Thailand: Fitch cagey on sovereign rating – 14 Sep 2017

  • Thailand’s subpar economic growth is the main obstacle to the country’s sovereign rating improving, says Fitch Ratings.
  • It is quite difficult for Thailand’s long-term foreign and local currency issuer default rating, which stands at BBB+, to be raised if the country’s economy continues to expand at around 3%, said Andrew Fennell, director of Asia-Pacific sovereign at Fitch Ratings Hong Kong.
  • The second-largest economy in Southeast Asia has seen growth fall below 4-5% since 2013.
  • High household debt and adverse demographic trends have continued as challenges to the country’s medium-term growth outlook, though economic growth has picked up, Mr Fennell said.
  • The high household leverage has been a drag on Thailand’s domestic consumption and economic growth.
  • The household debt level of most Asia-Pacific economies is above the average G20 level. China’s household debt increased by 27% points from 2008 to 2016, followed by 25% points for Thailand, 21% points for Malaysia and 19% points for South Korea.
  • Thailand’s household debt rose almost 80% to THB11.5tr at the end of Mar 17 from THB6.4tr at the end of 2010, according to central bank data. The household debt ratio surged to 78.6% at the end of Mar 17 from 59.3% at the end of 2010.

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