The robust recovery momentum on the global scale has resulted in a strong expansion of Thai exports across product categories and export destinations. In addition, the Thai tourism sector has grown consistently with steady increases in the number and quality of tourists. Therefore, it is not surprising to see businesses associated with exports of goods and services enjoying the benefits from the improved external demand. Domestic demand growth, however, is still proceeding at a gradual pace. Despite a continuous recovery, private consumption growth remains well below that of GDP, registering within the 3 percent range. And until recently, private investment growth had concentrated mainly in the export sector. Overall, the large current account surplus of 10.5 percent to GDP last year summarizes the pattern of economic recovery and reflects the imbalance between the external and domestic demand. Second, the rural economy has been exposed to more adverse shocks than its urban counterpart. Specifically, several populist measures including the controversial rice pledging scheme were withdrawn, together with adverse weather conditions such as severe droughts in 2016 and floods in 2017 as well as declines in global prices of key export crops especially rubber and rice, all constituted negative income shocks to farmers. In addition, rural entrepreneurs, which are mostly SMEs, tend to be less 2/10  productive and might not be able to compete with larger firms who are better equipped with capital and technologies.
4/10  Given these outlooks, we expect the growth momentum to be more balanced with a stronger contribution from domestic demand. In our March forecast, the GDP growth for both 2018 and 2019 was projected at 4.1 percent. These figures are likely to be revised up given better-than-expected growth outturns in the first quarter this year. Headline inflation in April and May has turned up above the lower bound of our target, which is set at 2.5±1.5%, mainly due to the recent pickup in energy prices. Yet inflationary pressure remains soft overall and we must continue to closely monitor inflation developments once these supply-driven fluctuations fade. Over time, improvement in domestic demand and rising energy prices are expected to bring about higher inflation, although it is likely that headline inflation would still remain below the midpoint of the target over the year. For now, an accommodative monetary policy stance would be maintained to foster a strong economic growth and facilitate the return of inflation to the target. Going forward, the Monetary Policy Committee will closely monitor the strength of growth momentum, inflationary pressure as well as underpricing of risks in the financial system that could lead to financial fragility and financial stability concerns. Ladies and gentlemen, So far, I have given you an overall near-term summary of the Thai economy. Let me now move on to the second part of my talk which looks further into the backbone of Thailand’s economic growth engine over a longer horizon.