ASEAN KEY DESTINATIONS
Moody reassures on Thai credit rating
While the devastating floods will have a negative impact on the Thai economy, the disaster is unlikely to affect the government's creditworthiness, according to Moody's Investors Service.
Moody's currently assigns a rating of Baa1 with a stable outlook on Thailand. It expects the economy to contract in the fourth quarter, pulling full-year economic growth down to just 2.8 percent.
The agency noted that the floods had significantly affected agricultural and manufacturing production, distribution networks and commercial activity. Supply chains, particularly in the auto industry, have been disrupted, while a quarter of the rice crop has been destroyed.
Moody's estimated economic costs from the floods to exceed 200 billion baht, or 2 percent of gross domestic product.
"Combined with the deterioration in the outlook for external demand, real GDP growth in the second half will slow significantly," it said.
However, economic growth should resume its trend rate of over 4 percent by 2013, and Moody's said the crisis "does not represent a structural break in terms of the country's productive capacity".
Creditworthiness is also unlikely to be affected, thanks in part to the strong economic recovery over the past three years, it said.
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