Now the central bank has downgraded its 2005 economic outlook, forecasting growth will be the slowest in four years, and policymakers find their hands tied in efforts to ease the pain on Thais who feel their wallets growing lighter by the day.

With sagging sentiment and record-high energy costs in mind, Thaksin's government trumpeted a raft of measures earlier this month, including speeding up a plan to raise civil servant salaries by 5 percent.

They come at a time of eroding morale, illustrated by a fall in consumer confidence in June to its lowest for more than two years, as international oil prices have risen to more than US$62 (HK$483.60) a barrel, sending Thailand's inflation rates to 6½-year highs.

Thaksin's popularity has suffered accordingly, falling to its lowest in three years.

But economists say government efforts to help consumers are unlikely to do much to defeat the factors that have prompted many to downgrade their full-year GDP forecasts to a median of 4 percent from 4.8 percent predicted in May.

``I don't see any individual measures within the government's recent stimulus package as providing much stimulus to Thailand's weakening economic environment,'' said Andrew Stotz, head of research at Macquarie Securities.

Unfortunately, policymakers have little more ammunition.

``The high oil price, coupled with the emerging current account deficit, is drastically reducing policy options in Thailand,'' said UBS senior economist Christa Janjic.

After logging annual growth in the past two years of more than 6 percent, the economy has been bedevilled by a mix of higher oil prices, slowing export growth, the devastating December 26 tsunami and a widespread drought.

Thailand is more dependent on energy imports than many other Asian countries, importing 90 percent of its crude oil. It spent 1 trillion baht (HK$185.7 billion) - 15 percent of its GDP - on fuel last year.

The country's current account surplus swung into the red in January, giving policymakers less leeway to nurture stable growth, economists say.

The Bank of Thailand has steadily downgraded its expectations for growth.

On Thursday, it lowered its 2005 GDP growth forecast to 3.5-4.5 percent from 4.5-5.5 percent predicted in April and 5.25-6.25 percent in January.

And surging oil prices and a weaker baht pushed the trade deficit to a nine-year high and kept the current account deficit near highs unseen since 1996, central bank data showed Friday.

The stimulus package announced this month, which also includes speeding up spending on public projects and the end of a subsidy on diesel prices, is meant to coax economic growth slowed by the jump in oil import costs.

But Phatra Securities predicts oil prices will average a high US$56 a barrel this year, helping push the current account deficit to US$3 billion-US$4 billion and putting pressure on the exchange rate, adding to inflationary woes.

Aside from the Japanese yen, the baht has depreciated against the US dollar more than any other Asian currency so far this year, effectively adding to the country's oil import costs. That has helped spark inflation, which the central bank predicts will increase in 2005 to an annual average of 4-4.5 percent from 3-4 percent forecast in April.

As a result, the central bank has raised interest rates six times since last August to 2.75 percent, the highest since 1999, despite a slowing economy.

Asked UBS's Janjic: ``What can the authorities do? Spend more? That means more imports, more pressure on the exchange rate and ultimately a greater need to hike interest rates.

``Cut taxes? That's fueling inflation, and again means higher interest rates. Cut interest rates? Well, that's putting pressure on the exchange rate.''