Moody’s presents grim outlook for Thailand

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No moneyThailand’s GDP growth rates will likely slow to less than 3 per cent on average for 2014 and 2015, well below the average of 3.8 per cent growth over the past 10 years, Moody’s Investors Service said in a release on April 25.

The expansion will be negatively affected by delayed public and private investment, and dampened consumer confidence, the ratings agency said. It warned politics continues to weigh on the government bond rating, now at Baa1 with a stable outlook. The rating is backed by the government’s strong financial position, marked by low funding costs and a favourable debt structure, and also by limited external vulnerabilities.

However, the anti-government protests are negatively affecting Thailand’s growth outlook for 2014 and 2015, and could over time, erode its key credit strengths.

“If the current political deadlock continues into the second half of 2014 or if the political conflict escalates and results in protracted negative consequences on the tourism or manufacturing sectors, such developments would be credit negative,” it said.

A significant rise in government funding costs or a sharp deterioration in the balance of payments position and a significant loss of official international reserves would also be credit-negative.
Moody’s says that the anti-government protests and the ensuing political deadlock are not currently at a point where they would prompt rating downgrades, despite having a negative impact on the country’s growth performance.

In its analysis, Moody’s rated Thailand’s economic strength, institutional strength and susceptibility to event risk as “moderate” while government financial strength was rated “very high”.

Nonetheless, the report also points out that Thailand’s core strengths are its government debt carrying capacity, stemming from pro-active and credible debt and monetary policy management, and high foreign exchange reserves in relation to short-term external debt payments.

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Reading Time: 1 minute

Thailand’s GDP growth rates will likely slow to less than 3 per cent on average for 2014 and 2015, well below the average of 3.8 per cent growth over the past 10 years, Moody’s Investors Service said in a release on April 25.

Reading Time: 1 minute

No moneyThailand’s GDP growth rates will likely slow to less than 3 per cent on average for 2014 and 2015, well below the average of 3.8 per cent growth over the past 10 years, Moody’s Investors Service said in a release on April 25.

The expansion will be negatively affected by delayed public and private investment, and dampened consumer confidence, the ratings agency said. It warned politics continues to weigh on the government bond rating, now at Baa1 with a stable outlook. The rating is backed by the government’s strong financial position, marked by low funding costs and a favourable debt structure, and also by limited external vulnerabilities.

However, the anti-government protests are negatively affecting Thailand’s growth outlook for 2014 and 2015, and could over time, erode its key credit strengths.

“If the current political deadlock continues into the second half of 2014 or if the political conflict escalates and results in protracted negative consequences on the tourism or manufacturing sectors, such developments would be credit negative,” it said.

A significant rise in government funding costs or a sharp deterioration in the balance of payments position and a significant loss of official international reserves would also be credit-negative.
Moody’s says that the anti-government protests and the ensuing political deadlock are not currently at a point where they would prompt rating downgrades, despite having a negative impact on the country’s growth performance.

In its analysis, Moody’s rated Thailand’s economic strength, institutional strength and susceptibility to event risk as “moderate” while government financial strength was rated “very high”.

Nonetheless, the report also points out that Thailand’s core strengths are its government debt carrying capacity, stemming from pro-active and credible debt and monetary policy management, and high foreign exchange reserves in relation to short-term external debt payments.

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