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p. 9 of 17 BACK | NEXT Executive Summary Map I. Recent Economic Developments II. Short and Medium-Term Economic Prospects and Policy Issues A. Government Strategies B. Growth, Investment, and Savings C. Revenue, Expenditure, and the Fiscal Outlook D. Inflation, Monetary Policy, and the Financial Sector E. The External Sector Outlook F. Medium-Term Risks and Uncertainties III. Selected Policy Issues

Country Economic Review: Thailand : II. Short and Medium-Term Economic Prospects and Policy Issues

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II. Short and Medium-Term Economic Prospects and Policy Issues

A. Government Strategies

37. Following the general election on 6 January 2001, the new administration identified the sluggish economy, poverty, narcotics, and corruption as the four main challenges facing the country. The Prime Minister faces immense pressure to stimulate the economy quickly and fulfill his campaign pledges. The new administration outlined its economic plans to Parliament on 26 February 2001, including a village fund, farmer debt suspension, public health program, reform of government salary payment, banking facilities for the poor, and TAMC. These initiatives entail an increase in the public sector deficit in FY2001-FY2002. The Government is, however, committed to maintaining a balanced budget over the next five fiscal years. Faced with the prospect of a sharp decline in export growth largely as a result of unfavorable external conditions, the Government has adopted an expansionary fiscal stance. The Government projects GDP growth of 1.5–2.0 percent in 2001, and 2.5–3.0 percent in 2002.

38. The Economic and Social Development Plan of the Government (2002-2006) (the 9 th Plan) emphasizes the “sufficiency economy” as the main philosophy for sustainable development and well-being of the Thais. The philosophy is based on a principle of the middle path—balanced and rationalized development, moderation, awareness of the changing world, and the quality of the people. The 9 th Plan proposes seven main strategies that are divided into three interrelated approaches. The first approach, to strengthen the social foundation of the country, comprises three strategies: (i) human development and social protection, (ii) sustainable rural urban development, and (iii) management of natural resources and the environment. The second approach, to restructure the economy to a balanced and sustainable path, comprises three strategies: (i) macroeconomic management, (ii) promotion of international competitiveness, and (iii) strengthening of the science and technological base. The third approach, to establish good governance in all levels of management, includes one strategy: development management for good governance.¹⁹ The 9 th Plan was approved by the Cabinet in October 2001. It has established strategic guidelines for all ministries and departments when formulating their development priorities and for use in identifying investment projects allocating budget resources.

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