But fears remain for the Thai economy, which is heavily dependent of exports and tourism.

Thailand is viewed by analysts as vulnerable to any intensification of the US slowdown or a collapse in the travel market following the hijacking attacks on America last week.

Sansern Wongcha-um, secretary general of government's National Economic and Social Development Board, has declined to predict the economy's performance in 2002 because of the "many volatile and unclear factors" involved.

"It would be premature to comment", he said.

Better than expected

In the second quarter of 2001, Thailand's economic output, or gross domestic product (GDP), grew by 0.9% compared with a 0.1% decline in the January-to-March quarter.

Economists had expected GDP in the April-to-June period to fall by at least 2% compared with the previous quarter, meeting the accepted definition of recession as two consecutive quarters of declining growth.

Exports account for about 60% of Thailand's GDP, with Japan and Thailand taking 36% of exports.

Tourism makes up about 6% of the Thai economy.

The NESDB said it now expects exports to fall by between 6.1-6.7% in 2001, a dramatic turnaround from the 19.6% growth recorded last year.

Its earlier forecast was for exports to fall about 0.5% this year.