However, Escap noted that with the current government in place, "the macroeconomic outlook in Thailand will be subject to greater downside risks than in other Southeast Asian economies", the UN's Bangkok-based regional office said in a press statement.

The Thai government earlier estimated GDP growth of 5 per cent for 2006. But that could still be the lowest among Southeast Asian economies, of which Escap estimates aggregate growth this year to be 5.7 per cent.

Escap contributes the growth to "buoyant electronic and commodities exports". Vietnam's growth led the pack, with an estimated hike of 7.8 per cent.

On Wednesday, Fitch Ratings also said political and security issues would be in the spotlight in a number of Asian countries next year, including the Philippines, Thailand, South Korea and Sri Lanka.

"In Thailand, ongoing support for the Council for National Security will depend in part on whether it honours its commitment to restore democracy by late next year. Fitch believes considerable political manoeuvring will take place in the lead-up to elections, as the Thai Rak Thai Party that controlled the legislature under the former prime minister is unlikely to be an effective political force."

Escap said, "A modest rebound in GDP growth in Southeast Asian economies is expected in 2007, as the factors constraining domestic demand have receded."

Developing economies in the Asia-Pacific are expected to grow an aggregate 6.9 per cent next year, compared with 7.1 per cent this year, but the region's dynamism is threatened by a potential slow-down in China, the United Nations said yesterday.

It forecast a very slight slow-down in growth next year as a result of lower demand in the US market and global electronics market and rising interest rates. However, it predicted "continued dynamism" next year.

Escap predicts the region's growth will be led by China, with an increase in gross domestic product (GDP) of 9.9 per cent next year, compared with 10.2 this year; and India, whose GDP is projected to grow 8.1 per cent, nearly unchanged from this year's 8.2 per cent.

The UN office cautioned that the region's economic prospects for next year would hinge on three key economic factors: the continuing revival of the Japanese economy, China's overheating economy and the volatility of financial markets.

The report said the first two factors were interrelated, since the "revival in Japan is both the cause and the consequence of China's success".

"A strategic trading relationship has developed between China and Japan whereby Japanese enterprises are producing final goods in China using inputs from Japan for sale in the United States," noted Escap.

China has been Japan's second-largest trading partner since last year, representing 17 per cent of Japan's total trade for 2005, with Chinese goods accounting for 21 per cent of its total imports.

"As such, Japan and China are bound together in their economic prospects," said Escap.

Other East and Southeast Asian countries have developed a similar symbiotic trade relationship with China in recent years, which bodes ill for the region if China should experience a significant slow-down, Escap cautioned.

"A reduction in Chinese domestic demand would lead to reduced exports and growth in the region. Countries would be affected according to the depth of their involvement in China," said the annual report.

Escap calculates that if China's GDP growth declines to less than 7 per cent, GDP growth in Taiwan and Singapore would decline 0.4 percentage points, while GDP growth in Hong Kong and South Korea would fall 0.3 per cent.

GDP growth in India, which has a low level of exports to China, would only slow 0.05 per cent.

"Net exports in developing Asia (excluding China) would decline by almost 2 percentage points, while the current-account balance as a percentage of GDP would deteriorate by almost 0.1 percentage points," projected Escap, should China's growth slow to 7 per cent.