While demand was weak in tandem with confidence, government pump-priming also helped achieve the favorable growth outcome. Going forward, sustainable economic growth can be achieved through several different means. But, among them, the prerequisite is maintaining the healthy growth momentum with the right policy mix. I will elaborate on this point later. For 2008, the growth prospect hinges largely on the recovery of private consumption and investment, supported by increased government spending. This year, the strengths of these three growth engines will be particularly important, since exports – the fourth engine – is expected to moderate in line with the global economic slowdown. Overall, the Monetary Policy Committee expects the Thai economy to grow by 4.8-6 percent. Due to continued high prices of energy and food, headline inflation is expected to be in a range of 4.0-5.0 percent for the whole of 2008. Nevertheless, the MPC expects the core inflation forecast of 1.5-2.5 percent. But, there are important risks to these forecasts. On the growth momentum, data for the first three months of 2008 point to GDP growth close to 6 percent, up from the previous quarter of 5.7 percent. During the first three months of this year, private consumption and investment, which constitute almost 70 percent of total demand, are firming up. Meanwhile, the disbursement rate of central government budget during the first half of fiscal year 2008 was also up from the same period last year.

Today, more than half of the Thai labour force is in the non-agricultural sector (including services), which is more averse to changes in global competition for trade and investment. Moreover, to maintain competitiveness, our economy needs the labour force that possesses higher and more flexible skill sets to move up the valued added chain of production and trade. In reality, Thailand, just like other countries, has weakness in the mismatch of skills produced through formal schooling from those which firms find useful. Government policies need to address this weakness quickly, by finding ways to align formal education with training through vocational schools and apprenticeship programs organized by private businesses. Key questions will be on designing appropriate incentive structures for players in the education and business sectors, while being mindful of social safety net considerations when businesses close. This is especially important because the agricultural sector now accounts for about 10 percent of the overall economy and cannot provide social-safety support for the non-agricultural sector should a downturn hit. In addition to government policies, investors and firms can play their parts in helping to improve labour skill and quality development. This can be achieved through building more experience in the workplace by investing in the best technology and capacity to use that technology efficiently. Importantly, we also need to focus on the quality of investment that will help build skills and enhance production techniques that adds higher values and saves costs. Ladies and Gentlemen, To close, let me highlight another important underlying strength of the Thai economy.