The government led by Anutin Charnvirakul began its term on Oct 1 under a four-month mandate, ahead of the expected dissolution of parliament and upcoming general elections.
By taking office in the final quarter of the year, the administration inherits a full-year budget of 3.78 trillion baht for fiscal 2026.
Economic activity is projected to pick up in the final months of the year, driven by increased government spending and the tourism high season.
However, the business community remains cautious as many doubt the anticipated uptick will be enough to offset the year-long economic slowdown within such a limited time frame.
There is also scepticism surrounding the government’s populist policies, which some see as little more than tools for electoral campaigning.
LIMITED IMPACT
Yunyong Thaicharoen, chief economist at SCB EIC, a research centre under Siam Commercial Bank, said although the government’s “Khon La Khrueng” co-payment scheme is expected to stimulate domestic consumption, its impact will likely be limited.
The scheme is projected to increase GDP by less than 0.1 percentage points this year, he said.
“The stimulus scheme is likely to encourage spending among middle- to upper-income earners, who still possess purchasing power. However, lower-income groups are more inclined to save rather than spend, due to high debt burdens and weaker income growth,” said Mr Yunyong.
Still, he agreed stimulus measures remain essential to support the country’s economic momentum.
Beyond short-term support, the new government should also focus on strengthening economic stability and pursuing structural reforms to build confidence and lay a foundation for long-term growth, said Mr Yunyong.
For the second half of this year, SCB EIC projects Thai GDP growth to average less than 1%, down from 2.8% growth in the second quarter.
The centre projects Thai GDP expansion of 0.9% year-on-year in the third quarter, followed by a 0.5% increase in the fourth quarter.
The Thai economy expanded by 2.8% year-on-year in the second quarter, easing from 3.2% in the first quarter. For the full year, GDP growth is forecast at 1.8% this year, slowing to 1.5% in 2026, according to SCB EIC.
The centre noted Thailand’s economic momentum is weakening, driven by both external and domestic challenges.
US tariffs have hurt shipments in some sectors and contributed to an ongoing export slowdown.
Meanwhile, foreign tourist arrivals are expected to lose steam in the second half of the year as baht appreciation against regional peers pressures both exports and tourism, according to SCB EIC.
The centre predicts the Thai economy to record low growth over the next 1-2 years as external challenges still exacerbate internal vulnerabilities.
WARNING
Nonarit Bisonyabut, a research fellow at Thailand Development Research Institute, warns stimulus policies should be carried out at an appropriate level or else it will become more difficult to address economic problems in the long run.
“I think the more we stimulate, the better the short-term economy looks, but in the long run, it becomes harder to fix,” said Mr Nonarit.
“At this point, we need to talk about the long-term picture, which includes fiscal sustainability.”
In his view, the planned stimulus package, expected to allocate a budget of 66 billion baht with the co-payment scheme as its main policy, might be slightly too large as initially the budget was supposed to be 20-30 billion.
Mr Nonarit said the co-payment scheme is likely to be the most effective policy compared with other projects, including direct cash handouts or tax rebate schemes such as “Shop Dee Mee Khuen” or “Shop Chuay Chart”, where people must spend first and later claim the money back through annual tax filings.
He said although the co-payment scheme may have weaknesses for the truly poor who cannot take part, which reduces its overall effectiveness, on the whole it has been more effective than past programmes.
If the government tries to introduce additional stimulus measures at year-end such as Shop Chuay Chart, Mr Nonarit said it may not be appropriate because the effectiveness would be limited compared with the large stimulus required to move the needle.
“For economic stimulus, we should assess the domestic economy’s growth potential and identify shortfalls. Stimulus should match these gaps rather than exceed them, as overstimulation gradually diminishes the policy’s effectiveness and is further constrained by fiscal limits,” he said.
The government’s real challenge is the economic structure, which is burdened by high household debt and banks’ reluctance to lend, said Mr Nonarit.
With such a structure, when the government injects money, the circulation in the economy is unlikely to be worth the money spent, as the environment is not conducive to growth. This results in minimal impact and heightened fiscal risks, he said.
“If the government wants to help people affected by economic shocks, such as those suffering from floods or the border conflict with Cambodia, it would make more sense to directly send money to those targeted groups,” said Mr Nonarit.
