Therefore, cooperation of financial and business sectors is vital for lifting growth potential. The private sector needs to add more value to products and services by having long run commitment and investing in both physical and human capital, for example, high technology machinery, employee training as well as research and development. In order to support this, the public sector and Bank of Thailand can improve accessibility to sources of funds, especially for SMEs, and lower the costs of long-term investment. Ladies and Gentlemen, The Bank of Thailand pursues economic growth as part of its commitment to sustainable well-being. Economic growth, as discussed today, is maximized by keeping growth close to potential as well as lifting growth potential itself. The central bank can contribute to growth potential by stabilizing the overall economy. The Bank of Thailand has looked after growth, price, and financial stability during the downturn, leaving the economy on a more confident track to recovery. As for raising growth potential, cooperation of all sectors is needed, while the central bank provides a favorable financial environment which is prerequisite. In the football game of the economy, the Central Bank acts as Center Back. In order to safeguard stability during the recent circumstances, we have played a proactive role due to high economic uncertainty. Now that political and economic clarity is higher, the central bank will play a supportive role.
We would expect to see the same factory owners boosting technology investment to be able to manufacture more valuable products in the future, or the banking system being improved to bring funds to investors more effectively. The first component requires full utilization of current resources and can be achieved through demand-management policies, while the second component requires improvement of these resources and production processes so that production can yield a higher rate of return. This can be achieved by supply-side policies: increasing productivity of the labor force, adding value to products by innovation, and improvement in infrastructure. BIS central bankers’ speeches  1  Looking at the Thai economy right now, we can see room for both demand-side and supply-side policies. Our economists have analyzed two decades of trend in capital accumulation and estimated that Thai economic growth potential has declined since the 1997 crisis and is currently at 4 to 4.5% per year. Thai growth potential is also low compared to ASEAN peers, who average around 5%, according to an IMF study this year. This reflects lower productivity, and suggests that there is room for supply-side policies to lift growth trend. Looking at need for demand-side policies, Thailand’s actual growth has averaged 2.5% between 2008 and 2013. In this period the Global Financial Crisis and the Thai mega flood occurred, and the economy’s rebound was not enough to compensate for lost growth during these large shocks. Demand-management policies are needed to restore confidence and growth to full capacity.