Tarisa Watanagase: Enhancing Thailand’s resiliency against economic turbulence Address by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the 4th Annual Euromoney Thailand Investment Forum: The Economic Perspective, Bangkok, 6 July 2010. *  *  *  Prime Minister, Distinguished Speakers and Guests, Ladies and Gentlemen, First of all, I would like to thank Euromoney for the invitation to speak to this gathering of prominent members of public and business sectors. I welcome this opportunity to share with you some thoughts on Thailand’s economic and policy issues at this very challenging juncture. As we all know, the Thai economy has been through one of the most turbulent periods due to the global impact from the US sub-prime crisis and the European debt crisis. Despite the difficult external environment compounded by political problem and weak sentiments at home, it is clear that the Thai economy has been able to cope with shocks quite well. Thus far, what the economy experienced has been a mere cyclical downturn, in tandem with the contraction of global demand. The good news is that nothing about our economy amplified the impact of these external and domestic shocks and I call that economic resiliency. Unfortunately, the less good news is that a small open economy like Thailand will be prone to more shocks, especially through international trade and financial market linkages. So, we need to accept this fact and make ourselves as resilient as possible to ride the waves.
We have also developed over the years and have been equipped with a broader and more in-depth surveillance that now covers household, financial, and real estate sectors. This is important for early detection of imbalances and enables preemptive policy action to prevent costly bursting of bubbles. Importantly, the process of monetary policy decision itself has been institutionalized, and independent from political influence. I therefore have no concern today whether who will become the next governor since a good system for policy decision making is already in place. Going forward, one of the important policy challenges facing us is the sizeable and volatile capital that flows to emerging economies, including Thailand. This is due to their better growth prospect and earlier policy normalization vis-à-vis G3 countries. Apart from the policy measure to try to shield ourselves from the adverse impact, the private sector also needs to remain vigilant about risk by not building up excessive risk exposure and by employing more risk protection tools as well. I turn now to the third part of my presentation that is what we can possibly do more to enhance Thailand’s resiliency over the medium term. On this issue, I would like to reiterate briefly what I said earlier in my annual statement regarding the urgency to elevate Thailand’s  BIS Review 94/2010  3  fundamental strength to cope with the changing structure of the global economy. Specifically, there are three issues that should be considered priorities.