41077 December 2006 EastAsian economies register especially in infrastructure and social services. fifth consecutive year of strong "We may have seen the peak in oil prices and interest growth,ThaiGDPtogrow4.5% rates in the region," said Homi Kharas, World Bank Chief Economist for East Asia and the Pacific. "So the prospects are good for domestic demand to strength- East Asian economies are expected to register en and to offset weaker exports." their fifth consecutive year of strong growth in 2006, backed up by a substantial decline in pover- Thailand.AccordingtothelatestThailandEconom- ty, according to the World Bank's latest East Asia ic Monitor--the findings of which were discussed Update, launched on November 14 in conjunction in Bangkok in conjunction with the Regional Up- with its Thailand Economic Moni- date--Thailand's GDP growth tor. But on the horizon, growth will remain at 4.5% in 2006, the ratesinTransitionEconomiesand same as last year. High export NewlyIndustrializedEconomies growth has greatly contributed are expected to slow, reflecting a to Thailand's economic growth likely weakening in US growth this year, even as domestic de- in 2007 and a consequent drop in mand has remained depressed exports from East Asia. as Thailand adjusted to high oil prices, rising inflation and inter- Growth and Poverty Reduction. est rates and policy uncertainties. The Update showed that growth Growth in 2007 is projected to be in the countries of emerging East 4.6 percent, slightly higher than Asia is likely to reach around 8 2006; though domestic demand percentin2006,thesecondstron- is expected to perform better, gest pace in the five-year long export growth will be lower on economic expansion underway account of lower growth in the in the region. Current estimates global economy and world trade. also suggest that the number of people in East Asia living on or "Average GDP growth has fallen below$2adaywillfalltoaround from 6 percent during 2002-2004 to 550 million (or 29.3 percent of around4.5percentduring2005-2007 the population) in 2006. This 1.5 period,andthisisnotgoodforreduc- percentage point drop in the past year means tions in poverty or inequality," noted Kazi Matin, that around 25 million people in the region have World Bank Lead Economist for Southeast Asia. emerged from severe poverty since 2005. "This is in part because the easy gains from utilization of post-crisis excess capacity are over. Higher growth Asamiddle-incomecountry,Thailand'sgrowth can now come mainly from efficient adjustment to high mustcomemoreandmorefrommorerapid oil prices, higher private investment to expand capac- productivitygrowth. ity, as well as higher productivity growth." He added, "As a middle-income country, Thailand's growth must come more and more from more rapid productivity Agrowth rate in China of more than 10 percent is growth, and for that the firms have to innovate prod- underpinning the region's overall GDP growth. ucts and processes, the workers have to acquire more Strong export growth has been a common fea- skills to compete with labor in China, Vietnam, India ture sustaining activity throughout the region. and other competitors producing technology-intensive Domestic consumption and investment perfor- goods, and the Government has to urgently support mance have been much more varied, reflect- these initiatives of firms and workers through policies ing the impact of higher oil prices and higher and investments." domestic interest rates in the first half of 2006, among other factors. Improved public finances Thailandneedstofocusonsupply-sidereformsto and lower public debt also provide the fiscal promote private investment and higher produc- space for higher public spending, if required, tivity growth and several measures can be taken Page1 quickly with good effect. Reducing regulatory burden is one and this could include rationaliza- tion of price controls, clarification of foreign own- ership rules, speeding up customs processing, and soon.RenegotiatingtheUSGeneralizedSystemof Preferences (GSP) deal that is expiring or signing the Thai-Japan Free Trade Agreement (FTA) are two steps that would help to sustain strong ex- port growth. Similarly, supporting improvements in secondary education and vocational training including English-language and IT skills, and promoting greater private participation in edu- cation service delivery can relax skill constraints that the firms identified as holding back invest- ment and productivity growth. Also, actions to 90 disadvantaged children from Chiang Rai and other improve infrastructure services could reduce costs Northern provinces of Thailand gathered at the "Thailand and raise rates of return to private investment. StreetChildrenOpenSpace" Seeking a New Window of Opportunities: Disadvantaged Children Express their Dreams and Hopes at the "Thailand Street Children