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Published on December 25, 2007

In a statement yesterday, the rating agency called Thailand's parliamentary election a key step towards repairing its sovereign credit fundamentals.

Battered by political and policy uncertainties since early last year, investment growth in the Kingdom has slowed considerably. A return to a more predictable policy environment will pave the way for a restoration of investor confidence, a scenario in line with S&P's stable outlook for Thailand's "BBB+" foreign-currency sovereign credit rating. This could revive domestic demand, thereby preventing a sharp pickup in unemployment in a year in which slower global economic growth is expected.

"It is therefore important for the key constituents to support the new elected government. The continuation of sharp political divisions will prolong the economic weakness and further undermine sovereign credit fundamentals," the statement said.

"If such divisions result in another unconstitutional replacement of the government or violent social unrest, then the political and economic consequences will be much more negative than experienced so far."

 The Nation