The broad strength of private spending also testified to inherently sound economic fundamentals, including rising income, low unemployment, and robust private sector confidence. At the same time, additional support from accommodative macroeconomic policy, both fiscal and monetary, helped maintain economic momentum throughout last year. Notwithstanding a somewhat lackluster economic performance in the first quarter of this year, many of the supportive factors are expected to remain in place. Forward-looking indicators suggest both businesses and consumers continue to hold positive outlook on the economy. Fiscal stimulus related to the large-scale public investment in infrastructure should begin to phase in from the latter part of this year, potentially generating positive crowding-in effects on private spending. Financial conditions also continue to be supportive of growth, with policy interest rate staying low and private sector credit growth expanding at a doubledigit rate. Longer-term interest rates and borrowing costs have been low and stable, affording both businesses and households relatively easy access to finance. In fact, if anything, a high pace of credit growth may have raised risks of overheating in some sectors, with potential implications for financial stability. The Monetary Policy Committee (MPC) has flagged this risk several times since last year, and will continue to monitor the situation closely. On the other hand, there remains an important drag to growth, largely stemming from a protracted global recovery. In some parts of Asia, the first quarter growth has turned out to be lower than expected, as a result of slowing global trade.

Pongpen Ruengvirayudh: The state of the Thai economy and macroeconomic policy Speech by Ms Pongpen Ruengvirayudh, Deputy Governor for Monetary Stability of the Bank of Thailand, on behalf of Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Joint Foreign Chambers of Commerce (JFCCT), Bangkok, 28 May 2013. *  *  *  Opening remarks Your Excellencies, Ladies and Gentlemen, First of all, on behalf of the Governor, I would like to thank the Joint Foreign Chambers of Commerce for the invitation. Thailand and the members of JFCCT have a long-established relationship, in some cases spanning over several decades. The Chambers’ work and efforts over the years have contributed significantly toward the economic development and prosperity here in Thailand. I hope that our economic partnership and cultural ties will continue to thrive as we further our cooperation in the future. Let me share with you today my views on Thailand’s economic assessment and how monetary policy can help address some of the immediate challenges facing the economy. Later in my talk, I will also touch on longer-term structural challenges which monetary policy may have little bearing on, but are nonetheless crucial for sustaining economic prosperity. But first, let me begin by reviewing current economic conditions and medium-term economic outlook. Economic outlook and monetary policy The economic expansion in 2012 at 6.4 percent proved to be stronger than most had anticipated, driven mainly by robust domestic demand amid post-flood reconstruction spending.