The International Monetary Fund praised Thailand’s skillful economic management in its latest annual review of the country’s situation, saying that moves by policy makers coupled with strong economic fundamentals helped the Kingdom avert the worst effects of global economic turbulence.

The IMF pointed to several positive aspects of Thailand’s economy and its management by policy makers, including low inflation, healthy balance sheets of commercial banks and corporations, high international reserves, and a moderate level of public debt. These have helped blunt the impact of recent severe shocks and are underpinning a recovery. In its report, the Fund encouraged Thai authorities to persevere in their efforts to rebuild fiscal buffers, strengthen financial stability, and promote more inclusive growth to cope with economic risks.

Those risks are “dominated by external factors”, according to the IMF. Thailand is an export-driven economy, and sluggish recoveries and potential weaknesses in key markets such as the United States, Europe, Japan – and especially China – could have a negative knock-on effect on the Thai economy. While the IMF said that an escalation of the European crisis or fiscal policy shocks in the United States were becoming less likely, those risks were still “skewed to the downside,” meaning they should be taken into account and countries such as Thailand should prepare for them.

Consumption has been growing as a component of the Thai economy, and stimulus policies and programs initiated by the administration of Prime Minister Yingluck Shinawatra have worked to kick consumption even higher during her first two years in office. But some of those programs, such as tax incentives for first-car buyers, have come to an end, and so consumption has begun to slow.

“The external environment remains challenging and domestic tailwinds are weakening,” the IMF said in the assessment’s conclusion.

The Fund said that political stability has strengthened in Thailand, but remains a risk factor. Public infrastructure investment programs that are scheduled to begin next year should be an engine that will support growth. Housing prices remain robust, credit has expanded, but consumer confidence has weakened.

The most controversial recommendation from the Fund was for Thailand to end its rice-pledging program, which has incurred losses to the government. Because of external risk factors, the Fund said Thailand would be better off not absorbing such losses. The IMF urged policy makers to adopt alternative ways to provide assistance to rice farmers, such as through direct or conditional cash transfers.

Minister of Finance Kittirat na Ranong rebutted the IMF’s recommendation, however, saying Thai authorities had a better understanding of the country’s farmers and had studied the best ways to support them and raise living standards.