efficiency and resiliency. as a tool, the macro - prudential and risk assessment framework which includes development of an early warning system model to bolster our financial stability analysis in order to make pre - emptive policy responses when appropriate has also been put in place. with regards to real sector reform, significant attempts have been made to raise real sector productivity, promote transparency, and strengthen governance. nevertheless, there remains more to be done on this front. the most important issue here is to keep pressing on with the reform effort and not to let reform fatigue get into our way. the adoption of a full - fledged inflation targeting regime in 2000 eliminated the inconsistencies among monetary policy, exchange rate policies, and capital flow policies that had contributed to the 1997 currency crisis. this framework has served us well, with enough flexibility to accommodate other important policy objectives such as output stabilization, provided that inflation remains in check. in fact, the consistent improvement in our monetary policy mechanism and thus its efficacy have given me reasons to be optimistic about the prospect of our present regime. seeing less inflationary pressure, the monetary policy committee this month turned to an accommodative stance to ensure that the economy continues on a satisfactory course. recognizing that inflation targeting is not a panacea, the monetary policy committee has supplemented the framework with a regular monitoring and assessment of seven key areas of financial imbalances, where buildup may threaten the macroeconomy and price stability. these seven areas are the country ’ s external position, the real estate sector, bank credit, household and corporate financial positions, the financial market, and the fiscal position of the government. ladies and gentlemen, despite all these reform efforts and the stronger foundation the thai economy now has, we have to remain vigilant. today, the change of pace in the global economic environment is simply unprecedented. some of these changes, if left unchecked, may have significant implications on a country. while the new global dynamics represents an opportunity for a country like thailand to leap forward, it also entails increasing risk of economic instability. the evolving complexity of the global economy means that conventional thinking and approaches to deal with economic problems may, at times, need to be adapted. the 1997 crisis highlighted this point. back then, the conventional wisdom for a crisis - ridden country is to adopt restrictive monetary and fiscal policies. as we all now know, overtightened stance aggravated the already fragile situation and created many unnecessary pains. only when the

economy. the direct effect of us safeguard measures on certain products led to slowdown in exports of solar cells and washing machines, though they have had small impact on our overall exports 1. meanwhile, us trade measures against china could have indirect impact on thai exports as a number of thai firms are part of chinese production and supply chain networks ; potential reduction in chinese exports has reduced the demand for thai supply. furthermore, the measures can lead to trade diversion, the consequence of which remains to be determined. on one hand, the thai economy may benefit from new investments from relocation of chinese factories. thai firms may be able to supplant chinese competitors in exporting to the us. on the other hand, trade diversion can lead to increased competition within thailand as excess supplies of goods from china are diverted to the thai market and priced at discount to compete with local products. besides, prolonged uncertainties surrounding trade measures had led to unusual front - loading of exports in 2018 and will weigh on export growth in 2019 — just when the global demand has begun to moderate. it can also impair business sentiments, preventing firms from taking on new investment projects. ultimately, as the us - china trade disputes remain unresolved and the us ’ s inclination for further trade 1 both products make up less than 1 percent of thailand ’ s total exports 3 / 9 protectionism remains, such as potential us auto tariff measure, trade disputes will certainly be the key concern for all authorities. ( 2 ) slowdown in the chinese economy is another concern. while the slowdown may be in line with the chinese authorities ’ goal of restructuring the economy towards a long - run sustained growth model, in the short - term it can have significant impact on the thai economy. this is because of high degree of linkages in terms of supply chain and production networks, tourism, and property investment. for instance, china is thailand ’ s second largest export partner following the asean region, making up about 12 percent of our exports in term of value while the chinese tourists represent nearly 30 percent of total foreign tourists. besides, slowdown in the chinese economy may contribute to higher volatility of the chinese yuan ; the movements of which can influence movements of the baht and other currencies in the region. against this backdrop, short - term slowdown in the chinese economy needs to be closely monitored. ( 3 ) geopolitical risks in many parts of the world remain elevated. these include long - standing issues such as the us - north