Thailand's Budget Proposal: Balancing Growth Amid U.S. Tariff Pressures

In a bid to bolster Thailand's economy, Prime Minister Paetongtarn Shinawatra will propose a 3.78 trillion baht ($115.5 billion) budget for the 2026 fiscal year on Wednesday. The draft, which seeks to address economic sluggishness exacerbated by steep U.S. tariffs, is set for a four-day parliamentary debate.

The budget outlines a moderate 0.7% increase in spending and predicts a 0.7% reduction in the fiscal deficit, projecting it at 860 billion baht, or 4.3% of GDP. Economic growth is anticipated between 2.3% and 3.3% for both 2025 and 2026, with inflation expectations set from 0.5% to 1.5%.

While the budget is expected to pass, underlying tensions within the ruling coalition, led by the Pheu Thai Party, could challenge its acceptance. Policy disagreements over casino legalization and cannabis sales have strained alliances, potentially impacting Prime Minister Paetongtarn's political standing.

(With inputs from agencies.)