Fitch Ratings has upgraded its sovereign credit ratings on Thailand, citing the economy's resilience to repeated shocks as well as the stability of the government led by by Yingluck Shinawatra since its election in July 2011.
In a statement released on March 8, the agency said it is upgrading the sovereign's long-term foreign currency Issuer Default Rating (IDR) to 'BBB+' from 'BBB'. The outlook is 'stable.' The long-term local currency IDR was affirmed at 'A-' with a 'stable' outlook.
The short-term foreign currency IDR was upgraded to 'F2' from 'F3' and the country ceiling was upgraded to 'A-' from 'BBB+'.
Fitch said that one of the the main drivers of the rating action was the economy's resilience to repeated shocks, including heavy flooding in the fourth quarter of 2011. The economic growth has been underpinned by a flexible monetary and exchange-rate policy framework.
It noted that the volatility of growth is in line with the 'BBB' median. In addition, the Bank of Thailand has sustained consumer price inflation in the low single digits for more than a decade, enhancing the capacity of the economy to absorb shocks, the agency said.
Also, Fitch took into consideration the reduced risks to policy predictability and investment environment from political and social tensions. The rating agency said that Thailand's investment rate has accelerated in recent years.
The government led by Yingluck Shinawatra has consolidated its position and has faced no serious extra-legal challenges since its election in July 2011, it noted.
Fitch said that Thailand's external finances continue to be a rating strength, while commending the government for the progress made in improving the structure of government debt.
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