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Sept 3, 2007
Thailand suceptible to Global slowdown
Thailand is one of the most vulnerable Asian countries to a potential global economic slowdown due to its reliance on exports and sluggish domestic demand, Fitch Ratings said on Monday.
A crisis in the U.S. mortgage market for less credit-worthy borrowers has triggered a worldwide credit squeeze in the recent months, fanning fears it could choke global economic growth.  "The growth of domestic demand is extremely low and net trade is largely responsible for headline GDP growth," James McCormack, head of Asia Sovereigns, said in a statement.  "The immediate outlook for the economy is probably not very promising. But in 2008, we think it will get better," McCormack told reporters on the sidelines of a conference in Bangkok.'

Fitch forecast the economy would grow 3.8 percent this year, the least since 2001, and 4.5 percent next year, McCormack said.

Consumption and private investment have been subdued since a military coup that ousted Prime Minister Thaksin Shinawata a year ago and analysts expect political uncertainty to weigh on growth until general elections scheduled for Dec. 23.  While a return to a more stable political environment was critical to ensuring economic growth, the country's credit ratings remained unchanged, McCormack said.

"Thailand's sovereign creditworthiness remains sound, and there are no immediate pressures on its sovereign ratings," he said, adding the agency might review them after the elections.

"In order for us to make it a definitive decision, we really have to see what the new government will plan to do," he said.

In May, Fitch affirmed the long-term foreign currency issuer default rating for Thailand at "BBB+" despite the uncertain political environment, saying political turmoil had affected sentiment and growth, but not sovereign credit fundamentals yet. Rueters reports

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