Paetongtarn unveils strategies to boost economic growth to 2.3–3.3%

During the first reading of the annual expenditure budget bill for fiscal year 2026 in Parliament, the Prime Minister outlined the bill’s objectives, emphasising stable economic growth, advancing the production and services sectors, improving national infrastructure, and fostering economic opportunities and social equality. 

The policy also prioritises quality of life, environmental sustainability, and national security.

She highlighted that these goals align with the national strategic framework, master plans, and key government policies previously presented to Parliament to ensure tangible benefits for the public.

Citing an economic outlook report from the National Economic and Social Development Council (NESDC) on February 17, Paetongtarn noted that Thailand’s economy is projected to grow by 2.3–3.3% in 2025, driven by government investment, domestic consumption, and a revival in the tourism sector.

However, she acknowledged existing challenges, such as high household and business debt, as well as risks stemming from US trade restrictions, geopolitical conflicts, and agricultural sector volatility.

Inflation is expected to range between 0.5–1.5%, with the current account surplus anticipated to be around 2.5% of GDP.

Looking ahead, the Prime Minister stated that economic growth in 2026 is forecasted to remain within the 2.3–3.3% range, supported by continued consumer spending, private sector investment, and the ongoing recovery of the tourism industry.

Nevertheless, global trade barriers, geopolitical instability, and climate change remain key risks to economic expansion. Inflation in 2026 is estimated to stay within 0.5–1.5%, while the current account surplus is projected to reach approximately 2.3% of GDP.

As of March 2025, Thailand’s outstanding public debt stood at 12.08 trillion baht, equivalent to 64.4% of GDP. This remains within the legal fiscal discipline framework, which sets a ceiling of 70% of GDP for public debt management. 

The national treasury balance, as of April 30, 2025, totalled 252.12 billion baht. 

Paetongtarn stated that the government would maintain a prudent level of treasury reserves and ensure effective management of state revenue and expenditure for maximum public benefit.

She noted that Thailand’s financial outlook faces increased risks due to global trade policies, while general inflation trends downward, supported by declining global crude oil prices and government measures to ease living costs and reduce business expenses.

Monetary conditions remain tight, prompting the Bank of Thailand’s Monetary Policy Committee to vote in favour of a policy rate reduction to 1.75% per annum at its April 2025 meeting. This decision aligns with economic trends, addresses heightened risks, and ensures an appropriate financial environment given evolving inflationary pressures.

Regarding Thailand’s external financial position, the nation maintains strong foreign exchange reserves, which stood at US$237.04 billion as of December 31, 2024—approximately 2.4 times the country’s short-term external debt, a level considered robust.

In light of prevailing economic conditions, Paetongtarn stated that the government would pursue a deficit budget policy in the 2026 fiscal year to uphold economic stability, support recovery, and sustain an appropriate growth trajectory.

Projected net revenue from tax collection, state enterprises, and other sources is estimated at 3.06 trillion baht, reflecting a 1.3% increase from the previous year. After deducting 141 billion baht for local government VAT allocations, net revenue available for government expenditure amounts to 2.92 trillion baht.

To balance the fiscal deficit, the government plans to secure a loan of 860 billion baht, bringing total revenue for the fiscal year to 3.78 trillion baht—matching the total expenditure budget.

Paetongtarn explained the budget allocation for the 2026 fiscal year, structured around six strategic priorities and one key initiative:

• National security – The government has allocated 415.32 billion baht, accounting for 11.0% of the total budget, to ensure national stability and security.
• Enhancing competitiveness – A budget of 394.61 billion baht (10.5% of total spending) has been designated to foster economic growth and strengthen Thailand’s competitive position sustainably.
• Human resource development – With an allocation of 605.92 billion baht (16.0% of the budget), the government aims to improve education, instil ethical values, and enhance the quality of life for citizens.
• Social equity and opportunity – The largest allocation, 942.70 billion baht (24.9% of total spending), is set aside to ensure equitable access to welfare and public services while reducing social disparities.
• Environmental sustainability – A budget of 147.21 billion baht (3.9%) will support conservation, resource management, and initiatives promoting a green and maritime economy, climate resilience, pollution control, and water management.
• Public sector reform – With an allocation of 605.44 billion baht (16.0%), the government seeks to modernise the civil service, enhance efficiency through digital transformation, and combat corruption.

Paetongtarn further elaborated on the budget allocation for government operations, which totals 669.36 billion baht, representing 17.7% of the total budget. This funding is set aside to cover unforeseen emergencies, public debt management, and treasury reimbursements. The allocation includes:

• Emergency and contingency management – 123.96 billion baht is reserved for urgent government needs, disaster relief, infrastructure compensation, and economic stabilisation measures, ensuring fiscal discipline.
• Public debt management – 421.86 billion baht is dedicated to efficiently managing and repaying public debt to optimise economic benefits.
• Treasury reimbursement – 123.54 billion baht is allocated for treasury repayments, covering previous expenditures.

The Prime Minister emphasised that the 2026 fiscal budget, totalling 3.78 trillion baht, aims to drive sustainable economic growth and improve citizens' quality of life while maintaining economic stability through a deficit budget policy amid global economic challenges. 

The budget is strategically allocated to key areas, including national security, competitiveness, human development, social equity, environmental sustainability, and public sector reform, ensuring effective spending for maximum public benefit. 

"This budget bill aims to ensure the nation progresses with stability, allowing citizens to truly benefit from government spending and achieve tangible and lasting national development," Paetongtarn concluded.