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Post by Fletchsmile on May 28, 2015 18:53:40 GMT 7
Moody's: Thai govt financial position very strong Bangkok Post Published: 28/05/2015 at 01:03 PM
Thailand's stable Baa1 credit rating is supported by a very strong government financial position, and the country's well-diversified economy and high foreign reserves are additional credit strengths, according to Moody's Investors Service.
"Thailand's low funding costs and favourable debt structure, which stem from prudent monetary policy and debt management, are a core strength in the government's debt carrying capacity," Steffen Dyck, vice president and senior analyst at Moody's, said on Thursday.
"In addition, the high level of foreign exchange reserves limits external vulnerabilities, while the well-diversified economy is another credit strength," he said.
Manufacturing, wholesale and retail trade, and agriculture accounted for around 52% of nominal GDP in 2014, and 66% of employment. The services sector was the single largest source of GDP growth in 2014, whereas the contribution from agriculture was negligible.
Increased public investment spending will be the key to Thailand's growth recovery in 2015 and 2016, whereas sluggish external demand recovery and constraints on private consumption spending from high household debt act as a drag on growth, he said.
The military coup on May 22, 2014, had restored public order and stemmed economic uncertainty.
Still, Thailand's deeply polarised domestic politics remains a key issue affecting growth outlook. If it is unresolved it could again destabilize the country's politics and economics, and erode Thailand's fundamental credit strengths, the Moody's senior analyst said. The stable rating outlook means that credit strengths and weaknesses are balanced.
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Post by Fletchsmile on May 28, 2015 18:58:23 GMT 7
From the original Moody's report released today: ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Overview and Outlook Thailand’s ratings are supported by a very strong government financial position, marked by low funding costs and a favorable debt structure. This core strength in the government’s debt carrying capacity stems from the sovereign’s pro-active and credible management of debt and monetary policy. In addition, external vulnerabilities are limited by Thailand’s high stock of official foreign exchange reserves. The well-diversified economy is another credit strength.
Although the military coup on 22 May 2014 restored political stability and put a floor on economic uncertainty, Thailand’s domestic politics remain polarized. Together with sluggish external demand recovery and constraints on private consumption spending from high household debt this negatively affects the country’s growth outlook for 2015 and 2016, and could – if unresolved –erode its fundamental credit strengths.
Thailand’s rating outlook is stable, reflecting balanced credit strengths and challenges. Nevertheless, credit positive signs would include: strengthening public sector finances; limiting contingent fiscal liabilities associated with short-term stimulus measures; and improvements in the political climate and governance which support long-term stability and economic policy effectiveness.
On the other hand, credit-negative developments would include: a renewed escalation of political confrontation, resulting in potentially long-lasting effects on tourism or manufacturing; a sharp rise in government funding costs related to domestic political uncertainty or a lapse in fiscal discipline; a deterioration in the balance of payments and significant loss of official international reserves.
This Credit Analysis elaborates on Thailand’s credit profile in terms of Economic Strength, Institutional Strength, Fiscal Strength and Susceptibility to Event Risk, which are the four main analytic factors in Moody’s Sovereign Bond Rating Methodology. The special topic on the following pages explains how the release of revised national accounts data on 11 May 2015 affects Thailand’s credit metrics.
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