As for the Commerce Ministry’s cost-of-living reduction policies, he said the government should not interfere with market mechanisms by lowering electricity or fuel prices. Instead, targeted support for those in real need is preferred, said Mr Nonarit.
STEROID INJECTION
Prakit Siriwattanaket, managing director of Merchant Partners Asset Management, said the new government is expected to spend eight months in office — four months as an interim government and four as a caretaker administration.
“This period is similar to steroids being injected into the economy through massive stimulus programmes, such as the co-payment scheme, debt moratorium and debt suspension, all of which are likely to stimulate the domestic economy in a short period of time,” he said.
Unlike the previous Pheu Thai administration, the stimulus launched by the Anutin government is mostly adjusted from measures designed by its predecessors.
In doing so, previously successful measures can be implemented quickly by a short-term government to prop up the economy, said Mr Prakit.
If the policies are rolled out successfully, he estimates they could support the Thai economy to expand by at least 2% this year, even reaching 2.3% as forecast by the Bank of Thailand.
Asia Plus Securities said the government’s four-month “quick-win” economic stimulus should lift GDP growth in the fourth quarter of 2025 by more than 0.3 percentage points year-on-year.
In the final quarter, the brokerage noted monetary policy easing is possible to support government stimulus, which is focused on five pillars: stimulating the economy and tourism; tackling household debts; expanding household savings; strengthening small and medium-sized enterprise liquidity; and promoting saving for future investment.
Lalita Thienprasiddhi, head of macro research at Kasikorn Research Center (K-Research), said the government measures are anticipated to relieve the financial burden of consumers and help sustain the economy in the final quarter.
Scheduled for implementation during the final two months of the year, the co-payment scheme is expected to lift the economy by only 0.15 percentage points due to low purchasing power, noted the centre.
Given the limited policy space and concerns about fiscal status from credit rating agencies, K-Research said additional government measures must focus more on efficiency of both spending and revenue generation.
“Being a minority government may affect the push for key policies and budget disbursements throughout its tenure, which is expected to last roughly eight months,” said Ms Lalita.
SHORT-TERM BOOST
Dhanakorn Kasetrsuwan, chairman of the Thai National Shippers’ Council, said two short-term stimulus initiatives should increase consumer purchasing demand in the four months before parliament is dissolved.
He said the co-payment scheme will benefit a broad group of consumers by stimulating immediate domestic consumption.
Previous Khon La Khrueng schemes generated a multiplier effect because spending tended to occur at small retail shops nationwide.
“This scheme can stimulate the economy immediately, but it is a temporary solution and does not address income structure or household expenses in the longer term,” said Mr Dhanakorn.
He said a tourism initiative for secondary cities, which includes a double tax deduction for travel expenses and a budget for seminars of 6-8 billion baht for government agencies and state enterprises, could benefit these areas, distributing income to lesser visited provinces.
The tax deduction should encourage middle- to high-income individuals to travel domestically, particularly during the year-end festivals, increasing spending per tourist and domestic tourism revenue, said Mr Dhanakorn.
“These initiatives provide a short-term boost, but without strategies to promote investment and exports as well as reduce production costs, we will not see a sustainable economic recovery,” he said.
TOURISM EFFECT
Chai Arunanondchai, president of the Tourism Council of Thailand (TCT), said domestic spending should improve in the fourth quarter thanks to government stimulus schemes.
Healthier income circulation from these efforts should eventually benefit tourism, he said.
Domestic tourism should benefit from stimulus, including the co-payment scheme, household debt reduction plan and tax breaks for visiting second-tier destinations, said Mr Chai.
He said these relief measures will help Thai tourists save more to spend on domestic trips, helping to fill up vacancies in second-tier cities as well as northern provinces, which are popular for cool weather and cheaper travel prices than southern cities.
Tourism and Sports Minister Artthakorn Sirilatthayakorn pledged to increase Chinese tourists by 2-3 million over his four months in office, and Mr Chai said to achieve this vow, flight capacity for domestic and international routes should be maximised simultaneously to cater to growing demand, while safety measures must be heightened.
He said TCT plans to meet with the tourism and sports minister to share its concerns regarding the tourism industry.
Mr Chai said the council is requesting dedicated measures for hotels and tourism operators in the seven provinces along the Thai-Cambodian border, such as tax reductions and social security aid as tourism remains sluggish in these areas.