Ladies and gentlemen, We forecast Thailand to grow at around 4.8% next year, a rate that means steady recovery to normal levels of economic activity. As the economy returns to full capacity, inflation and financial risks may surface. To ensure sustainability, the process of growth must not create imbalances in the economy that will draw down future growth. This brings us to the two other aspects of stability: price and financial stability. The Bank of Thailand has had much success in anchoring inflation expectation through our Inflation Targeting framework, adopted since 2000. Many times during this period, well-anchored inflation expectation has allowed flexibility for the Bank of Thailand, when needed, to actively support growth and ensure financial stability. As you well know from the Subprime Crisis, an economy with growth stability and price stability can still fall into contraction due to financial causes. The Bank of Thailand has learned from our own experience with a financial crisis as well as others’ and has been vigilantly monitoring indicators of risk to financial stability in the economy, and has policies developed especially to ensure financial stability. Conducting policy through the use of interest rate alone may not be sufficient to take care of financial imbalance. In addition to monetary policy, which sometimes is too blunt to optimally take care of financial stability, we have adopted macroprudential tools since 2002 and employed them to help us cover and specifically target areas of the financial system.
The progress can be observed by both trade with CLMV, which has been growing annually with double digits over the past 4 years, and more efficient allocations of capital and resources as seen in an increasing number of Thai companies doing outward Foreign Direct Investment. In addition the SMEs, which account for approximately 95% of total businesses in Thailand, have been playing an essential role in driving the economy and will continue to do so going forward. They are an integral part of the supply chain and one of the key success factors of Thailand’s previously-mentioned high-potential industries. There are also SMEs who have the capability to produce high value added products by creating their own innovation such as the seasoning packages you see in Asian grocery stores here. Another example is ready-to-drink coconuts, a product that combines a coconut in its natural shell with an opener such as one you’d find on a soft drink can. It is a recent entrepreneurial product that has outstanding growth in exports since launch. In 2004, the Bank of Thailand launched the Financial Master Plan which aims to increase efficiency and financial access by promoting competition in the market. Since implementation, we have observed the improvement in Thailand’s financial infrastructure from reduced cost-to-income of commercial banks and particularly from SMEs’ greater  BIS central bankers’ speeches  3  financial access. The cost of raising funds in Thailand has been reduced through the welldeveloped financial market since more players are allowed to offer variety of financial products.