Thailand’s shrinking investment budget: a growth drag as the debt burden creeps higher

Thailand is borrowing more and investing less. Budget figures show the government’s capital expenditure allocation has been cut again after a reduction of more than 10% in fiscal 2026.

Recurring spending – which covers items such as public sector pay, pensions, welfare and interest – is taking up an ever-larger share. Meanwhile, the official watchdog expects public debt to reach just over 69% of GDP by the end of the fiscal year – just below the 70% ceiling.

For now, the private sector is doing the investing in Thailand. Corporate spending on equipment has driven fixed capital formation; public investment, still concentrated in construction, adds little. Meanwhile, government levers for growth have little room left amid very low interest rates.