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Quarterly Economic Review III October 10, 2013

Quarterly Economic Review III October 10, 2013. Bhanupong Nidhiprabha Thammasat University . Main themes. Growth and vulnerability Global slowdown and Business Cycle Synchronization Future risks: Fed tapering China slowdown US budget politics Risks from bad policy responses.

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Quarterly Economic Review III October 10, 2013

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  1. Quarterly Economic Review IIIOctober 10, 2013 BhanupongNidhiprabha Thammasat University

  2. Main themes • Growth and vulnerability • Global slowdown and Business Cycle Synchronization • Future risks: Fed tapering • China slowdown • US budget politics • Risks from bad policy responses

  3. Mean = 3.2, SD = 4.6 SD/Mean = 1.4

  4. IMF World Economic Outlook(GDP Growth)

  5. Impact of global slowdown

  6. Risk Exposure to Global Slowdown Source: ADB

  7. High Time for Rebalancing Source: Asian Development Bank

  8. How to boost private investment Source: Bank of Thailand

  9. Source: Bank of Thailand

  10. Countercyclical Spending

  11. Quality of bank assets during recovery

  12. Capital inflows (outflow) and currency appreciation (depreciation)

  13. ASEAN-5 economies looked similarly during the GFC (2008-2011)

  14. US Budget politics • Debt ceiling deadline: October 17 • The US government cannot borrow any more • On October 17, the government would have $30 billion on hand, while the daily expenditures were about $60 billion. • Default risk on interest payments on bonds • Downgrading of the US’s credit rating • Stock market crash • Highest one-month bond interest in 5 years

  15. Significant tail risks and bad policy responses • Be prepared for capital flight after the Fed tapering: No more injection of $85 billion per month • How far and how long can the BOT defend the baht?

  16. Thai Budget Politics • Consumer confidence • Investor sentiment • Business sentiment and effectiveness of fiscal policy

  17. Fiscal Space and Alternative Growth Driver

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