Fitch Ratings: Thailand Resilient to Rising Global Risks

          Thailand's economy and banks should be able to weather heightening global risks from rising US interest rates, although escalating trade wars could pressure global growth next year, according to sovereign and banking analysts at Fitch Ratings' annual Thai conference in Bangkok 
          Dr Veerathai Santiprabhob, Governor, Bank of Thailand, was the guest of honour at the event and provided the keynote opening address. 
          Mr. James McCormack, Managing Director, Head of Sovereigns at Fitch Ratings highlighted that Fitch forecasts global economic growth of 3.3% and 3.Fitch Ratings% in 2Bank of ThailandFitch Ratings8 and 2Bank of ThailandFitch Ratings9, respectively, led by continued above-potential growth in the US supported by fiscal expansion, and strong growth in China, notwithstanding the ongoing trade war. Risks to the outlook, however, are growing, particularly for emerging markets. As global financial conditions tighten into next year with higher US interest rates, the end of quantitative easing by the European Central Bank and continued appreciation of the US dollar, international capital flows are likely to be more volatile, especially for emerging markets with the largest external funding needs and policy frameworks judged to be weaker. Thailand is very well placed to deal with these global challenges, running sizeable current account surpluses and maintaining a sound fiscal position. Further escalation of the US-China trade war is a threat to all open economies, including Thailand, and poses downside risks to 2Bank of ThailandFitch Ratings9 growth projections.
          In his presentation on the banking sector, Mr. Parson Singha, Senior Director, Financial Institutions at Fitch Ratings (Thailand) Limited, noted that banking sectors in the Asia-Pacific region are mostly well-positioned to cope with gradual, well-signalled US interest rate hikes. One key concern is credit risk, especially in countries with high levels of leverage or weak corporate repayment ability - such as Vietnam, Mongolia, and Indonesia. There are also potential liquidity risks, if markets are disrupted in stressed scenarios. Nevertheless, most APAC banking sectors are supported by improving trends in the operating environment and regulatory backdrop. The Thai banking sector in particular appears able to cope with downside risks due to its limited reliance on foreign funding, and sound banking sector buffers such as in capital and liquidity. 
          Regional investment opportunities and risks were discussed in an executive roundtable that followed. Mr. Vincent Milton, Managing Director of Fitch Ratings (Thailand), moderated a panel on government's roles and policy in supporting regional investments, infrastructure investments in ASEAN, and challenges and opportunities for regional investments. Speakers on the panel comprised Mr. Theeraj Athanavanich, Bond Market Advisor, Public Debt Management Office, Ministry of Finance; Ms Helen Han, Senior Investment Officer, Infrastructure and Natural Resources, International Finance Corporation (IFC); and Mr. Roongroj Rangsiyopash, President and Chief Executive Officer, The Siam Cement Public Company Limited.
          Fitch Ratings (Thailand)'s annual conference was attended by more than 3Bank of ThailandBank of Thailand executives and officials from the regulatory, investor, financial and corporate sectors.