Open Space" in Chiang Rai As more than 90 disadvantaged children from ChiangRaiandotherNorthernprovincesofThai- Kirida Bhaopichitr, author of the report, gives a television land gathered at the "Thailand Street Children interviewaboutThailandeconomy Open Space" on November 18 and 19 in Chiang Rai, volunteer teachers as well as representa- Kirida Bhaopichitr, World Bank Country Econo- tives from local non-governmental organizations mist and author of the Thai Economic Monitor, (NGOs), government agencies and youth groups highlighted that "Thailand's strengths in terms of heard some of the most compelling stories from sustained macro-stability and increasing openness street children living in Thailand, who described remains. The fiscal situation remains strong, with the their daily concerns and the harsh realities they Government running a balanced budget this year and face each day, along with the dreams and goals a slight deficit next year. Public debt as a share of they hope to achieve. GDP is 41 percent, and is projected to remain below 50% over the next five years." Furthermore, she "Thistypeofforumcreatesanenvironmentin highlightedthatThailand'sexternalvulnerability is low--with the current account in surplus and whichthechildrencantrulyvoicetheiropinion, end-August 2006 foreign reserves at US$59 bil- andthusfurtherenhancedevelopmentefforts lion (three times short-term external debt), total aimedatimprovingtheirqualityoflifeand external debt stood at around 28% of GDP, one of chancesofbeingpartofapeacefulsociety." the lowest in the region. KhunTeunjai Deetes Ms. Bhaopichitr also noted, "Political uncertainty has diminished after the interim government was Developing the workshop's overarching theme, established in October 2006. While consumer and in- "Challenges and Opportunities: how to create a better vestor confidence declined in the beginning of the year, future for children in Thailand," the street children it recovered somewhat in September 2006. Neverthe- present broke out into groups and engaged in lively discussions on topics such as how to obtain a better less, both consumers and investors are waiting to see education and achieve their dreams; how to take the policy direction of the interim government." care of their families and friends; how to become a teacher, doctor, or nurse to help other children and For more information, please contact Ms. Kirida Bha- adults in difficult situations; how to ensure that dis- opichitr(kbhaopichitr@worldbank.org). advantaged children are given more opportunities Page2 and do not have to endure the same struggles as nity by truly expressing their needs and concerns, they do. as these could later on guide future policy planning by the Royal Thai Government (RTG). "I want to be a teacher when I grow up," said Yaowa- luk, a child assisted by the Mirror Foundation. "I According to the organizers, the key to this event's want to share my knowledge with children who lack the success will be to translate the results of the Street opportunity to get an education, such as the hill tribe Children Open Space into inputs which the World children. This way, when they Bank, other partners, and grow up, they will be educated government agencies can take and have more career opportuni- into consideration, to demon- ties and eventually escape from strate that voices of children the hardships they encounter in do matter and can be heard. their daily lives." The recommendations and suggestions from the "Thai- Open Space workshops are land Street Children Open Space retreat-style events during Dialogue" will be compiled which the participants them- into a report, which will be selves are able to set their shared among the partners. own agenda and define the As part of its follow-up plan, topics of discussion. As part the World Bank also hopes to ofitsyouthprogramthisyear, weave some of the first-hand the World Bank in the East accounts heard during the Asia and Pacific region has KhunTuenjaiDeetes,formerSenatorofChiangRaiprovince, workshop into its analytical held a series of Open Space welcomingparticipantstotheworkshop work, as well as provide col- dialogues across the region to laborative support to other provide interested partners with a real opportunity agencies that work with disadvantaged children in to listen to the concerns and needs of youth and Thailand. disadvantaged children from diverse backgrounds, and discover what local and international develop- For more information, please contact Ms. Alix Lebec ment agencies can do to respond to them. Open (alebec@worldbank.org) or Mr. Tinnakorn Sareenun Spaces for both youth and disadvantaged children (tsareenun@worldbank.org). have taken place in Papua New Guinea, Timor Leste, Cambodia, Lao PDR, Singapore and Mongo- lia over the last three months. Held at a local school facility in Chiang Rai, the Recent Events Open