HONG KONG, April 19 (Reuters) - Fitch Ratings changed the outlook on Thailand’s A-minus local currency rating to negative from stable, blaming political uncertainty, slow economic recovery and a deteriorating policy environment.
The agency said in a statement on Monday that the three factors could be a drag on its credit worthiness over time.
“Thailand’s economy has been dragged down by heightened political uncertainty and unresolved issues related to weak governance, policy implementation, the authority of the state, and the credibility of the political leadership,” it said.
It said the country’s average growth rate in the past five years had lagged its regional and BBB-category peers.
Fitch said it expected Thailand’s economy to expand 3.8 percent in 2010 and 4.2 percent in 2011, driven mainly by external demand.
In comparision, Thailand’s central bank has predicted economic growth of 3.3-5.3 percent this year, compared with the 3.5-4.5 percent predicted in February by the state planning agency, which compiles GDP data.
But Fitch retained Thailand’s BBB foreign currency rating with a stable outlook.
It said the country’s strong external financial position continued to support sovereign creditworthiness in foreign-currency terms, despite current turbulent domestic developments.
However, it said prolonged political uncertainty was likely to undermine sovereign creditworthiness over time, potentially exerting further downward pressure on the country’s sovereign rating.
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