The fiscal positions of ASEAN+3 member economies generally improved in 2023. However, fiscal deficit remained still higher than the pre-pandemic level, and government debt-to-GDP ratio continued to rise, albeit at a slower pace. Given the recurring large-scale economic crises, it has become increasingly important to restore fiscal buffers by solidifying fiscal consolidation plans with clear targets and paths, supported by strong commitment. At the same time, the positive economic outlook in the region in the near term—stronger growth and moderating inflation—provides an opportunity as well as a rationale for fiscal policy to transition from crisis mode to its fundamental role in supporting sustainable and inclusive growth. Fiscal policy should continue to play a proactive role in addressing long-term challenges, including population aging and climate change.

This policy perspective paper assesses the recent fiscal developments and outlook in ASEAN+3 member economies, and discusses the policy issues to strike the right balance between restoring fiscal buffers and carrying out an active fiscal policy, while transitioning to fiscal normality.