deficit of nearly $2 billion, the first since April. The Commerce Ministry says trade momentum may continue to decline because some of the recent export “strength” was from frontloaded orders.
Read more: Reuters (Government Response), Bangkok Post (Economic Impact), Pattaya Mail (Foreign Inflows), Travel and Tour World (Tourism), Bangkok Post (Export data), Invezz (Trade Deficit), Nation Thailand (Ag Exports)
Government Sets Four‑Month Agenda
Prime Minister Anutin Charnvirakul says the House of Representatives will be dissolved by January 2026, forcing a general election by March or April. The government is expected to present a policy statement to parliament on September 29-30, focusing on four key areas: economy, national security, disaster response, and social issues. The plan will be to try to kick-start the economy with up to 60 billion baht from the current budget, reduce an uncomfortably high household debt (next story), and manage the skyrocketing baht. A referendum on constitutional amendments is expected to come along with the general election.
Read more: Bangkok Post (Election Timeline), Reuters (Policy Statement), Reuters (Economic Confidence), Asianews.network (UNGA Cancellation)
Household Debt Hits Four‑Year High
A survey by the University of the Thai Chamber of Commerce shows a 22% increase in average household debt, now totaling 740,596 baht. The growth in debt is being blamed on rising living costs, unforeseen emergency expenses, and insufficient income, as banks have tightened lending. Informal debt is on the rise as formal credit availability decreases. The debt breakdown shows the debt mix is about 47% credit card debt, 40% housing, and about 37% auto debt. Roughly four in 10 consumers reported borrowing from various sources to manage insufficient income. Household debt is now over 80% of GDP (first time since 2013), meaning it’s now at a level beyond where the Bank of Thailand is comfortable. Interestingly, although it’s hinted at, there’s no direct mention of irresponsible spending being part of the problem.
Read more: Bangkok Post (Survey), Bangkok Post (Youth Savings)
IMF Pushes Prudence, Return to Lower Debt Cap
The International Monetary Fund is telling Thailand to bring public debt below 60% of GDP and to bring back the 60% ceiling previously in place to improve the nation’s fiscal health. Public debt now stands at 12.12 trillion baht - nearly 64.5% of GDP. The IMF foresees public debt hitting the current 70% ceiling by 2027, two years earlier than expected, which would risk credit downgrades and therefore an increase in government borrowing costs. Going into the COVID-19 pandemic, Thailand’s debt-to-GDP ratio was below 40%.
Read more: Nation Thailand
Power Output, LNG Imports Slide
There has been a record drop in electricity output, with about a 5.4% annual decrease reported through July 2025. The country’s LNG imports are also (resultantly) on track for their steepest decline, down about 15.3% to 7.2 million metric tonnes. Analysts are saying the drop is mostly due to mild weather reducing air conditioning usage, but it also hints at a worryingly slowing economy. Residential power demand is down about 7%, and industrial and commercial demand fell by almost 3%.
Read more: Bangkok Post (Energy Trends), Reuters (Analysis)
Factories and Clean Energy Draw Cash
Haier opened a 10-billion-baht air conditioner plant in Chon Buri, operations start this month. The factory will reach its full output capacity of 6 million units a year by 2027 and is expected to create 3,000 local jobs. The factory is Haier’s second plant in Thailand. Separately, Thailand’s Energy Regulatory Commission is saying we should expect the launch of the first Direct Power Purchase Agreement pilot project by year-end. The pilot will be in support of attracting more international data center investors/ investments. The current cap on DPPA transactions is 2GW, which might be increased as demand grows.
Read more: Bangkok Post (Manufacturing), Recessary (Clean Energy)
Border Tensions with Cambodia Simmer
The Thai-Cambodian border conflict is still simmering; all checkpoints are still closed, continuing to damage trade and tourism. Reports of a shooting (Cambodian officials say it was an accident) and military buildup(s) have raised the temperature in the area. Both sides are swapping accusations of territorial encroachment. Thai Prime Minister Anutin is not exactly reducing tensions, instructing soldiers to place the Thai flag “wherever it belongs.” The Ministry of Foreign Affairs of Cambodia has denied Thai allegations of Cambodian citizens “invading” 17 border locations.
Read more: Khaosodenglish (Economic Impact), UCanews (Tension), Nation Thailand (Leadership), Kiripost (Dispute)
Anutin Pushes Regulatory Guillotine
Prime Minister Anutin Charnvirakul says that plans for regulatory reforms to overhaul capital markets are underway, promoting (again) the “regulatory guillotine” that would cut corporate expenses by 134 billion baht annually. The government says it will work to push reforms at the ministerial level without having to create any new laws, as it works to get rid of outdated business rules. Suggested measures include reintroducing the “Khon La Khrueng” co-payment stimulus scheme and getting rid of dividend taxes on long-term stock holdings. Brokerages would love to see that, and going a step further by proposing personal income tax exemptions on dividends paid on stocks held longer than a year.
Read more: Bangkok Post (Regulatory Reforms), Bangkok Post (Investment Incentives)
Senate Puts a Knife in the Casino Plan
The Senate has formally rejected a draft bill on the establishment of integrated entertainment complexes with casinos because of concerns about social impact, economic disruption, and national security. The committee, chaired by Senator Veerapun Suvannamai, decided that the bill could cause long-term harm, including a higher risk of money laundering and (a further) erosion of public trust. Senator Sornchat Vichaya Suwannaprom thinks that creating a study group to look into alternative entertainment models that would exclude casinos might be worthwhile.
Read more: Bangkok Post (Senate Rejection), Yogonet (Social Concerns), igaming business (Political Context)
Charter Rewrite Push Picks Up Momentum
Several political parties have submitted proposals for constitutional amendments to Parliament, as talk continues on efforts to reform the charter. The Bhumjaithai Party has proposed reducing the Senate’s role in the amendment process and wants to set a 360-day deadline for a new constitution. The People’s Party put forward a draft amendment that would create mechanisms for drafting a new constitution, including a referendum that’s expected alongside the next general election. The Pheu Thai Party thinks that a 151-member Constitutional Drafting Assembly is appropriate. All these suggestions, pitches, and other efforts to direct the rewrite come after the Constitutional Court ruled that CDA members can’t be directly elected.
Read more: Bangkok Post (Bhumjaithai Proposal), Bangkok Post (People’s Party Plan), Nation Thailand (Pheu Thai Ideas), Bangkok Post (Reform Challenges)
That’s it for this week, thanks for reading!
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