Deep political polarisation since 2006 is adding to structural challenges to Thailand's competitiveness, and reform delays could eventually lower the sovereign credit profile, which has largely remained immune to the country's political disturbances, warns Moody's Investors Service.
Moody's feels the May 22 coup has likely, at least for now, halted the deteriorating consumer and investor confidence. But progress in structural economic reforms is likely to hinge on continued lower political uncertainty, or else competitiveness and economic growth could erode further in the medium term, it said in a report entitled "Thailand: Political Polarization Adds to Structural Competitiveness Issues".
The report points out that Thailand's diversified and competitive economy is a credit strength for the Baa1 sovereign government bond rating. Moody's assessment of the country's economic strength is supported by its manufacturing competitiveness. Furthermore, growth remained resilient during politically turbulent periods in 2006, 2008 and 2010.
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