Opening Remarks by
Mr. Joel Turkewitz
Acting Thailand Country Director, the World Bank
January 21, 2010
Four Seasons Hotel, Bangkok
Good afternoon Deputy Secretary General Porametee, distinguished guests, ladies and gentleman,
The World Bank greatly appreciates another opportunity to co-host the seminar today with the National Economic and Social Development Board. The seminar today marks the global launch of the Global Economic Prospects 2010 report. We would like to thank Dr. Hans Timmer, the main author of the Global Economic Prospects report, and his team for choosing Bangkok to be the site for the global launch of the report this year.
The Global Economic Prospects is an annual report by the World Bank. This year’s report titled Crisis, Finance and Growth is timely, as it examines the current global economic crisis and its developments as well as its consequences on both the short and medium-term growth prospects of developing countries.
How the global economy evolves is of particular relevance for Thailand, whose economy is largely an open one. Thailand has successfully pursued a growth model for the last three decades that relied largely on final demand from advanced economies for exports of manufactured goods. Given that demand growth of developed countries in the post-crisis environment is expected to be structurally lower than its pre-crisis levels, Thailand will need to find new export markets and deepen regional integration.
At the same time, efforts to boost domestic demand together with the regional agreements to implement ASEAN and GMS trade agreements would promote greater trade within East Asian. These could be new sources of growth for Thailand and the countries in the region.
For Thailand to boost domestic demand, a growth strategy focusing on shared and more equitable growth is also needed. Better and wider social safety nets would allow individuals to reduce savings and enter more productive and better-paying jobs even if they may have greater income volatility. These would raise their consumption and investments within the country.
More equitable public spending across regions in the country, which contributes to higher access to public services and the development of lagging regions, could increase not only the equity among, but also the productivity and incomes of citizens in the regions. Addressing lagging regions and pursuing more active policies to reduce income inequality and may also reduce political tensions in the long run. These would also contribute to greater overall consumption levels in the country.
A key factor to increase domestic demand and as equity in the country as well as sustain exports is reforms to enhance productivity of the various sectors in Thailand. Higher domestic demand requires reforms to increase productivity, which will in turn, generate higher disposable incomes for those engaged in those activities.
These reforms would include policies and measures that would reduce the constraints to growth and productivity in the manufacturing, services, and agricultural sectors. Top constraints to growth and productivity of major manufacturing industries in Thailand include the uncertain macroeconomic environment, mismatch of skills, regulatory burden, and inadequate infrastructure. Constraints to improving productivity of the agricultural sector, especially in the Northeast Thailand in which agriculture is its major economic activity are, for example, insufficient irrigation facilities, fertilizers, and pesticides, the over-use of land for short-term gains, and lack of knowledge and instruments in coping with natural uncertainties such as drought and pest attacks which are increasing prevalent in the light of climate change.
The services sector is a large sector in Thailand and has a high growth potential, but its productivity has been low. Policies that would develop the services sector as well as allow greater competition could help unleash the productivity of the services sector.
Ladies and gentleman, we can not deny that we are living in a much greater integrated global economy than a decade ago. Developments of the global economy will affect Thailand’s development path as well. Understanding the global economy and foreseeing the economic trends will enable both government policy makers and the private sector to make informed decisions for Thailand’s development in the future.
We hope the messages of the Global Economic Prospects report and the insights of our distinguished speakers today will help us better understand and foresee the economic trends in the world and in Thailand in this year and the next few years. I thank you for joining us in the launch of the Global Economic Prospects today and look forward to the seminar.