New Globalization: Risks and Opportunities for Thailand in the Next Decade

The ongoing globalization process via the reduction and removal of obstacles to international trade and investment and international labor movement has come to an important inflection point due to the global Credit Crisis in 2008-2009. The Credit Crisis left G4 economies considerably weaker in light of the massive fiscal debt, fragile banking sector balance sheets, as well as the nearly maxed-out space for macroeconomic policies. Meanwhile, despite initial setbacks, EM Asia seemed to poise for robust growth going forward and is expected to become the second engine of global growth after the US. In the next decade, EM Asia growth will likely be driven by the prospects of its own regional demand from burgeoning middle class as a result of fast transition from the primary sector to higher-paying manufacturing and service sectors. Additionally, supply side factors will provide significant support for EM Asia growth going forward through the improvement in TFP from intensifying regional production network and frugal innovation, as well as the rise in capital accumulation from greater infrastructure investment and intra-regional FDI. However, for the real sector growth to achieve its full potential, more effective financing that is efficient and inclusive will be needed. The resiliency of the financial system will also be a key factor that must be monitored closely and enhanced to ensure the sustainability of economic growth.