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Published on September 20, 2007

Tarisa, in a speech titled "Thailand's Economic Outlook and Challenges Under the Volatile Financial Environment" yesterday, said Thailand needed the policy package to rapidly regain economic stability after several negative shocks.

The policy package must be able to cope with three challenges: management volatility caused by global capital movement, building resilience for both the real and financial sectors, and improving long-term productivity.

However, she did not specify what the policy package should be.

Tarisa said in the near term Thailand was likely to face hot money and large inflows, pressure from baht appreciation, and potential loss of monetary autonomy.

She said the BOT would maintain a wait-and-see mode after the Federal Reserve aggressively cut of its policy rate by 50 basis points to 4.75 per cent on Tuesday. The BOT would like to see the impact of the cut on the US economy before making any further decision about policy rate movement.

After the Fed cut, the capital flows could be both in and out of the Thai market.

However, Tarisa insisted Thailand's GDP could grow as much as 4.5 per cent this year with exports as the main engine. Next year, growth is expected to be 4.5-6 per cent with core inflation at 1-2 per cent.

Anoma Srisukkasem

 The Nation