Fitch Ratings raised its credit rating on Thailand, citing a resilient economy and a more stable political environment.
The nation’s long-term foreign currency-denominated debt was raised one level to BBB+ from BBB, Fitch said in a statement today. That’s three levels above junk and brings it in line with Standard & Poor’s and Moody’s Investors Service ranking of the nation. The outlook on the rating is stable.
“Fitch has revised its assessment of the risks to policy predictability and the investment environment from political and social tensions,” it said. “The investment rate has accelerated in recent years. The government led by Yingluck Shinawatra has consolidated its position and has faced no serious extra-legal challenges since its election in July 2011.”
Prime Minister Yingluck last year raised minimum wages and unveiled incentives for car buyers and rice farmers to boost domestic demand and counter falling exports. Economic growth surged last quarter after a slump in the corresponding period in 2011 when the worst floods in almost 70 years disrupted output by manufacturers from Western Digital Corp. to Honda Motor Co.
The upgrade will benefit the country and allow it to borrow at cheaper rates, the prime minister told reporters today.
Southeast Asia’s second-largest economy has been “resilient to repeated shocks” including the flooding crisis in late 2011, supported by flexible monetary and exchange rate polices, Fitch said.
Fitch restored its credit rating on Thailand after a 2009 downgrade following street protests. The ratings company also cited the nation’s strong external position and low government debts. Fitch expected the public debt to remain below 50 percent of gross domestic product even after a planned infrastructure spending.
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