Thai economy set for strong growth

Thailand's economy is set to benefit from low interest rates and tax relief, the economic planning agency says

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BANGKOK, Thailand (CNN) -- Thailand's economy will grow 4.9 percent this year, with growth slowing to 3.5 to 4.5 percent in 2003, the country's economic planning agency said Monday.

The National Economic & Social Development Board said low interest rates and a variety of tax-relief measures will sustain growth in private spending and investment.

But tensions between the United States and Iraq threaten to curtail this year's strong growth, the board said.

Growth hit 4.5 percent in the first half of the year and picked up the pace to 5.8 percent in the third quarter, compared with a year ago.

That was better than the 5.5 to 5.6 percent growth forecast for the third quarter by Thai Prime Minister Thaksin Shinawatra.

Vietnam fastest in Southeast Asia

Vietnam is expected to be the fastest growing Southeast Asian economy this year, with growth of 6.9 percent, followed by 7.0 percent next year, according to the Tokyo-based Institute of Developing Economies.

Thailand gets a hefty dose of its vitality from tourism but is also an Asian manufacturing base

China is the fastest growing large economy in the world and the fastest growing in Asia, on track for 8 percent growth this year and likely to slow to around 7.2 percent in 2003. (Full story)

Both China and Japan have started talks with the 10-nation Association of Southeast Asian Nations group to form a free-trade zone and take advantage of the region's nascent economies. (Full story)

The IDE predicts Thailand's growth will speed up next year, to 5.0 percent, contradicting the state planning group. Malaysia will also outstrip it with 5.8 percent growth.

With the United States and European economies still struggling to get back to sustained growth, many economists say Asia is set to lead world growth next year.

But the small size of the Southeast Asian economies means they will not contribute significantly even to growth in East Asia, according to the IDE, where Hong Kong and Taiwan continue to struggle, only South Korea is performing well and the shadow of ailing Japan looms.

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