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Thai Coup Positive If It Resolves Political Crisis-Fitch
Interesting take on the thai economy's reaction to the coup
BANGKOK (Dow Jones)--Fitch Ratings has put its sovereign credit ratings for Thailand on Rating Watch Negative after a military coup late Tuesday against a caretaker government, but the agency said the coup might have a positive effect if it leads to a resolution of the country's long-running political crisis.
"One way to look at it is that the coup leads to a political resolution, and the economy could bounce back quickly," Fitch's Hong Kong-based head of Asian sovereign ratings James McCormack said Wednesday in a telephone interview with Dow Jones Newswires.
Thailand has been under a caretaker government since Prime Minister Thaksin Shinawatra dissolved the parliament in February. The results of snap polls in April were annulled due to irregularities. [ 20-09-06 0109GMT ]
McCormack said Fitch is standing by its forecasts on Thailand's gross domestic product growth this year and next of 4.3% and 4.6% respectively.
He said the forecasts have priced in delays in government construction spending and weakening investment sentiment due to the months-long political crisis. The Thai economy grew 4.5% in 2005.
"The best-case scenario is there is a quick resolution after the coup and an effective government is put in place," he said.
McCormack said the country's exports would be able to help cushion economic fallout from the coup in the short term.
However, if the conflict drags on, the country would risk rating downgrades, he said.
"We will keep a close look on how things would unfold," he said.
Fitch places Thailand's sovereign rating at BBB+ with a stable outlook.
Fitch earlier said Wednesday its decision to put Thailand on Rating Watch Negative reflected "the increased uncertainty about sovereign credit trends in Thailand in light of the apparent coup attempt."
Late Tuesday in Thailand, military troops surrounded government offices and an army spokesman said the country's commander-in-chief would serve as acting prime minister. Thaksin is currently in New York.
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