The bomb attack in Bangkok on Monday night has limited immediate impact on the sovereign credit support for Thailand but downside risks caused by weaker tourism are increasing, said Standard & Poor's Ratings Services.
"Our sovereign credit ratings on Thailand (foreign currency BBB+/Stable/A-2; local currency A-/Stable/A-2) are unaffected. Nevertheless, the attack has increased uncertainties over political stability and will put additional pressure on near-term economic prospects," it said in a statement.
Supant Mongkolsuthree, chairman of the Federation of Thai Industries, admitted that the blast shook confidence among investors and tourists, but the magnitude would depend on the government's measures to handle the situation and prevent another tragedy. He also said that it is necessary that the media and foreigners are regularly updated.
"The blast would not hurt the economic growth, but it would shake investor confidence in the short term," he said.
Over 300 hotels in the Greater Bangkok were asked by the Thai Hotel Association to check on their foreign guests. In the afternoon today, the association also had a meeting with the tourism minister.
Surapong Techaruvichit, president of the association, noted that over 60 per cent of foreign guests are from Asia, with 25 per cent being the Chinese.
Standard & Poor's added that weaker tourism trade at least in the next two to three quarters will likely hurt Thailand's economic growth. The explosion could have a longer-lasting impact on visitor numbers compared with previous incidents in the past decade.
Standard & Poor's expects tourists to be more wary this time as the incident appeared to be aimed at creating casualties in a venue popular with foreign visitors.
The latest official release indicates that Thailand's economic performance remained weak in the first half of 2015 despite a sizable increase in public spending. A slowdown in the tourism sector would further dampen growth. This would weaken sovereign credit metrics, including economic growth and fiscal indicators, unless an unexpectedly swift improvement in political stability materialises.