Sethaput Suthiwartnarueput: Challenges facing small, open economies in the changing global landscape

Speech by Dr Sethaput Suthiwartnarueput, Governor of the Bank of Thailand, at the Budapest Eurasia Forum 2022, organised by Magyar Nemzeti Bank (the central bank of Hungary), Budapest, 19 September 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Excellencies, distinguished participants,

It is a great pleasure and privilege to be here at the Budapest Eurasia Forum. 

While the global landscape is constantly changing, the speed and scale of the changes happening now are particularly large and rapid. Many of these changes pose particular challenges for small, open economies. I would like therefore to focus my remarks on three key challenges facing small, open economies in this changing global landscape.      

Part 1: The first challenge is rapid and synchronized monetary policy tightening  

• We are going through one of the most rapid and concerted monetary policy tightening cycles in recent memory. About this time last year, the Fed Funds rate expected for the end of this year was under 0.5%; markets now expect it to be around 4%. Almost all central banks have raised rates as part of what one might call the "Great Policy Normalization". This reflects the rapid return of inflation. Two years ago, of the 60 countries tracked in the BIS database, 42 had inflation below 2%. Today, that number is zero.