Production constraints continue to ease, while private sector demand is back on track. The growth momentum in the period ahead is likely to sustain, driven mainly by domestic demand. We expect that economy will grow at 5.7 percent this year and 5.0 percent next year. This episode of rapid growth recovery is that it also witnessed macroeconomic stability. Thailand has a long history of low and stable inflation, averaging around 3 percent over the decades. The unemployment rate in recent years has also been low at around 1 percent. Meanwhile, external position remains solid with moderate short-term external indebtedness. The banking sector has been safe and sound with sustained profitability amidst the ongoing global financial crisis. Despite capital inflows into Thailand, there appears to be no sign of asset price bubble while the degree of leverage in the corporate and household sector is still low. Such promising outlook is reflected in Thailand’s sovereign credit rating which has been stable at investment grade despite intermittent political tension. At this juncture, please allow me to highlight a number of Thailand’s fundamental strengths that underpin this positive outlook. First, our corporate sector remains competitive with accumulated robust savings and profitability. This fact is well evidenced by their healthy balance sheets and their ability to explore investment opportunities overseas. Net profit of most listed companies in the second quarter 2012 turned out be positive despite damages inflicted by the floods.
In line with the cyclical situation, this policy has provided its stimulus through the key interest rate cut and ongoing liquidity injection into the banking system. We have also revised the banking system regulatory basis from the viewpoint of easing it, in order to stimulate lending by the banking system. I avail myself of the opportunity to reiterate that the banking system remains profitable, liquid and well-capitalised. Safeguarding the stability of this system will always be on our focus. BIS central bankers’ speeches  1  Third, reducing uncertainties and risk premiums in the economy is an important priority. As I have already stated, these uncertainties stem, to a great extent, from the foreign market, but a part of them stems from the Albanian economy. Without intending to make a list, I will mention just a few: •  Reducing informality should be a primary objective. Besides outflows in public finances, informality brings hidden costs in terms of diminishing competition, inefficiency in terms of lack of balance sheet transparency, and artificially increased financing costs to businesses. •  Fostering the financial system infrastructure protection is another aspect deserving attention. The Bank of Albania signed and has already made effective a cooperation agreement with the People’s Bank of China, which also provides for the possibility to obtain liquidity in case of need. An important step in this regard is the agreement between the Deposit Insurance Agency and the European Bank for Reconstruction and Development to increase the deposit insurance coverage.