Research Briefing | May 3, 2023

APAC: Fiscal policy will not save the day this time around

Though the impact of a slowing global economy is weighing on Asian economies, we expect fiscal consolidation to continue, which means the fiscal impulse, government balance adjusted for cyclical movement in the economy, will be negative in most places.

What you will learn:

  • The pace of fiscal consolidation will vary, however. Hong Kong will lead the pack, looking to narrow the very large deterioration in its fiscal position over the last four years. At the other end of the spectrum are Malaysia and India, where we expect fiscal deterioration.
  • Government revenues will rise for economies such as Hong Kong and Singapore due to either a better growth picture or tax measures. Commodity exporters like Indonesia and Malaysia, on the other hand, will see their revenues decline due to lower prices compared to last year.
  • On the expenditure side, we generally expect lower spending as pandemic-induced stimulus measures are withdrawn and budgets are reallocated to longer-term economic priorities.
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