The ongoing protests will likely undermine investor confidence and an already fragile growth outlook for next year, both of which are credit negative factors for Thailand, according to Moody's Investors Service. Thailand is currently rated Baa1 with a stable outlook by the credit rating agency
Although the protests have mostly been peaceful four people were killed and dozens wounded during clashes on Saturday night. Prolonged or escalating protests may adversely affect foreign investment and tourism, and exacerbate delayed public infrastructure investment which will weigh on Thailand's future growth in 2014 and beyond. While Thailand's credit fundamentals are still good, weaker growth will negatively affect the fiscal balance and push debt ratios
Since US tapering fears emerged in May this year, emerging market countries with relatively weak policy frameworks or external current account and domestic budget deficits have had more volatile capital flows Thailand has become more vulnerable to diminished investor confidence because it has these twin deficits and its foreign exchange reserves have declined since May.
Thailand's growth momentum is also slowing. Third-quarter real GDP growth declined to 2.7% year on year from 5.4% in the first quarter This contrasts with South Korea, Malaysia and Singapore, which all reported stronger third-quarter annual growth rates