A German exporter selling goods both in the USA and in Sweden could, for instance, have kept its profits up fairly well by determining its prices in dollars in the USA and in Swedish kronor in Sweden. At the same time, increased competition should in general mean that wholesalers and retailers in the domestic market have greater difficulty in passing import price increases on to the consumer channel. The general demand situation in the world also has great significance for the capacity to raise prices in all channels - low utilisation of resources subdues price pressure and high resource utilisation increases price pressure. However, our knowledge of pricing behaviour among both exporters to Sweden and domestic operators is limited. This means that assessments of the effects on inflation of a particular development in the krona are uncertain. An even more difficult task is to make assessments regarding the krona exchange rate during the forecast period. In the medium to long term, we do not obtain much guidance from the theoretical models for determining the exchange rate. Almost all models are based on the real exchange rate creating balance in a country’s foreign trade. A particular basket of goods shall, for instance, cost approximately the same here as in Germany. If it is -as is the case today - cheaper in Sweden, we will increase our exports and have a surplus on the current account - which we have.
In addition, sufficient digital infrastructure should be put in place as it will considerably strengthen other modes of connectivity. The internet and mobile communication connectivity will radically change the ways in which businesses operate and people interact, as they drive productivity and efficiency of all sectors. It will also facilitate financial, transport and logistics services, as well as open door to knowledge sharing for people across the subregion. While digital technology is rapidly improving in some GMS countries, there remains large “digital divide” both within and between countries that should be narrowed. BIS central bankers’ speeches  1  The second aspect is trade and investment connectivity. Intra-regional trade and investment activities have continued to flourish, mainly thanks to complementarities among GMS economies. Many GMS countries have varied and abundant natural resources, young population and low labor costs, while the others can offer technological know-how and financing. With varying industry specializations, the diversity among GMS members has contributed to stronger regional supply chain network, and in the future should magnify national strengths towards a higher competiveness of the whole subregion. Amid thriving trade and investment, Thailand is well-positioned to serve the whole subregion, owing to our established legal framework, financing facility, infrastructure, logistics and IT capability. This can be seen by prospering business activities along the Thai border with other GMS countries. Last year, Thailand’s 25 border customs checkpoints with Myanmar, Laos and Cambodia registered impressive trade flows of more than 500 billion baht.