to domestic demand recovery. repayment of overdue debt to farmers, approvals of backlog projects by the boi, and fresh loans to the smes provided quick relief in and of themselves, but the combined multiplier effects could also be meaningful. by shoring up income and improving overall sentiments, these measures constitute an important effort to revive private spending. fast indicators already suggest that private consumption and investment are stabilizing, and private confidence improving. we expect the recovery of domestic demand to gain more traction going forward, especially in the second half of this year. in light of these recent events, our latest growth projection for this year has been revised upward to 1. 5 percent. while this figure may be much lower than long - term potential growth of around 4 to 5 percent, it is chiefly dragged down by the first - quarter contraction – bygones if you like. from this quarter onwards, we anticipate a clear pickup in growth and a v - shaped recovery. many independent forecasters are currently holding a similar view, and most have revised up their growth projections after the political turning point in may. bis central bankers ’ speeches this brighter economic outlook is not without risks, however. exports of goods in particular have underperformed thus far this year, despite their insulation from domestic political turmoil. a number of factors are at play, some temporary, others more secular. weaker economic growth in regional trading partners, including china and asean, has been one cyclical hindrance. global trade also appears to be lagging global growth, limiting scope for emerging economies like thailand to leverage on advanced economies ’ recovery. more deep - rooted structural issues at home may also be responsible, as segments of the manufacturing sector are not integrated into the modern global supply chain. for these reasons, exports may play a less active role in its contribution to growth this year. on the financial stability front, we remain cautious but optimistic. domestically, the prolonged period of economic slowdown has subjected indebted households and smaller businesses to financial strains. loan quality for weaker borrowers has deteriorated somewhat as a result. the good news is that these risks have been confined to specific sectors, and the banking system remains strong and has weathered the slowdown very well, owing to their prudent risk management policies. externally, we also cannot rule out further episodes of volatile capital flows owing to shifts in monetary policy abroad. our economy has proven resilient to such shocks in the recent past, thanks to strong macro

##es. the imf staff has taken these developments into account in the april 2017 world economic outlook ( weo ) and forecasts that world gdp growth will be noticeably higher over the next two years than in 2016 — a slight upward revision relative to the october 2016 weo. 5 there may well even be some chance that foreign economies kick into gear enough that u. s. and foreign business conditions become reasonably well aligned, as occurred during the u. s. monetary tightening cycles that began in 1999 and in 2004. in both of those episodes, u. s. exports grew substantially against the backdrop of a brisk expansion in foreign activity and a stable or even slightly depreciating dollar. of course, it is hard to predict whether foreign economies continue to strengthen so that the global economy will move more in sync — as i hope — or if a substantial gap will remain between the business cycle positions of the united states and our foreign trading partners. however, even if monetary policy divergence remains substantial, there is good reason to think that spillovers to foreign economies will be manageable. first, i expect that the fed ’ s removal of accommodation will be driven by a continued expansion of the u. s. economy ; thus, foreign economies are likely to benefit from the developments that induce the fomc to tighten. second, most foreign central banks should be able to mitigate an undesirable tightening of their own financial conditions through appropriate policy actions. an important lesson of the taper tantrum was that effective communication and actions by major central banks, including the european central bank and the bank of england, were helpful in quickly pushing bond yields down to levels that these central banks regarded as appropriate to their economic situation. third, many emes have markedly improved fundamentals — including smaller current account deficits and more anchored inflation expectations — that should allow them to better withstand the effects of u. s. tightening, though some vulnerabilities remain. finally, i expect that u. s. policy normalization will be gradual under likely scenarios for the evolution of output and inflation. a gradual and ongoing removal of accommodation seems likely both to maximize the prospects of a continued expansion in the u. s. economy and to mitigate the risk of undesirable spillovers abroad. references ammer, john, michiel de pooter, christopher erceg, and steven kamin ( 2016 ). “ international spillovers of monetary policy, ” ifdp notes. washington :