Thai credit rating under scrutiny by Fitch

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yingluck thailandThe February 2 election in Thailand has failed to ease political tension and if the five-month political stand-off worsens, it could raise the risk of a lasting negative effect on economic performance and financial stability relative to its rating peers, rating agency Fitch Ratings said on February 4.

Fitch thinks political tensions are already weighing on economic activity – evident from a contraction in manufacturing output of around 7 per cent year on year in the fourth quarter last year.

“We expect the Thai economy will bounce back when political tensions eventually ease, underpinning our expectation of 3.5 per cent growth in 2014. But more prolonged and intensified political confrontation could eventually impair Thailand’s economic performance relative to its rating peers, and which could undermine this credit strength,” Fitch Ratings said.

However, Political turmoil is not new in Thailand, and a degree of volatility is factored into the sovereign rating, the agency added.

Political deadlock at home following Sunday’s poll also weighed on market sentiment. Foreign investors yesterday yanked 4.89 billion baht (148 million) out of the Thai stock market, adding their net sales to 21.6 billion baht ($655 million) year-to-date.

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Reading Time: 1 minute

The February 2 election in Thailand has failed to ease political tension and if the five-month political stand-off worsens, it could raise the risk of a lasting negative effect on economic performance and financial stability relative to its rating peers, rating agency Fitch Ratings said on February 4.

Reading Time: 1 minute

yingluck thailandThe February 2 election in Thailand has failed to ease political tension and if the five-month political stand-off worsens, it could raise the risk of a lasting negative effect on economic performance and financial stability relative to its rating peers, rating agency Fitch Ratings said on February 4.

Fitch thinks political tensions are already weighing on economic activity – evident from a contraction in manufacturing output of around 7 per cent year on year in the fourth quarter last year.

“We expect the Thai economy will bounce back when political tensions eventually ease, underpinning our expectation of 3.5 per cent growth in 2014. But more prolonged and intensified political confrontation could eventually impair Thailand’s economic performance relative to its rating peers, and which could undermine this credit strength,” Fitch Ratings said.

However, Political turmoil is not new in Thailand, and a degree of volatility is factored into the sovereign rating, the agency added.

Political deadlock at home following Sunday’s poll also weighed on market sentiment. Foreign investors yesterday yanked 4.89 billion baht (148 million) out of the Thai stock market, adding their net sales to 21.6 billion baht ($655 million) year-to-date.

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