Energy prices are rising relentlessly. Consumers are tightening their belts as they watch inflation head toward four percent, throwing the strategic plans of businesses into disarray. World economic growth is flagging, making it harder for policymakers to make the right choices.

The tourism industry is holding its breath as it awaits the coming high season to see if the ghosts of the tsunami will finally be laid to rest. And longstanding problems persist _ farmers can't seem to get ahead, political and social discord in the South remains unresolved, and public dismay over political corruption and cronyism is as keen as ever.

It's an unappetising menu by any standard. Five years into a respectable economic recovery, have expectations in Thailand been too high? Has fatigue set in among the consumers who helped power the revival? Are investors hedging their bets? Or has the country merely reached a pause while it plots the way ahead? For business leaders willing to honestly assess where they stand and make the adjustments needed to rise to the next level, opportunities can still emerge.

Against this challenging backdrop, all eyes are on the Thaksin Shinawatra government, which was rewarded early this year with an unprecedented mandate. Having taken credit for reviving the economy during its first term, Mr Thaksin's Thai Rak Thai party says its secondterm goal will be nothing less than total transformation. What that transformation should entail has been the subject of lively debate.

In the 2005 MidYear Economic Review, Bangkok Post writers examine recent developments and look at how nearterm and more distant strategic challenges are being addressed.