{
  "title": "Public Information Notice: IMF Executive Board Concludes 2012 Article IV Consultation with Thailand",
  "publication": "IMF News, May 10, 2012",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1248",
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  "summary": "Each Public Information Notice contains a background section, a table of selected economic indicators, and an Executive Board assessment.",
  "publishDate": "2012-05-10",
  "sections": [
    {
      "heading": "Background and recent developments",
      "content": "- Thailand experienced natural disasters in 2011 that severely disrupted the economy:\n  - Earthquake in Japan in March disrupted supply chains and slowed production.\n  - Massive floods beginning in August and worsening in October–November slowed the economy to a near halt.\n  - Output contracted by 10¾ percent (quarter-on-quarter) in Q4 2011, the largest quarterly contraction ever recorded.\n  - Annual GDP growth fell from 7.8 percent in 2010 to 0.1 percent in 2011.\n  - Total losses from the disasters are estimated at about 3 percent of GDP.\n- Sector impacts:\n  - Manufacturing (automobile and electronics), agriculture, and tourism were particularly badly affected.\n- Policy response and near-term outlook:\n  - Monetary easing: Bank of Thailand lowered the policy rate twice by a cumulative 50 basis points in November 2011 and January 2012.\n  - Fiscal support: A large fiscal package aimed at income redistribution, reconstruction, and flood-prevention.\n  - High-frequency indicators improved sharply since December 2011; manufacturing output surged in December 2011.\n  - Growth projections: GDP should grow by 5½ percent in 2012 and a further 7½ percent in 2013, with domestic demand driven by reconstruction and flood-prevention efforts.\n- Downside risks highlighted:\n  - Uncertainty in the global economy, contagion from turmoil in the euro area, weak growth among trading partners.\n  - Domestic political tensions could re-emerge.\n  - Capacity constraints and potential failure of water management projects could affect confidence."
    },
    {
      "heading": "Executive Board assessment — main conclusions",
      "content": "- Short-term outlook: Directors commended the authorities’ policy response and called the short-term outlook favorable, but emphasized significant downside risks from global, domestic, and implementation challenges.\n- Macroeconomic policy stance:\n  - Directors agreed that current expansionary fiscal and monetary stances are appropriate given weak world demand and muted inflationary pressures.\n  - Recommendation to unwind supportive policy as recovery takes hold and move to a medium-term consolidation path consistent with low inflation and fiscal sustainability.\n  - Authorities should stand ready to tighten monetary policy as the output gap closes.\n- Fiscal institutions and transparency:\n  - Support for formalizing current budgetary practices and targets; anticipation of the adoption of the Public Finance Act.\n  - Recommendation to improve transparency and accountability of fiscal operations in line with the 2009 review of fiscal standards and codes.\n- Structural and distributional reforms:\n  - Support for ambitious reform agenda to promote more inclusive growth.\n  - Recent income redistribution policies, including the rice price support mechanism, should be monitored and assessed to contain fiscal costs and improve efficiency.\n  - Minimum wage increases should be accompanied by measures to boost labor productivity to preserve competitiveness.\n  - Need for technology transfers and investment in human capital and infrastructure, particularly in less developed regions, to raise long-term growth.\n  - To create fiscal space for these reforms, Directors saw scope for:\n    - Scaling back subsidies,\n    - Eliminating income tax credits,\n    - Reviewing the rate structure for excise and value added taxes,\n    - Strengthening tax administration.\n- Capital flows and exchange rate policy:\n  - Capital inflows have been volatile and likely to remain so in the near term.\n  - With high international reserves and more risk-aware agents, Directors considered there is room to increase exchange rate flexibility in both directions.\n  - Support for gradual relaxation of restrictions on capital outflow with adequate safeguards against sudden reversals.\n- Financial sector and supervision:\n  - Progress in developing financial markets welcomed; expected to facilitate private investment.\n  - Need for swift action to mitigate risks from government-owned specialized financial institutions by refocusing them on core mandates, improving risk-assessment standards, and strengthening supervision (as suggested in the latest module of the Financial Sector Assessment Program).\n  - Recommendation to continue developing strong financial safety nets and address remaining weaknesses in the regulatory framework to combat money laundering and the financing of terrorism."
