Concerns about the global economy in 2017 have been ongoing, particularly regarding the volatility trap caused by various factors, including U.S. economic policies that impact global trade and finance, political changes among European Union member states, and risks from China's debt bubble. As a result, the International Monetary Fund (IMF) predicted at the beginning of the year that the global economy would grow by about 3.4% in 2017, compared to 3.1% in 2016. 

          However, after ten months, during the annual meeting of the IMF and the World Bank from October 13-15, it was agreed that the global economy has improved in a more distributed manner this year, particularly in European countries where the economy has begun to expand for the first time, as evidenced by labor market growth, increased employment, and a decrease in the unemployment rate.

          Mr. Veerathai Santiprabhob, Governor of the Bank of Thailand (BOT), stated that the IMF estimates global economic recovery to grow by 3.6% in 2017 and 3.7% in 2018. However, within this recovery, the IMF has raised some puzzling issues, as many countries still have inflation rates below target levels. The main factors may include stagnant wages, advanced production technologies that diminish the bargaining power of e-commerce operators, and an aging society that leads to increased savings, resulting in consumption not exerting inflationary pressure.

          Regarding Thailand's inflation, which is below the target range, the BOT has discussed this with the Ministry of Finance and the Ministry of Commerce, believing that inflation rates will enter the target range of 1-4% from early to mid-2018, and there is no need to propose a review of the inflation target for 2018.

          “If we can manage the stability of the financial system, it will reduce the constraints on monetary policy. However, if financial stability becomes a major concern, monetary policy must consider the trade-off with financial stability more carefully. Recently, we have seen various risk pockets, so we are working with other regulatory agencies to mitigate these issues and ensure that the trade-off of monetary policy does not become a significant concern,” Mr. Veerathai said.

          Although the global economy is in a recovery phase, short-term risks must still be monitored, particularly from the rising policy interest rates in major industrial countries, which affect asset prices and financial costs, potentially impacting the liquidity of emerging markets that rely on cheap money, the Korean Peninsula and Russia issues, trade protection policies, China's economic restructuring, and increasing risks from cyber threats.

          Meanwhile, investing in low-rated bonds also poses a concerning risk, as over the past six months, BBB-rated securities have increased by more than 50% from 25%. Many countries that have never issued bonds or those facing issues have increased their bond issuance, reflecting a behavior of chasing higher yields. Similarly, the prolonged low volatility of asset prices has led investors to become complacent in assessing risks, but if problems arise, they could be more severe than before.

          For the long term, two issues must be closely watched, particularly the use of technology in customer service. While it greatly enhances convenience, it may impact employment, a problem currently emerging in many businesses, as well as the increasing inequality within the country.

        “It is evident that despite growth, the global economy still faces numerous risk factors that can have an impact at any time. Therefore, policymakers must prioritize three pillars: monetary policy, fiscal policy, and economic restructuring.

        As Ms. Christine Lagarde, Managing Director of the IMF, stated, “Don’t Miss This Opportunity,” meaning do not miss the chance during the global economic recovery. We must seize this moment to reform various economies, which is normal as reforms should be implemented during periods of economic upturn.”