. the automobile industry, which has just recovered from supply chain disruptions following natural disasters in japan earlier this year, is once again terribly affected. and in the big picture, we have sharply lower consumption and investment spending that will require some time to resume their normal trend. but even in the face of this hardship, and amidst the external environment that is quite unpredictable given heightened risks and uncertainty from the u. s. and the eurozone, we still expect thailand ’ s growth outlook to be favorable next year. provided that the flood situation starts to improve by early december, we should see thailand staging a respectable comeback on the back of domestic demand revival. we expect private consumption to rebound as early as the first quarter next year, and investment to regain its firm footing by the second. this will be made possible by pushes from reconstruction spending and fiscal stimulus, both through the government ’ s direct spending and additional measures. and in particular, higher investment on developments of flood warning and prevention systems is also urgently needed, both to prepare thailand for future flood incidents and to restore foreign investors ’ confidence. i would like to stress again that thailand ’ s fate will depend upon her success in reviving domestic demand, given that the problems in the u. s. and the eurozone are still far from resolved and are expected to last well into the next year and beyond. early resolution of the bis central bankers ’ speeches u. s. and the eurozone crises will rejuvenate the now - sluggish global growth momentum, and this will benefit thailand by allowing her exports to work with domestic demand in driving growth. but if the opposite happens, then it is likely that another global economic slowdown, even a global recession, is coming underway. ladies and gentlemen, this leads us to our second focus today on developments in the u. s. and the eurozone, along with their implications on thailand ’ s outlook going forward. serious structural concerns continue to threaten the health of the u. s. economy. and given the lack of momentum from private and public sectors, u. s. growth will likely remain low for an extended period of time. while economic data releases have pointed time and again to delayed consumption spending and persistently high unemployment, available fiscal and monetary policy space seems to be quite limited. on the fiscal side, further stimulus will be constrained by the promised cuts in federal spending that accompany the recent raise of the u. s. debt ceiling. on the other hand, the fed ’ s

prasarn trairatvorakul : the outlook for thailand ’ s economy in the face of concerns about the slowing us recovery and europe ’ s debt crisis address by dr prasarn trairatvorakul, governor of the bank of thailand, at the foreign correspondents ’ club of thailand, bangkok, 3 november 2011. * * * distinguished fcct members and guests, ladies and gentlemen, first of all, i would like to thank the fcct board for inviting me to share my view on thailand ’ s economic outlook in the face of the u. s. economic slowdown and the eurozone ’ s sovereign debt crisis. actually, the organizer ’ s original intention reflects very well what was in the back of everyone ’ s mind over the past few months when we talked about key challenges to the thai economy. but as all of us here today might agree, things have changed so dramatically over the past month alone, with the country now being swept over by the flood. while our feet need to stand firm weathering through and recovering from the flood together as a nation, our eyes cannot lose focus on what happens in the u. s. and the eurozone. i think it is fair to say that what happens in the u. s. and the eurozone will likely reshape the global financial and economic landscape over the years to come. and for thailand, these factors and their implications on the global economy will also determine whether the recovery from the flood will be a rosy or a painful one. so, my talk today will be divided into two parts. first, i would like to touch briefly on the bank of thailand ’ s latest view on domestic growth in short and medium term. then i will delve more deeply into concerns in the u. s. and the eurozone, along with the likely implications on thailand ’ s recovery. ladies and gentlemen, i would like to first share with you the bank of thailand ’ s latest economic projection and our outlook for the thai economy. despite the fact that we have less than two months to go for 2011, the bank has just revised down its growth projection for the thai economy this year, from 4. 1 percent in july ’ s assessment to only 2. 6 percent in october ’ s. this significant downward revision reflects the severity and the broad - based impacts of the flood, which has brought about a halt in agricultural and manufacturing production in affected areas, and has also disrupted production chains in other areas as well