The Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) said he viewed the expected reduction in stimulus measures by the US Federal Reserve (FED) will only affect financial and capital markets in the short-run.
Dr Supachai Panitchpakdi on Thursday spoke at ‘Thailand Focus 2013’, a two-day international roadshow in Bangkok.
He said Asia has been relying on liquidity injected by the US Federal Reserve’s Quantitative Easing measures which saw a large amount of capital inflowing into the region, raising concern about a bubble in the bond and stock markets.
The UNCTAD chief said he viewed it as positive for Asia that the US will reduce its QE measures for capital inflows, reversing the flow, which will enable Asia, including Thailand, to see the real economic fundamentals. The Thai economy may shrink but will become stronger in the long run.
Dr Supachai suggested that the government invest in projects to encourage more efficient production, being an example for the private sector to follow suit, making the Thai economy to sustainably expand and it will not negatively affect public debt.
The UNCTAD Secretary-General also advised Thailand not to depend heavily on its exports to China, for the country’s economy is trying to balance itself.