S&P Global Ratings re-affirms Thailand’s ratings on strong economic profile, keeps outlook stable

S&P Global Ratings re-affirmed Thailand’s ratings at 'BBB+/A-2' and 'A-/A-2', keeping outlook stable, following a strong economic profile of the country. Also, low government debt, and monetary policy credibility support the rating.

The smooth succession to the Crown and the referendum results have restored stability but the underlying sociopolitical fissures along with a tepid economy remain rating constraints.

"We are affirming our 'BBB+' long-term and 'A-2' short-term foreign  currency sovereign credit ratings, and our 'A-' long-term and 'A-2' short-term local currency ratings on Thailand. We are also affirming our 'axAA/axA-1' long- and short-term ASEAN regional scale ratings on Thailand ," the ratings agency said in its latest research report.

The stable outlook reflects expectation that macroeconomic fundamentals are sufficient to counter the effects of uncertain political conditions over the next two years. Gross external financing needs are likely to stay around 68 percent of current account receipts plus usable reserves over 2016-2019.

The export sector had suffered from negative terms of trade while undergoing structural adjustments to its manufactured goods profile. Of late, however, the sector has benefitted from low oil prices and a weaker exchange rate; the current account is forecasted to rebound to surplus levels averaging 11 percent of GDP over 2017-2019, the report added.

The stable outlook signals that that there is a less than one-in-three probability that we will change our rating on Thailand in the next two years. Thailand is believed to be able to preserve its external, fiscal, and monetary strengths despite ongoing political uncertainty.

Meanwhile, upward pressure on the ratings could build if leaders across Thailand's political spectrum achieve greater political harmony, such that economic growth prospects improve.