BANGKOK - Thai Prime Minister Paetongtarn Shinawatra on Wednesday proposed the government's 3.78 trillion baht ($115.66 billion) budget for the 2026 fiscal year to parliament, aiming to shore up a sluggish economy amid global trade tensions.

The draft bill projects a 0.7 percent increase in expenditure and a budget deficit of 860 billion baht (about $26.31 billion), marking a 0.7 percent decline from fiscal 2025 that ends in September.

Paetongtarn emphasized that the budget reflects her administration's commitment to driving sustainable economic recovery, enhancing national infrastructure, strengthening social equality, and maintaining fiscal discipline.

In light of revenue limitations and the challenging global landscape, the government has adopted a deficit budget policy, with key focuses on strengthening national security, enhancing competitiveness, and developing human capital, she told a parliamentary session.

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According to the budget plan, Thailand's gross domestic product growth for both 2025 and 2026 is forecast at 2.3 percent to 3.3 percent, with inflation expected at 0.5 percent to 1.5 percent.

The Southeast Asian nation's economic outlook is supported by increased public investment, domestic consumption, and a rebound in the vital tourism sector, Paetongtarn noted.

However, growth remains constrained by high levels of household and corporate debt, as well as risks stemming from US trade protectionism, geopolitical tensions, and volatility in the agricultural sector, the prime minister said.

A four-day debate in the lower House of Representatives is set to conclude on Saturday, and the bill requires support from the majority of lawmakers present to pass its first reading.