ASEAN+3 Macroeconomic Research Office

Navigating Fiscal Strategy Through Uncertainty

Since the release of the ASEAN+3 Fiscal Policy Report (AFPR) 2024 in April last year, mixed fiscal developments and a slower pace of consolidation have left ASEAN+3 economies’ fiscal positions weaker than their pre-pandemic levels.

This year’s AFPR provides a comprehensive assessment of recent fiscal developments and the fiscal outlook for ASEAN+3 economies in FY2025. It includes an in-depth analysis of key challenges and outlines fiscal policy directions to navigate through heightened risks.

Recent Fiscal Developments and Outlook

Fiscal performance in FY2024 varied across ASEAN+3 economies. Some economies saw their fiscal positions improve compared to FY2023, while others experienced setbacks. Overall, improvements were slower than what was originally planned in FY2024 budgets. Government debt and financing needs remained high, limiting fiscal space.

Policy Discussion

Fiscal authorities should remain agile and flexible to respond swiftly to emerging shocks amid heightened uncertainties, particularly in the face of rising protectionist policies. At the same time, sustained efforts to implement fiscal consolidation and rebuild fiscal buffers over the medium term are crucial, as fiscal positions weakened and fiscal space narrowed. Achieving sustainable and inclusive growth while addressing structural challenges requires comprehensive policy packages, supported by structural reforms, to enhance policy effectiveness and avoid excessive reliance on fiscal resources.