of my talk today, let me briefly touch upon the challenges that we are now facing on the external front. with the ever closer integration of global markets for goods, services, and finance, it becomes harder to separate domestic economic prospects from the international context. this backdrop is presently quite challenging. continuing strains in the euro area and fragilities in major advanced economies elsewhere make for a highly uncertain global economy. without bold actions, economic as well as political ones, the potential for europe to be swept into a downward spiral of collapsing confidence and stagnant growth looms large. this grim possibility will remain a drag on the global economic backdrop and hence a key risk factor for the thai economy in the foreseeable future. bis central bankers ’ speeches while the potential impact on thailand through financial channel appears limited due to low direct exposure of the thai financial institutions to the european financial system, the impact through trade could be significant. this reflects thailand ’ s strong trade tie with europe, which accounts for around 10 percent of our total exports. fortunately, any such slowdown in thai exports can be cushioned to some degree. a key reason is thailand ’ s shift towards more intra - regional trade within asia, as well as our success in diversifying into alternative export markets more generally. against this backdrop of continuing headwinds from abroad, i believe that thailand is poised for a sustained upward growth trend. despite the floods, our long - term growth trajectory remains intact. we project that economic growth will rebound to 5. 7 percent in 2012 driven mainly by strong domestic demand. fiscal spending through flood - relief and stimulus measures will play a supportive role. the latest economic data show private consumption already recovering swiftly. business confidence has also rebounded strongly and investment is projected to regain a firm footing by the third quarter of this year. the economy is expected to gather momentum and return to its potential from the second half of this year onwards. this positive outlook is attributable to a number of key fundamental strengths in the thai economy. first, corporate sector balance sheets remain healthy, thanks to robust savings and profitability. net profit of thai listed firms in 2011 was forecasted to continue rising strongly despite damages inflicted by the floods. this will enable firms to rebuild and invest. second, our banking sector is sound with a strong capital base. this reflects sustained profitability, good risk management and rigorous supervision. latest information from our loan officer survey indicates banks ’ continued willingness to lend. this will greatly facilitate a quick recovery

euro crisis. a flexible exchange rate regime allows flexibility in responding to exchange rate movements. however, in a world where global liquidity is especially fluid due to loose monetary policies in the us and the euro zone, can exchange rates move out of line with fundamentals for prolonged period of time? this is an issue that faces not only australia and thailand but also the region as a whole. as a life - long central banker, i ’ m sure governor glenn stevens can give us the broader perspective on this issue. 4. i sincerely hope that the common lessons learned from our experiences within the region will help us, and indeed other central banks, better manage the complexities of the global economy. 5. before we hear from governor stevens, i wish to take this opportunity to thank all guests for joining us at this policy forum to mark the 70th anniversary of the bank of thailand. many of you here have been an integral part of our policy progress over the past many years. on this note, may i propose a toast of appreciation to all of you and of hope that many of you will continue to support a common vision toward building further policy progress for the well - being of all thais in years to come. 6. thank you. bis central bankers ’ speeches