In the post-pandemic era, ASEAN+3 member economies are faced with a trade-off between restoring fiscal buffer and providing adequate support. Given the deteriorated fiscal position during the pandemic and elevated uncertainties, it is critical to restore the fiscal buffer to enhance fiscal sustainability and ensure sufficient policy room to tackle future shocks. Fiscal consolidation is also important for an effective policy mix complementing the tight monetary policy to control high inflation. However, uneven recovery requires the continued support of fiscal policy, especially with the constrained monetary policy under the global financial tightening cycle. In the longer-term perspective, fiscal policy should also focus on enhancing growth potential while minimizing the scarring effects caused by the pandemic, and addressing existing and emerging structural challenges, such as population aging, infrastructure gap, and climate change.
This policy perspective paper analyzes the recent fiscal developments and outlook in ASEAN+3 member economies, and discusses the policy issues to keep a good balance between restoring fiscal buffer and responding to evolving fiscal policy needs.