The latter is also connected with globalisation through the increased competition and changes in production patterns. 8  9  However, the value of foreigners’ assets in the form of direct investment in Sweden is high from both a Nordic and a European perspective. Foreign direct investment in Sweden amounted to around 47 per cent of GDP in 2004, which can be compared with just over 30 per cent in the EU. ` SEB, ”Kronsyn”, 22 March 2006. 4  BIS Review 35/2006  Globalisation and imbalances in the world economy The deregulated international capital market has meant that countries have to a much greater extent than before been able to finance consumption and investment via borrowing abroad. This could indicate that trade imbalances are something we have to live with in a world with deregulated capital markets and a greater degree of free trade than before. At the same time, risks of rapid adjustments may be built up. In connection with the slowdown in economic activity in 2000-2001, US economic policy was shifted in a more expansionary direction. Income tax was lowered and public expenditure increased, at the same time as the key rate was cut to an all-time low. This entailed a strong increase in demand, which also stimulated exports in other countries – the United States acted as growth engine for the world economy. The consequence of this was that the US current account deficit increased rapidly; in 2005 it amounted to 6.4 per cent of GDP.
We continue to place an emphasis on promoting the global competitiveness of Thai businesses, while ensuring the integrity of the economic and financial system as a whole, the very foundation of consumer and business confidence. The key challenge this year for the BOT and other policymakers is to preserve the right balance of policy mix, which in turn demands both intra- and inter-agency cooperation. Our common goal is to promote a sustainable growth path and ensure a high standard of living for all Thais. Economic developments and policy implementation in 2012 Last year, the Thai economy had to grapple with the stagnating global economy, volatile capital flows, and challenges in recovering from the flood crisis. Notwithstanding these difficulties, the economy proved to be resilient and flexible enough to withstand various shocks and uncertainties. Indeed, robust domestic demand has become the main engine of growth amid the softening global economy, helped in part by government stimulus measures. Overall economic activities consequently improved, and I would like to thank all parties for their collective efforts. On the monetary policy front last year, a greater emphasis was placed on risks to growth, which justified the accommodative monetary policy stance throughout 2012. The Monetary Policy Committee (MPC) lowered the policy interest rate twice by a total of 0.50 percentage points. The first cut took place earlier in the year, and was designed to help speed up economic recovery after the severe flood.