Fitch: Thailand's Ratings Remain Resilient

(The following statement was released by the rating agency)

BANGKOK, October 01 (Fitch) Fitch Ratings (Thailand) Limited, which held its annual conference in Bangkok today, said that Thailand's sovereign and financial institution ratings remain supported by fundamental strengths, although there remain downside risks such as relatively weak global growth and a challenging domestic operating environment.

M.R. Pridiyathorn Devakula, Deputy Prime Minister, was the guest of honour at the event and provided the keynote opening address. During the conference, Heads of Fitch's analytical teams discussed the outlook, key risks, and rating implications for their respective sectors.

Mr. James McCormack, Global Head of Sovereigns, noted that while sovereign credit ratings in Developed Markets - particularly the Eurozone - have stabilised in 2014, government debt levels remain elevated, underscoring the need for continued fiscal consolidation to ensure debt sustainability. This is made more difficult, however, by relatively weak growth prospects.

Emerging Market ratings have also stabilised this year, with fewer upgrades and Outlook changes. As US monetary policy normalises, there is likely to be some pressure on Emerging Market external funding conditions, though most of Emerging Asia, including Thailand, is relatively well positioned in this regard.

Full story: http://www.reuters.com/article/2014/10/01/fitch-thailands-ratings-remain-resilient-idUSFit76952020141001

-- Reuters 2014-09-30

McCormack also noted that “the Thai economy has settled around an average growth rate of 3% to 3.5%, which looks sluggish compared with regional and rating peers. The average for six Fitch-rated ASEAN economies was 5.6% over 2010-2014. A key question is whether Thailand can recapture a stronger growth rate - which may require growth-enhancing structural reforms including infrastructure development.”

Any disruptions in the governance of Thailand, such as ballooning debt, lower revenues, inflation, etc. can have a multiplier effect to further dampen or reverse economic growth. The question is also whether the new government will have the discipline to follow through on a robust economic reform plan or disintergrate into appeasing special interests. The fiscal year 2015 will be very telling.

According to man farangs on here, farangs are leaving Thailand in droves, so a rise in GDP with a fallig population means GDP per capita is rising faster. Also, the leaving farangs were responsible for over 50% of GDP by buying a few beers every day. If you believe these farangs then GDP must be super high.

But seriously, just reporting GDP without know whether the population is up or down is a bit pointless. Also, you can raise GDP by borrowing money and spending it. It really is a very flawed statistic.