IMF chief hails Thai resilience

Friday, Jul 13, 2012
The Nation/Asia News Network


The managing director of the International Monetary Fund has praised Thailand for its economic resilience and "V-shaped" recovery, while cautioning Asean not to rush into a single currency like Europe did.

"We see a very positive outlook," Christine Lagarde said in an interview with Nation Group chairman and editor-in-chief Suthichai Yoon. "[Thai] monetary policies are sensible and it's very important to keep fiscal policies stable and healthy."

She noted that it was also important for the government to ensure more inclusive growth so that all Thais shared in the prosperity.








The IMF forecasts 5.5-per-cent growth for Thailand's gross domestic product this year.

Lagarde sees limited direct impact from the euro-zone crisis on the Thai economy, although she acknowledged it could contribute to "a reduction" in exports, as the Kingdom sells about 10 per cent of its exports to Europe. But given the interconnectedness of the global economy, she noted that Thailand could feel some indirect consequences, chiefly through slower growth in China.

She also acknowledged that the fragile US recovery and the European crisis could pose a major disruption to China's growth model, but added that growth could be sustained through Beijing's policy mix, which to date had contributed good "numerical results" in both the pre- and post-crisis periods.

"We at the IMF observe that there are a lot of interconnections [in terms of trade, financial transactions and capital flows] ... All of these are links and keep economies together. The globe, and Asia, can take advantage of it but can't avoid being affected or infected by the contamination. There's no immunity."

She noted that Asia - and particularly Asean - had a lot to teach its colleagues and partners in the US and Europe, after years of deleveraging following the 1997 financial crisis, which lowered national and corporate debt levels.

On the euro zone, she praised European Union leaders for their pledge to set up a banking union and a supervision union, reached at last week's EU Summit. The region "has made progress but more is expected in the future", she said.http://creativecommons.org/licenses/by/3.0/legalcode

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