Thailand's outlooks stable: RAM
Malaysia's RAM Ratings has assigned Thailand a "stable" outlook on both the global and Asean scales, noting that the ability of the military-led regime's new Cabinet to shore up the economy remains to be seen.
RAM rated Thailand "gBBB1(pi)" on the global scale and "seaAA1(pi)" on the Asean scale.
Thailand benefits from low oil prices, which improve its trade balance, the rating agency said. Coupled with declining capital imports, its current account hit a surplus of 6 per cent in the second quarter. As of June, the level of reserves was sufficient to fund 10 months of imports and 2.9 times the country’s short-term external debt.
Despite the benefit of a low base in 2014, Thailand’s economy continues to be weak, with growth slowing to 2.8 per cent in the second quarter from 3 per cent in the first, and a surprise 25-basis-point policy-rate cut in April failing to boost the economy.
In response to the weak economic performance, the Cabinet was reshuffled in August. A fiscal stimulus package worth Bt110 billion was subsequently approved to provide interest-free loans to low-income earners and to facilitate repairs, construction work and small projects.
"The efficacy of the new Cabinet remains to be seen at this juncture, although the line-up, which now has more military ministers, should ensure greater policy alignment for the military government," said Esther Lai, RAM’s head of sovereign ratings.
RAM Ratings is a public limited company, wholly owned by RAM Holdings. It ultimate shareholders comprise major financial institutions in Malaysia, McGraw-Hill Asian Holdings (Singapore) and Fitch Ratings.
RAM’s "Asean Sovereign Focus" publication is the point of reference for credit views on all 10 Asean nations. As an Asean-based rating agency with 25 years of experience, this latest publication supports RAM’s commitment to the development of Asean bond markets.
Its Asean series also covers leading Asean corporates, sovereigns, banks, the power industry and telecoms.
