Indeed, the revisions to estimates of potential growth have mostly occurred after the crisis, whereas it is most likely that the slowdown in productivity had already startedbefore the crisis but was masked by the credit-fuelled boom. For example, in 2007 the euro area’s output gap was estimated by international institutions such as the IMF, the OECD and the European Commission to be negative – somewhere between –0.2% and –0.6%. The most recent estimates put the output gap in the region of positive2.7% to 3.4%, a significant downward revision to views of potential. At the same time as potential growth has been declining, the share of global factors driving inflation seems also to have been increasing. In large part, the common global trend can be explained by the decline in price of energy and other commodity prices. But low global inflation goes beyond weakness in domestic demand and falling energy and commodity prices. In recent years there has been a growing understanding of the role of global demand factors on domestic inflation.6 For example, it has been observed that changes in the degree of slack in OECD economies are having a smaller impact on inflationary pressures than it has in the past.7 In part this changing 5/7  BIS central bankers' speeches  correlation is a result of the success of monetary policy in anchoring inflation expectations.
It is not to say that the banking sector response was all that we wanted because there were still some elements and gaps in the market response that we felt were inadequate. While overall credit grew well and continues to do so, some sectors, particularly SMEs, did not receive the credits we wanted them to get. The credit did not extend or reach out to the sectors hit particularly hard by Covid-19. Our response is to design policy measures to supplement the market response, for example, what we initially called a soft loan program. The program then started to have some obstacles because of the pricing of the loan structure. Therefore, we came up with another emergency degree on Financial Rehabilitation Measures, which in part established a loan facility for SMEs with a credit guarantee component from the government. The measures were to encourage the banks to lend to those sectors which had not received adequate credit by addressing the high credit risk that banks might experience from lending to SMEs. As a result of the package that we put together on the SME front, we managed to see loan growth in SME sectors. These measures are examples of the proactive response that policy authorities, both on the fiscal side at the Ministry of Finance and us on the monetary side at the Bank of Thailand, try to get the economy through this crisis, as well as it could be reasonably expected.