The outlook for the other developed economies is not much more favourable and, indeed, the available projections for the emerging economies, which in recent years have been the main driver of global economic growth, also show a weakening of activity. The difficulties of definitively restoring confidence in the soundness of the Monetary Union continue to weigh on the lack of momentum in the euro area. It is widely accepted that the problems continuing to affect sovereign debt markets in the area and limiting its ability to recover ultimately stem from the slowness shown by certain economies in adapting to the new reality of belonging to a monetary union and from certain weaknesses in the original design of European governance. Since the tensions emerged, significant progress has been made in what could to some extent be considered the first phase of reform of the euro: warranting a mention here, in any event, are the strengthening of the Stability and Growth Pact, the Excessive Imbalances Procedure and the European Semester. At the same time, however, the scope and depth of the crisis have shown the need for a more far-reaching review, whose ultimate aim must be to achieve a “genuine economic and monetary union”. The Summit of Heads of State or Government of the euro area in June this year marked the beginning of the second phase of reform, which rests on three basic pillars: the banking union, further fiscal integration and greater economic policy coordination.
These could weigh on the pace of the already fragile global recovery and create more bumps in the road for the Thai economy than we have anticipated. Moreover, the impact could be more pronounced in the rural areas, where drought and low commodity prices worsened the already weak farm income. Nevertheless, I believe there are grounds for optimism for the Thai economic growth. The Thai economy this year will continue to be driven largely by domestic demand and tourism. Exports will likely remain flat or decline further, not only due to subdued global demand but also price effects as export prices have tumbled following the low commodity prices. But, so far the impact on the labor market, even those in export-oriented sectors, has appeared well-contained. Notwithstanding the threatening uncertainty around us, tourism continued to be a main growth driver for the Thai economy, with expected tourist arrivals of around 31 millions in 2016. The CLMV market is another bright spot. The Thai exports to CLMV market are expanding in accordance with their growing middle class and vibrant economic activities. The CLMV market is now accounting for 10.4 percent of Thai total exports, which is already larger than our exports to Japan, the third largest export destination. In terms of the domestic economy, we have learned from the latest GDP release that the construction sector has picked up with a strong growth of more than 20 percent in the fourth quarter of last year, thanks to government infrastructure projects.