buffer for capital flow volatility. in this context, a more balanced capital account is an important supporting factor. to this end, the bot is currently formulating a capital account liberalization master plan. this plan seeks to promote thai investment abroad and streamline foreign exchange regulation, thereby increasing economic adaptability and bis central bankers ’ speeches promoting greater awareness and capability for the private sector ’ s foreign exchange risk management, which relate directly to the businesses of many of you present here. in addition to maintaining stability, bot can also enhance competitiveness by ensuring financial institutions ’ role as effective intermediaries of capital, thereby improving financial access and inclusive growth. in this regard, i like to mention that we have launched the financial consumer protection center to boost financial literacy. clearly, a more competitive financial sector will support the process of structural change i discussed before. the second financial sector master plan, which takes into account major global developments such as regional integration and global regulatory reform, will further this vision of a modern financial sector landscape. in designing such a landscape, many key policy issues will need to be explored in depth. these issues include a regulatory framework that promotes financial sector development without compromising financial sector stability, the optimal adoption of international standards for bank supervision, a level - playing field among different domestic financial players, and the competitiveness of the thai financial system in the asean context of qualified asean banks, and so on. ladies and gentlemen, i believe that the efforts put forth by the bot will fulfill the objective of enhancing competitiveness and ensuring long - term macroeconomic and financial stability. however, we cannot do this alone, especially in a world of global economic uncertainty, domestic challenges and diminishing fiscal room. a common vision among all stakeholders is necessary for policy coordination. the advanced economies that are now experiencing public debt crisis offer valuable lessons for emerging countries as well as thailand where planned fiscal spending will add to fiscal debt. i believe that at this crucial juncture, many countries, thailand included, still have time to manage possible future fiscal stresses. austerity by means of cutting public spending is one conventional way to achieve fiscal consolidation. however, most emerging and developing countries still require essential infrastructure investment to unleash their own growth potential. austerity without growth would be futile. therefore, what is needed is constructive fiscal consolidation rather than dogmatic austerity programs. prudential cuts can be combined with infrastructure spending to raise competitiveness levels and ensure sustainable long - term growth. rest assured

tools, including large foreign reserves, the current policy capability is adequate in meeting challenges of the day. second pillar : fixing the shortfalls ladies and gentlemen, at the same time, a number of pressure points in the thai economy have started to emerge in the aftermath of the global financial crisis. the decline of economic growth in recent years relative to pre - crisis period hints at structural bottlenecks holding back the economy. exports which were the leading driver of pre - crisis growth are expected to be flat this year, lagging those of our competitors. anecdotal evidence suggests that some manufacturing sectors are struggling to be integrated into the global modern supply chain. slow gain in labor productivity, and inadequate investment may be hindering the overall technological advances, a critical pre - requisite for sustaining long - term development. these problems are potentially our existing shortfalls that need to be overcome in the second pillar of development. however, it may be too premature to put the entire blame on structural flaws. there are a number of cyclical headwinds suggesting that the recent subdued growth could be just a temporary phenomenon. the more diversified export product range in thailand implies that our global growth ‘ beta ’ may be lower than that of our specialized hi - tech exporter peers. this is not necessary a shortcoming, since some high - end manufacturing sector such as semiconductor is prone to strong cyclical swings, with a short and sharp upturn followed by a protracted downturn. but by implications, export diversification that helped lessen the impact of global recession then, is limiting our sensitivity to the global recovery now. it may therefore take some time for exports to show a firmer recovery. another factor weighing on private sentiments and domestic demand until recently is the political development. economic uncertainties brought about by street protests and threats of violence late last year have had a discernible impact on private spending and tourism. but a political resolution in the second quarter has lifted the fog, and the incoming data since suggest that there has been a steady improvement in private sector confidence. the resumption of public spending is also adding to growth impetus, including through accelerated disbursement of fiscal budget, and infrastructural public investment. the government ’ s efforts to balance the short - term stimulus needs with the long - term improvement of fiscal spending efficiency should also be welcomed. as the fiscal support starts to kick in, the domestic demand should continue to lead this recovery. bis central bankers ’ speeches this cyclic