As a result, interest rates in emerging market economies are expected to be raised faster than the industrialized countries. These interest rate and growth differentials against the backdrop of ample global liquidity are breeding the carry-trade behaviour with the USD as the funding currency this time. This leads us to our third challenge, which is how to prevent the surge in capital inflows from creating unwarranted instabilities such as excessive volatility in the currency market and asset price bubbles. In response to this challenge, we are beginning to see some countries such as Hong Kong, Korea, Singapore and China tightening their prudential standards to cool down speculative pressure in the real estate sector. In addition, Brazil has recently imposed measure to slow down the inflows of fund into its stock market. In the case of Thailand, net capital flows have turned positive in July and continued to remain so, causing the Thai baht to strengthen as the current account is also in surplus. Nevertheless, the Thai baht has been moving in line with other regional currencies and the Bank of Thailand remains vigilant in ensuring this continues to be the case. In order to make capital flows more balanced, we are in the process of furthering the liberalization of capital outflows. This would also increase the flexibility of our businesses in financial management.
As a result, the overall GDP growth for the quarter came in at 1.3 percent on a quarter-on-quarter basis. Ladies and Gentlemen, In 2010, the Thai economy is expected to stay on the course of a gradual recovery due to two important factors. First, the continued world recovery, and second the fiscal stimulus. Let me go into each of these briefly. First, the IMF and market consensus expect the world economy to return to positive growth next year, owing primarily to monetary and fiscal policies of the industrialized economies that are expected to remain accommodative. Emerging market economies including Asia are expected to rebound faster and stronger than developed economies. This is because Asia’s financial sectors were not directly affected by the current crisis. Brighter prospect for the global economy next year means our export sector can continue to be our main growth engine going forward. Secondly, the government spending under SP2 or the Strong Thai scheme will also continue to support the nascent recovery. As we are all aware, we cannot indefinitely rely on fiscal stimulus to keep the economy going so it is our hope that public spending will eventually crowd in private demand so that the recovery will continue after the stimulus tapers off. Now let me turn to the risks associated with this outlook. Despite several good signals, the recovery of the world economy is still subject to a number of downside risks.