BANGKOK – Thailand is closing out 2025 with a clear economic problem as government revenue is coming in way below projections. The shortfall adds pressure to public finances at a time when growth is already weak.
Figures from the Ministry of Finance, along with outside forecasts, show targets were missed as the year went on. Early results held up better, but the overall picture has softened, and it’s pushing long-standing fiscal issues back into view.
Economic growth in 2025 fell short of expectations. Estimates put GDP growth at about 1.6% to 2.0%, well below the earlier goal of around 3%. That slowdown fed straight into tax receipts. With softer spending, lower investment, and weaker exports, collections slipped across major lines such as VAT, corporate income tax, and excise duties.
The Fiscal Policy Office said net revenue in the first eight months of the 2025 fiscal year (October 2024 to May 2025) reached 1.704 trillion baht. That missed the target by 12.75 billion baht (0.7%).
By mid-year, Permanent Secretary Lavaron Sangsnit cautioned that full-year revenue was unlikely to hit the budgeted 2.88 trillion baht, mainly because GDP growth came in under forecasts. Later updates showed the gap remained, with revenue growth not keeping up with spending needs.
Thailand’s revenue-to-GDP ratio also kept slipping. It was around 14.9% in 2025, continuing a long decline from higher levels decades ago. Ratings commentary from Moody’s and Fitch pointed to this structural weakness, and it played a part in less positive views on Thailand’s sovereign outlook.
Tourism Falls Short and Takes Revenue With It
Tourism has often been treated as Thailand’s main support when other sectors slow down. In 2025, it did not deliver the lift many had hoped for. International arrivals were estimated at roughly 32.8 to 35 million, still below pre-pandemic highs and below earlier forecasts.
Spending per visitor also dropped as more travellers watched their budgets closely, including from key markets such as China. Tourism income was expected to be more than 20% lower than in 2019, at about 1.52 trillion baht. Late-year disruptions added to the strain.
Severe flooding in the South and tensions near the Cambodia border cut New Year takings by an estimated 2% to 9%. That hit not only direct tourism-related taxes, but also VAT and excise revenue tied to hotels, restaurants, and transport.
In Chiang Rai and Chiang Mai, some higher-end travel held up better. Still, stronger pockets in the North were not enough to offset weaker performance in larger centres such as Bangkok and Phuket.
Floods and Trade Pressure Add to the Strain
Natural disasters made the revenue picture worse. Flooding in the South and other areas caused damage estimated in the hundreds of billions of baht. December alone saw revenue losses of around 20 to 30 billion baht. The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) expects the effects to run into 2026, with total lost revenue projected at about 90 billion baht.
External trade conditions also turned less helpful. Export shipments brought forward earlier in the year gave a short-term bump, but that faded. US tariff threats weighed on manufacturing sentiment and on taxes linked to trade activity. Weaker demand from China, plus pressure from Chinese overcapacity, also squeezed export earnings.
Corporate income tax receipts were hit by delays and shortfalls, linked in part to shifts in online filing. Excise revenue from vehicles fell as car sales stayed weak.
Bigger Deficit, Higher Debt, and More Interest Costs
Thailand’s 2025 budget was its largest on record at 3.75 trillion baht. It set a deficit of 865.7 billion baht, about 4.3% of GDP. With revenue under plan, the government leaned more on reserves and borrowing. Public debt rose to around 65% of GDP, moving closer to the 70% ceiling.
Debt costs also climbed. Interest payments reached about 10.2% of revenue, up from 9.59% in 2024, which left less room for other spending. Analysts warned that without changes, debt servicing could push past comfort levels and raise the risk of rating pressure.
Treasury cash balances also fell from their starting point as the state funded support measures during the revenue gap. These included digital wallet handouts priced at 145 billion baht.
Finance officials said they are watching collections closely and will try to limit the shortfall, using reserves where allowed without breaking fiscal rules. At the same time, talk of tax reform has gained speed. Proposals include adopting the global minimum corporate tax from January 2025, raising oil excise (estimated to add 33 billion baht), and wider changes aimed at lifting the tax-to-GDP ratio over time.
The NESDC and the World Bank have called for more targeted support for vulnerable households, stronger revenue measures, and continued infrastructure spending. Longer-term ideas focus on reducing informality, improving skills, and shifting tourism towards visitors who spend more per trip.
2026 Outlook, More Pressure Ahead
Looking into 2026, some forecasts suggest growth could slow again, possibly to around 1.6%. Revenue projections for fiscal 2027 sit near 3 trillion baht, but risks remain. US tariff moves and trade policy changes could affect exports and investment.
In Chiang Rai and across the North, where farming and cross-border trade matter, businesses say they feel the squeeze from national trends. Farmers and tour operators remain hopeful, but many say a slow reform pace could leave key sectors exposed for longer.
Thailand’s 2025 revenue slump shows the limits of short-term fixes. The country has covered near-term gaps, but lasting stability needs stronger revenue sources, especially with an ageing population, higher climate risk, and an uncertain global backdrop.
One Finance Ministry source, speaking anonymously, summed it up: “We must reform taxes to secure our future, stimulus alone won’t suffice.”
