Prasarn Trairatvorakul: The rise of Asia – finding the right balance for policy Address by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Japan Bank for International Cooperation (JBIC) seminar on “Outlook for the Global Economy and Financial Markets 2011”, Bangkok, 8 February 2011. *  *  *  Distinguished Speakers and Guests, Ladies and Gentlemen, It is my honor and pleasure to address today’s distinguished audience on the outlook of and the main challenges facing the global and Thai economies. Rather than giving you data and projections, which are readily available, I would like to take this opportunity to share with you my observations on the economic future of Asia and Thailand. While economic recovery in the West will likely be constrained by crisis legacies, the rapid bounce-back in Asia and its fast rising role in the world economy have made many believe that Asia is on the continued rise, to the extent that Asia is entering a golden age. Nevertheless, there are questions whether Asia can manage the risks associated with continued growth, particularly inflationary pressure and the impact of volatile capital flows. In line with this introduction, my presentation today will focus on four related topics. First I would like to pose a question whether Asia is truly approaching a golden age. Secondly, to sustain the rise of Asia, I would like to highlight the need for Asian economies to build capacities, as well as strengthen innovation and productivity.
This is because it helps investors, businesses, and household to effectively make plans and manage their risks, as well as lower businesses’ cost of funds. To end my remarks today, I would like to stress that while there remain risks and uncertainties surrounding the overall outlook for global growth, prospects for Asia remain relatively bright. However, countries in Asia, and Thailand especially, need to put real efforts to foster capacity, innovation, and productivity. We must also prevent excessive risk taking and lax policy-making from becoming the norm. This requires preempting excessive risktaking and conducting policy with prudence. I can assure you that the Bank of Thailand is committed to ensuring a stable macroeconomic environment which would help investors, businesses, and households in planning their economic activities and to operate effectively. However, policies can mitigate only parts of the spectrum of risks. The business sector must also be mindful and well-prepared to deal with new risks and challenges, going forward. Thank you. BIS central bankers’ speeches  3