Asean+3 Countries Needs To Gradually Unwind Support Measures To Rebuild Fiscal Space

KUALA LUMPUR, May 13 (Bernama) -- ASEAN Plus 3 (ASEAN+3) countries need to unwind the emergency support measures that were put in place during the pandemic period as a step for rebuilding fiscal space as more countries emerge from the COVID-19 pandemic, reopen their economies and look for growth. ASEAN+3 Macroeconomic Research Office (AMRO) Regional Surveillance group head and lead economist Dr Ling Hui Tan said this, however, would depend on the recovery momentum in the economy and the need for continued support. “As economic growth starts to pick up, the support measures that were introduced during the pandemic will have to be withdrawn at some point but this has to be carefully calibrated as we all know, COVID-19 isn’t exactly eliminated yet and we will risk jeopardising the economic recovery. “Besides, there are new risks and uncertainties stemming from the war on Ukraine and high inflation,” she said in a webinar jointly organised by the Asian Development Bank (ADB) and AMRO titled “Economic Recovery in ASEAN+3: New Drivers of Growth and Optimism” today. She said countries should pare down the support measures gradually and selectively based on the assessment of need and probably should also be prepared to put them back if the situation warrants. Ling said once recovery is entrenched, the next step is to make a strong commitment to fiscal consolidation where governments would need to prepare a clear fiscal adjustment plan with a specific fiscal target and then quantify the measures to achieve their targets. “This is essential to maintain market confidence. For example, some economies may need to put more emphasis on revenue enhancement by improving revenue collection capacity first, namely raising taxes or introducing new tax. “We should also avoid across the board fiscal austerity. Instead, a comprehensive expenditure review would help to rebalance spending priorities to ensure adequate support for vulnerable groups and for long-term development priorities like education, health and infrastructure,” she said. She said over the medium term, fiscal structure reforms would also be necessary for more large scale resources to rebalance and incorporate new policy initiatives such as digitalisation and green initiatives. Meanwhile, ADB’s Economic Research and Regional Cooperation Department director Lei Lei Song said although the ASEAN+3 is believed to recover quickly from the pandemic, high food prices are immediate concerns as the pact also relied on agriculture fertilisers from Russia and Ukraine. “We need to look beyond the short term and the potential crisis that human societies are facing is the climate change. “The battle on climate change needs to be won in Asia because Asia accounts the bulk of the carbon emission in recent years. So this is the long term battle we have to fight,” he said. Lei said ASEAN+3 countries must take actions to slow down the pace of climate change and adapt to the impact of climate change while at the same time, seeing the actions as new growth drivers. He added that all economies must catch up to invest and continue to invest in it along with two other ongoing revolutions, namely digital technology and green technology. ASEAN+3 consist of the 10 ASEAN countries namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam while the plus three refer to China, Japan and South Korea. -- BERNAMA