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However, the sustainability of this recovery remains vulnerable to a number of factors, especially consumer demand in the US, the resolution of critical problems in the US financial sector and the global oil price.

Given that US consumption, which earlier played the key role in driving the world's economic growth, has collapsed in the wake of its financial crisis, it is highly unlikely that there will be enough demand from other major economies to prop up global growth.

This will inevitably hurt the prospects of a recovery in Thailand where exports, mainly to the US, Europe, Japan and other key markets, account for 60 per cent of the GDP.

Secondly, the US government has not yet solved critical problems in its financial system, so it is unlikely that there will be a sustainable flow of new credit to drive US economic growth for an extended period.

Thirdly, an up-trend in oil prices will pose a major risk to the sustainability of a global economic recovery.

As a result, it remains uncertain if the Thai economy will be able to stand on its own feet once the government's fiscal stimulus package runs out.

Regarding the monetary policy, it's clear that there is no need for further easing, so the Bank of Thailand earlier this week kept its one-day bond repurchase rate unchanged at 1.25 per cent.

According to BoT, the current level of policy interest rate is appropriate and supportive of the recovery without generating any inflationary pressure.

Like other Asian economies, Thailand saw its second-quarter GDP contraction smaller than that of the first quarter. Year-on-year, Q2 GDP shrank 4.9 per cent compared to Q1's contraction of 7.1 per cent.

Other headline figures also showed that the Thai economy has passed the worst of its declines, largely helped by government spending which rose 5.9 per cent from 3.6 per cent in the first quarter. Private consumption was also resilient, down only 2.3 per cent from a minus 2.5 per cent in the first quarter.

However, there remain weaknesses in key industries as the manufacturing sector, which accounts for 40 per cent of the GDP, dropped 8.4 per cent year on year compared to a minus 14.4 per cent in the first quarter.

For the third quarter, GDP contraction is projected to be even smaller at 2 to 3 per cent before returning to a positive growth in the last quarter of this year.

For the whole year, the economic contraction is forecast to be around 3.5 per cent.

For 2010, GDP growth is forecast to be 4.5-5 per cent, according to the central bank. If the economic recovery is solid, then Thailand's GDP should return to the level prior to the 2008 crisis in the fourth quarter of next year.

However, authorities will have to closely watch further development of the world economy, especially China's economy.

For example, the Chinese government has started to slow its economic stimulus measures after injecting more than US$500 billion (Bt17 trillion) into its economy since the start of this year.

Easy bank lending and other pro-growth measures have already led to the rise of economic bubbles in China, prompting the government to pull back some of its earlier measures.

This will also affect Thailand and other Asian economies, which have turned to China as a new major market following sharp declines in US, European and Japanese markets.

In the end, China may not be able to help Asia much.