    },
    {
      "heading": "Key statistics (Thailand: Selected Economic Indicators, 2009–12)",
      "content": "- Real GDP growth (percent)\n  - 2009: -2.3\n  - 2010: 7.8\n  - 2011: 0.1\n  - 2012 (Proj.): 5.5\n- Inflation\n  - Headline CPI (period average, percent): 2009: -0.8; 2010: 3.3; 2011: 3.8; 2012 (Proj.): 3.9\n  - Core CPI (period average, percent): 2009: 0.3; 2010: 0.9; 2011: 2.4; 2012 (Proj.): 2.2\n- Saving and investment (percent of GDP)\n  - Gross domestic investment (excluding stocks): 2009: 24.1; 2010: 24.7; 2011: 26.2; 2012 (Proj.): 27.7\n  - Of which: private: 2009: 17.6; 2010: 18.8; 2011: 20.7; 2012 (Proj.): 21.7\n  - Gross national saving: 2009: 32.4; 2010: 28.9; 2011: 29.7; 2012 (Proj.): 28.7\n  - Of which: private, including statistical discrepancy: 2009: 29.6; 2010: 23.8; 2011: 26.0; 2012 (Proj.): 25.9\n- Fiscal accounts (percent of GDP) 1/\n  - Central government budgetary balance: 2009: -4.2; 2010: -2.6; 2011: -1.9; 2012 (Proj.): -2.8\n  - Revenue and grants: 2009: 17.0; 2010: 18.2; 2011: 19.0; 2012 (Proj.): 18.3\n  - Expenditure and net lending: 2009: 21.2; 2010: 20.8; 2011: 20.9; 2012 (Proj.): 21.1\n  - General government balance 2/: 2009: -3.2; 2010: -1.6; 2011: -3.0\n  - Public sector balance 3/: 2009: -3.6; 2010: -2.4; 2011: -4.4\n  - Public sector debt: 2009: 45.2; 2010: 42.6; 2011: 41.7; 2012 (Proj.): 44.1\n- Monetary accounts (end-period, percent change)\n  - Broad money growth: 2009: 6.8; 2010: 10.9; 2011: 15.2; 2012 (Proj.): ...\n  - Private sector credit growth: 2009: 2.5; 2010: 12.3; 2011: 16.7\n- Balance of payments (billions of U.S. dollars)\n  - Current account balance: 2009: 21.9; 2010: 13.2; 2011: 11.9\n  - (Percent of GDP): 2009: 8.3; 2010: 4.1; 2011: 3.4; 2012 (Proj.): 1.0\n  - Exports, f.o.b. (billions): 2009: 151; 2010: 194; 2011: 225; 2012 (Proj.): 246\n  - Exports growth rate (in dollar terms): 2009: -13.9; 2010: 28.4; 2011: 16.4; 2012 (Proj.): 9.2\n  - Imports, f.o.b. (billions): 2009: 118; 2010: 162; 2011: 202; 2012 (Proj.): 227\n  - Imports growth rate (in dollar terms): 2009: -25.1; 2010: 37.0; 2011: 12.5\n  - Gross official reserves (end-year; incl. net forward position, billions): 2009: 154.1; 2010: 191.7; 2011: 206.3; 2012 (Proj.): 212.7\n  - (Months of following year's imports): 2009: 11.4; 2010: 10.2\n  - Exchange rate (baht/U.S. dollar): 2009: 34.3; 2010: 31.7; 2011: 30.5\n  - External debt (in percent of GDP): 2009: 28.6; 2010: 31.5; 2011: 30.7; 2012 (Proj.): 29.0\n  - Debt-service ratio 4/: 2009: 7.6; 2010: 4.7\n- Sources listed in the table: Data provided by the Thai authorities; and IMF staff estimates.\n- Fiscal and statistical notes:\n  - 1/ On a fiscal year basis. The fiscal year ends on September 30.\n  - 2/ Includes budgetary central government, extrabudgetary funds, and local governments.\n  - 3/ Includes general government and nonfinancial public enterprises.\n  - 4/ Percent of exports of goods and services.\n\nPublic Information Notice (PIN) No. 12/48; May 10, 2012. Executive Board concluded the Article IV consultation on April 27, 2012.\n\n---\n\n\n References\n\n- Thailand and the IMF\n- Public Information Notices\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1248"
    }
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    "Published: May 10, 2012",
    "Thailand experienced natural disasters in 2011 that severely disrupted the economy:",
    "Sector impacts:",
    "Policy response and near-term outlook:",
    "Downside risks highlighted:",
    "Short-term outlook: Directors commended the authorities’ policy response and called the short-term outlook favorable, but emphasized significant downside risks from global, domestic, and implementation challenges.",
    "Macroeconomic policy stance:",
    "Fiscal institutions and transparency:",
    "Structural and distributional reforms:",
    "Capital flows and exchange rate policy:",
    "Financial sector and supervision:",
    "Real GDP growth (percent)",
    "Inflation",
    "Saving and investment (percent of GDP)",
    "Fiscal accounts (percent of GDP) 1/",
    "Monetary accounts (end-period, percent change)",
    "Balance of payments (billions of U.S. dollars)",
    "Sources listed in the table: Data provided by the Thai authorities; and IMF staff estimates.",
    "Fiscal and statistical notes:",
    "[Thailand and the IMF](http://www.imf.org/external/country/THA/index.htm)",
    "[Public Information Notices](https://www.imf.org/en/news/searchnews)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](https://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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