Global uncertainty poses risk to ASEAN+3 growth prospects: AMRO

ASEAN+3 refers to a grouping that includes the ten member states of the Association of Southeast Asian Nations (ASEAN) plus China, Japan and South Korea.

At the same time, narrowing fiscal space and elevating debt servicing burdens underscore the impetus for continued fiscal consolidation, the blog by Koon Hui Tee says.

Against this backdrop, policymakers in the region must strike a delicate balance between maintaining near-term fiscal flexibility and committing to long-term discipline, it suggests.

Structural reforms are key to complementing fiscal consolidation efforts and unlocking long-term growth potential. Enhancing competition, streamlining regulations and promoting technological adoption can significantly boost productivity and improve competitiveness, it notes.

For economies facing aging demographic pressures, productivity gains will be vital to offset the adverse effects of shrinking labour force.

ASEAN+3 economies face dual challenges of maintaining short-term fiscal policy flexibility to respond to immediate risks while ensuring long-term fiscal sustainability. Advancing structural reforms and strengthening fiscal institutions are essential to building resilience, sustaining growth and managing long-term fiscal risks, it says.

Economies better equipped for adoption of artificial intelligence (AI) should focus on enhancing regulatory frameworks, fostering innovation ecosystems and promoting integration. Others may need to prioritise foundational investment in digital infrastructure and human capital, it adds.

ALCHEMPro News Desk (DS)