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The outlook for next year will also be slashed from 5.2 per cent to 4.7 per cent.

 Again, the political instability is punishing the Thai economy. This comes at a time when oil prices are rising sharply and the cost of living is skyrocketing.

 The Samak government is at a loss over how to tackle the economic ills. If it keeps on doing nothing, it won't last more than the remainder of this  year. Samak Sundaravej, the prime minister, can't manage the Thai economy in the kitchen any longer.

 Most political observers aren't sure how the political instability will play out, or what the conclusion will be. The People's Alliance for Democracy (PAD), which is holding street demonstrations, has regained strength and momentum, going into the second week of its revival. It is well lubricated and well prepared, reportedly with big companies playing a role in financing the rallies.

 The businessmen do not want to bet on the wrong horse this time.

 The objective of the PAD is to go after Thaksin Shinawatra, the former prime minister. There was earlier talk that the PAD had aimed for a quick and decisive battle, which should have ended in a conclusive result at the end of May. Somehow, this did not come to pass.

 On the surface, the PAD is lambasting the Samak government over its status as a nominee of Thaksin and for its failure to handle the economic problems. Prime Minister Samak would like to have the PAD removed from the street. But he has been forced to play it soft.

 It looks as if the PAD is set to stay for the long haul. It will keep a watchful eye out for any attempt on the part of the government to amend the Constitution. It is accusing the government of amending the charter in order to whitewash all the corruption cases against Thaksin.

 In the meantime, the corruption cases against Thaksin are being fed into the justice system. By August, there might be some development on this legal front, which is still causing a lot of sleepless nights for Thaksin. If the ousted former premier were to lose one of the court cases, his political life would be doomed.

 That's why we saw Thaksin appear at Wat Sommanas last week. He knew that General Prem Tinsulanonda, the president of the Privy Council, would be attending the funeral rites for the mother of Army Chief General Anupong Paochinda.

Thaksin and Prem are sworn enemies. By rushing to see the Privy council chief, Thaksin might have realised that he was about to lose his shirt once again after the 2006 military coup that removed him from power.

 Thaksin told Gen Prem that he was sorry for all that has happened. He also said that the accusation that he was not loyal to the monarchy was untrue.

 But that was all too little, too late.

 What will happen next on the Thai political scene is hard to predict. But let me raise some possibilities:

 1.PM Samak is now walking on thin ice. If his government fails to tackle the economy, combined with the aggravation of the political deterioration, his backers might pull the plug. He is a "Home Alone" prime minister.

 2. Samak might dissolve Parliament, which would lead to a new election; or he could just resign to pave the way for another Thaksin nominee to become prime minister; or the Democrats might form a new government with the coalition partners and the backing of some People Power Party MPs.

 3. Some of the cases against Thaksin go to court, which would decide his political future.

 4. The PAD's demonstration might somehow lead to street violence as political risk heightens. In that case, the military might step in with some emergency measures. The military would only take such action when the situation is beyond anybody's control. The possibility of another coup is remote.

 5. The sweeping political change should happen before the military reshuffle in September.