Space workshop in Thailand was organized jointlybygovernmentagenciessuchastheOfficeof Non-Formal Education of Chiang Rai and Chiang MaiwhichispartoftheMinistryofEducation;local NGOs such as the Mirror Foundation and the Mae- sai Child life (BanNana in Thai), with support from the World Bank, as well as the Ministry of Social Development and Welfare and universities such as Chulalongkorn and Thammasat. The partner or- ganizations decided to hold the event--the first of three planned for this year--in Chiang Rai because a large portion of Thailand's disadvantaged and migrant children from Myanmar, Cambodia, and Lao PDR live in the Northern part of Thailand. The Over 150 participants from government agencies partner organizations also committed to building and insurance companies in India, Sri Lanka, Chi- stronger and collaborative relationships with the na,Korea,thePhilippinesandThailandgatheredin World Bank to find viable long-term solutions to BangkokonNovember1-December30forawork- concerns raised by the street children participants. shopon"ExtendingPensionCoveragetoInformal Sector Workers: the Asian Challenge." Organized Khun Tuenjai Deetes, former Senator of Chiang Rai jointly by the World Bank and Thailand's Govern- province and currently a member of the National mentPensionFund,theworkshopwasopenedby LegislativeAssemblyworkingcloselywiththeMin- Khun Suparut Kawatkul, Permanent Secretary for ister of Social Development and Human Security, Finance, and Mr. Ian Porter, World Bank Country said at the workshop, "This type of forum creates an Director for Southeast Asia. The workshop al- environment in which the children can truly voice their lowed policymakers and industry professionals opinion, and thus further enhance development efforts to share experience in pension development and aimed at improving their quality of life and chances of be- related issues. For more information, please contact ing part of a peaceful society." She urged the children Mr.LuisBenveniste(lbenveniste@worldbank.org). at the workshop to make the most of this opportu- Page3 The World Bank team in Bangkok joined UNES- At the invitation of the World Bank and the Fis- CO and other national and international partners cal Policy Office of the Ministry of Finance, 60 to support the longest-ever "Condom Chain of representatives of key ministries and govern- Life" on December 1, World AIDS Day. Bringing ment agencies gathered in Bangkok on Decem- together people from all walks of life--young and ber 6 to discuss collaboration between Thailand old, students and workers, husbands and wives, and the World Bank economic and development gay people and heterosexual people--the event cooperation programs in the Greater Mekong aimedtosetaGuinnessWorldRecordwitha2.75- Sub-region (GMS). Following opening remarks kilometre chain made up of 23,000 condoms tied by Khun Acksiri Buranasiri, Director of Bureau together. Organizers highlighted the need to over- of International and Macroeconomic Policy, and come sensitivities about discussion of sexual mat- presentations by World Bank Country Director ters and communicate openly and broadly about Ian Porter and National Social Development HIV/AIDS,inordertoprotectlifeandallowthose Board Senior Advisor Dr. Poramethee Vimolsiri, with HIV to live full and active lives. For more in- participantsfocusedtheirdiscussionsonfivesec- formation,please contact Mr.Kwanchai Niyomthamkit tors--trade and investment, transport, energy, (kniyomthamkit@worldbank.org). water resources management, and migration-- which the Royal Government of Thailand and the World Bank would aim to share experience and collaborate. For more information,please con- tactMs.BuntarikaSangarun(bsangarun@worldbank. org). Looking Ahead The Royal Government of Thailand and the World Bank will launch a Country Development Partnership for Infrastructure (CDP-Infrastruc- Agroup of 70 students and lecturers from the De- ture) on January 31, 2007 in Bangkok. For more partmentofFinanceandBanking,FacultyofMan- information and to attend the launch, please contact agement Science, of Ubon Ratchathani University Mr.Chanin Manopiniwes (cmanopiniwes@worldbank. participated in a lively discussion on Thailand's org). development agenda at the World Bank Office in BangkokonDecember4.ModeratedbyDr.Kirida Bhaopichitr, World Bank Country Economist for Thailand, the discussion was followed by an in- troduction to the resources available to research- ers at the World Bank's Public Information Centre in Bangkok. For more information,please contact Ms. BuntarikaSangarun(bsangarun@worldbank.org). Forcommentsorquestionsaboutthisnewsletter, Tel.:+668(0)26868300 pleasecontactMr.TinnakornSareenun Fax:+668(0)26868301 TheWorldBankBangkokOffice Email:tsareenun@worldbank.org SiamTower,30thFloor,989RamaIRoad,Pathumwan,Bangkok10330THAILAND Website:http://www.worldbank.or.th Page4