Thailand's growth 'looks healthy'

Fears about the global economy are behind gloomier expectations for exports in the coming year, though economists think Thailand's domestic spending boom is likely to continue.

Issuing its quarterly report, the Bank of Thailand predicted growth for 2002 would prove to be 5% when full year figures are released in March.

It had previously forecast growth of between 4% and 4.5%.

Export driven growth

The Bank said exports would stay on track next year, growing by between 5% and 7%.

Exports fuel Thailand's economy, accounting for about 60% of gross domestic product. About one fifth of exports are shipped to the United States.

Last year, exports reversed their decline to grow an estimated 5.8% after shrinking nearly 7% in 2001.

But caution about exports led the Bank to predict overall economic growth would slow to 3.5% to 4% in 2003 - a range which fits with the World Bank's less upbeat predictions for this year.

"The dark side may come sooner than expected if export growth tapers off in December, caused by a waning US recovery," said economists at US brokerage Salomon Smith Barney.

Consumer spending

They warned that sluggish export growth could dampen spending by consumers and businesses.

Thailand's firms have also suffered a blow in the last week as Cambodian rioters attacked Thai businesses, which many Cambodians see as too influential there.

Bangkok Airways, a private airline shuttling tourists to the famous Angkor Wat temple ruins said it would restart flights to Cambodia on Friday, but flights by Thai Airways remain suspended.

The central bank said exports grew by 10.3% in December 2002 compared to the same month a year ago. Exports of goods were worth $5.4bn.

The trade surplus sagged in December, at $868m compared to $948m in November.

Thailand faces a considerable unfinished agenda, according to the World Bank, which wants to see more financial reforms, debt restructuring, tighter bankruptcy rules and a more efficient legal system.