Moody’s Forecasts Recession for Thailand After Military Coup: Negative Growth in 2014


Moodys

 

While the Governor of the Bank of Thailand seemed to be ‘fibbing’ a little bit today when he gave a statement that said yesterday’s military coup in Thailand would not affect the overall economic stability of Thailand, Moody’s, the bond credit rating agency, sees the situation rather differently.

In fact, Moody’s forecasts a recession for Thailand as a result of the military coup, with the agency’s Fred Gibson stating categorically that the coup could cause the Thai economy to shrink.

Gibson said Moody’s had lowered their GDP forecast for Thailand from a possible slight growth of 0.2 percent at the end of the second quarter to a now expected recession and a minus growth rate in 2014. Considering that’s down from the expected 6 percent growth rate in 2014 projected when Yingluck Shinawatra was still prime minister and before anti-government protests began last November, and to say political upheaval in Thailand is bad for the country is an understatement.

What that means, Gibson went on, is that the quarter ending in June is likely to show negative growth for the second successive quarter, and that will put Thailand officially in recession.

Meanwhile, while some Thai newspapers are heralding the ‘strength of the Thai baht’ after Thailand’s military coup, this also seems to be somewhat of a ‘fib’.

The Thai baht declined at the beginning of the day today and finally ended up at 32.06 – .04 lower than yesterday.

Morgan Stanley has also forecast a continual fall of the Thai baht until it hits 37 to the US dollar towards the end of the year, if the political instability does not improve.

As for what you think, you should probably decide whether you believe the Governor of the Bank of Thailand or Moody’s when it comes to a recession for Thailand, and if Morgan Stanley or a Thai newspaper has it right about a plummeting baht?

I know who I believe. How about you?

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