The latest figures have indicated the better-than-expected recovery of the global economy and financial markets due to the large, timely and broadbased economic stimulus measures that have been implemented to combat the crisis. In most countries, manufacturing production and trade have improved, while rebounding consumer and business confidence has helped boost the private demand. As for the financial system, de-leveraging and the tightening of credit underwriting standards have moderated. Banks have gradually rebuilt their strength and become less dependent on the support from government facilities. Ladies and Gentlemen, Let me turn to the case of Thailand. Our successful navigation of the Thai economy through the crisis can be credited to two key factors. The first is our strong economic fundamentals including the resilient financial system as a consequence of intensive and continuous reforms since the 1997 Asian crisis and the second is the timely implementation of both monetary and fiscal stimulus measures. You may remember that, the Bank of Thailand has reacted decisively and preemptively by lowering the policy interest rate by 250 basis points to a historically low level of 1.25 percent, while the Thai government launched massive stimulus packages and other measures to help relieve households’ cost of living through the difficult time. As a result of these policies and the revival of the global economy, our GDP data for the fourth quarter of 2009 shows solid growth and momentum, growing 5.8 percent year-on-year and 3.6 percent quarter-on-quarter, one of the highest in the region and the world.
Our latest economic projection as of January 2010 suggests an economic expansion of 3.3–5.3 per cent in 2010 and 2.8–4.4 per cent in 2011, with an increasing role of private investment replacing government expenditure, which will gradually subside since the need for continued fiscal stimulus wanes as the economic growth becomes self-sustaining. Here, I would like to point out that this projection is due for a revision in April. With the stronger-than-expected performance in the last quarter of 2009, it is highly likely that these numbers will be revised upward. Ladies and Gentlemen, Having pointed out a fairly positive outlook, I will now turn to the second topic of my talk: the key challenges going forward and I must quickly add that looking ahead there are both external and domestic uncertainties. Policymakers therefore will have to be watchful and well-prepared to implement appropriate policy to ensure continued growth momentum amidst these challenges. First, the global economic recovery, particularly those of the industrialized economies, remains fragile and subject to downside risks. In spite of the higher-than-expected growth in the fourth quarter of 2009, the US economy is still beset by high unemployment, continued deleveraging, and weak financial institutions. All of these will have dampening effects on domestic demand, especially consumer spending – the main growth driver for the US economy. At the same time, concerns on the Eurozone’s sizable fiscal deficits especially those of the peripheral economies may trigger another round of confidence problems.