Thai PM Proposes $115 Billion 2026 Budget to Support Sluggish Economy

Thai Prime Minister Paetongtarn Shinawatra has proposed a 3.78 trillion baht ($115.5 billion) budget for the 2026 fiscal year aimed at reviving Thailand's sluggish economy amid global uncertainties and steep U.S. tariffs. The draft budget projects a 0.7% increase in spending and a 0.7% reduction in the budget deficit to 860 billion baht, or 4.3% of GDP, alongside expected GDP growth of 2.3% to 3.3% and inflation between 0.5% and 1.5% for 2025 and 2026. The government is pursuing a deficit budget policy to maintain economic stability and support recovery, focusing on public investment, domestic consumption, and tourism as key growth drivers. However, growth risks persist due to high household and corporate debt, U.S. trade protectionism, geopolitical tensions, and agricultural sector volatility, with the budget not accounting for a potential increase in U.S. tariffs to 36% after a moratorium expires in July. The budget will be debated in parliament over four days, concluding with a vote expected to pass despite coalition tensions, especially surrounding a controversial casino legalization bill and disagreements on constitutional reform and cannabis policy. If the budget fails to pass, Prime Minister Shinawatra may face stepping down or a parliamentary election for a new premier.