The latest released January economic figures point to more strength in the fourth quarter of 2001 than we had anticipated, given the event on September 11. And, with the current more supportive fiscal and monetary policy stance as well as the expectation of a rebound in the US, the overall environment this year is more conducive to growth than last year. From this vantage point, we are of the view that the economy could grow by 2-3 per cent this year while inflationary pressure would be virtually absent. A continuing expansion in domestic demand and a rebound in exports in the latter half of the year would be the key drivers of this year’s growth. The outlook for inflation remains tame, with core inflation expected to hover around 1-1.5 per cent, well within the target corridor of 0-3.5 per cent. Last year, notwithstanding the slowdown in the global markets, the Thai economy exhibited a noted degree of resiliency. While the world economy was in a slump, Thailand’s exports did not fall to the extent observed in many countries in the region. And, even as export fell by about 7 per cent, output growth remained positive in every quarter. In terms of macroeconomic stability, we saw an improvement both on the domestic and external fronts. In fact, Thailand external position strengthened significantly over 2001. The current account registered a large surplus and external debt continued to fall sharply in 2001. Our reserve position remains strong.
To meet the growth challenge, Thailand needs a steady and sincere effort at the micro-level to put our economy back on a more robust growth path. The reforms must aim for good corporate governance, faster debt restructuring, and the efficient and effective banking sector. Without these actions, the potency of the fiscal and monetary policies will be limited, and whatever gains in output we make will be ephemeral. The bottom line, Ladies and Gentlemen, is that Thailand will stand ready to reap the full advantage of an upcoming global recovery only if the real sector becomes competitive and the financial sector functions smoothly. The Bank of Thailand can contribute to the growth process by conducting a responsible monetary policy to ensure price stability, and by prodding the economy along the path of institutional reforms that have been initiated. With a sound policy framework and institutional reforms in place, a more efficient economic structure will have been built and the entrepreneurial energy of the private sector can be unleashed to ensure greater economic well being. This brings me to the last point I wish to make tonight, that is the need to speed up the structural reforms. I am convinced that the necessary transition toward more robust and durable growth lies in breaking out of the current constraints imposed on the economy post-1997, the most pressing of which is the debt-overhang problem. To go forward we first need to unshackle ourselves. The crawling pace of debt resolution is tying down the economy.