Chapter 1. Macroeconomic Prospects and Challenges remain elevated for a sustained period, temporary and is significant. Maintaining the flexibility to provide such support, while preserving the broader direction of consolidation, remains an important consideration (see ASEAN+3 Fiscal Policy Report 2026 for further discussion). Source: National authorities via CEIC and Haver Analytics; AMRO staff estimates. FY2024hilgatintbtfepdiurliesthxnditrei5 was higher than the expenditure in FY2024. the year, holding its policy rate steady after initial cuts, headwinds intensifed. With price pressures subsiding from post-pandemic peaks, central banks across the growth amid a challenging external environment. Several demand prompted a pause in its easing cycle. central banks, including those in Indonesia, Malaysia, the Philippines, and Thailand, lowered policy rate to bolster Looking ahead, the monetary policy environment remains complex, with the combination of external headwinds, trade-related headwinds. In China, the central bank geopolitical uncertainty, and the potential for supply- central banks face. The rate cuts implemented in 2025 the year, utilizing a range of policy tools including interest headwinds, and most central banks across the region retain room to respond further should conditions warrant. This easing trend was not universal, however. The Bank However, the near-term outlook involves weaker external of Japan moved in the opposite direction, raising its inflation - a combination that, should it materialize, of ultra-loose monetary policy, with inflation showing signs of sustainably reaching its target. The Bank of Korea inflationary pressure. A supply-driven price shock that 3/Contribution tothe change in fscal balance is calculated, based on the following decomposition: and fb=fiscal balance as a percentage of GDP, R=revenue, E=expenditure, P=GDP deflator, Y=real GDP, g=real GDP growth, π=GDP deflator inflatior
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