Fitch Says New Thai Gov't Will Face Political Risk While Prospects Of '23 Growth Are Weakening

Fitch Ratings released a note stating that the election of Pheu Thai Party's (PTP) candidate Srettha Thavisin as Thailand's new Prime Minister "removes one source of political uncertainty, but the new coalition government will still face other sources of political risk."

• According to Fitch, "prospects for economic growth in 2023 are weakening in the face of headwinds affecting merchandise exports and public investment, providing an imminent challenge for the new government, while PTP’s spending pledges could complicate fiscal consolidation."
• In their view, "bringing the various factions together could encourage consensus-led policymaking and reduce the risk of challenges to the administration from conservative forces. However, the wide range of priorities among the coalition’s member parties could also complicate policymaking."
• They recall that when they "affirmed Thailand’s rating at ‘BBB+’/Stable in July 2023 [they] stated that heightened political disruption on a scale sufficient to alter Thailand's economic policymaking effectiveness and growth prospects could be a driver of negative rating action."
• This comes as speculation is rife that Srettha could take an additional role as Finance Minister, with multiple source reports flagging such a scenario. Furthermore, Srettha said that he will tap PTP candidates to oversee ministries dealing with economic affairs, which suggests that this area will be a priority for the ruling party.