The economy will grow by 4.5-5.5 percent this year, down from an earlier projection of 4.7-5.7 percent, the government's economic think tank, the National Economic and Social Development Board (NESDB), said.

"Due to political uncertainty, foreign investors' confidence in investing in Thailand is likely to decline," NESDB secretary general Ampon Kitti-ampon told reporters.

"If the situation continues until after June, it will affect the country's economic fundamentals," he said.

Thaksin, battling allegations of corruption and abuse of power, has been the target of tens of thousands of protesters demanding his resignation at four mass rallies in as many weeks.

The crisis battered the Thai stock market and left foreign investors jittery over the outlook of Thai politics, while forcing the government to delay the launch of a 44-billion-dollar public works project to upgrade infrastructure.