domestic demand, supported by expansionary fiscal policy and monetary accommodation. once world trade has resumed growth after the initial contraction in the aftermath of 2008 us crisis, asian exports have continued to grow robustly on the back of regional trade expansion and strong growth in asia, particularly china and india. notably, some studies have shown that the ratio of asian exports for final consumption within asia has risen, though varying among individual countries. for example, approximately 70 percent of indonesian exports to china are for final consumption in china. such ratios for singapore and korea are 50 and 40 percent, respectively. that said, it is wise not to jump quickly to conclusion because asian economies and trade remain critically linked to the g3 economies. while this negative spillover from advanced economies to asian economies could be partially cushioned on the trade side, i have greater concern on the potential spillover through volatility in international capital flow and financial market movements. in addition to the risk aversion in time of market stress, emerging market economies have tried to live with spillover from exceptionally easy monetary policy in advanced countries. such practices have created excess global liquidity leading to volatile capital flows into emerging market countries bis central bankers ’ speeches including thailand. moreover, excess global liquidity has been an important factor behind the rapid rise in oil and other commodity prices. unless the advanced economies manage to get themselves out of sluggish growth path, all of us have to be vigilant and cannot rule out the possibility that the us may need to find creative policy actions to stimulate its economy. and the impact of these efforts on emerging markets can be quite unpredictable and inconsistent with economic theories, due to the international currency status of the us dollar and the safe haven status of us dollar investment. distinguished audience, against the background of quite an unpredictable external environment, i believe that the thai economy would still turn in reasonable growth rate for the year 2011. on the demand side, i see consumption and investment continuing on the rise. consumer spending is expected to benefit from a high level of farm income from rising output and agricultural prices, high employment, and good consumer confidence. meanwhile, investment by the private sector is also expected to grow, though at a slower rate than the periods following the crisis recovery. currently, business sentiment and future investment plans are still showing an improving sign. and, public investment spending remains a key factor to keep demand momentum going forward. what we need to assess more cautiously is the future export performance. of course, our export sector would

prasarn trairatvorakul : global risks and the outlook for thailand address by dr prasarn trairatvorakul, governor of the bank of thailand, at the fitch ratings ( thailand ) ’ s 10th anniversary annual conference, bangkok, 1 september 2011. * * * distinguished speakers and panelists, ladies and gentlemen, i would like to thank fitch ratings ( thailand ) ’ s for inviting me to give an opening address at this year 10th anniversary annual conference. i also like to say that the conference theme “ global risks and outlook for thailand ” is most timely and should stimulate quite active discussion among the distinguished audience in this room. i am sure that the conference will help bring new insights on how we should look at the world, advanced, and asian economies in the period ahead underlined by great uncertainties. for my part, i would like to highlight some key issues that can have potentially significant policy implications. i will touch briefly on three areas, namely the prospects of the advanced and asian economies, thailand ’ s economic outlook, and finally the key policy challenges going forward. at the outset, it is fair to say that prospects of the global economy could be quite murky over the year ahead. there are greater uncertainties with regard to the speed of recovery and additional policy actions in the us and eurozone economies, and the risks of misforecasting are high. worldwide, policymakers and markets have anticipated that the us sluggish recovery could face further downside risks as us fiscal and monetary policies could run out of “ bullets ” to provide the much needed stimulus. for the eurozone, doubts on the potential contagion of sovereign debt crisis to other european countries remain, reflecting the ineffective impact of domestic policy on the economic recovery in these economies. looking ahead, a more positive sentiment on the eurozone is contingent on the growth performance of germany and france in particular. but, recent signs of economic weakness in external and domestic demand in these countries have been somewhat worrisome, and new data release could either calm or jerk market sentiments. despite these rather gloomy prospects in advanced economies, i remain cautiously optimistic on the performance of asian economies for the rest of this year. my assessment is conditional on the ability of asian economies to maintain economic resilience and pursue an appropriate policy mix to preserve economic and financial stability. evidenced since the 2009 us crisis, major economies in asia have been able to cushion the adverse impact of global economic roller coaster by expanding