UBS Study on Singapore and Malaysia and RP Fiscal Update

UBS Study: Putting Singaporean and Malaysian monetary policy in context

 

Summary

The latest monetary policy moves from Singapore's Monetary Authority (MAS) and Malaysia's Bank Negara (BNM) have to be put in context. While the resulting monetary easing was arguably less than the consensus expected, these steps were taken in the context of significant moves on the part of the government - in terms of spending, taxation and a form of credit easing.

Preliminary GDP estimates in Singapore and commentary from the BNM suggest a significant contraction in economic activity in the first quarter of 2009. We expect that the Q4 2008 and Q1 2009 period will mark the trough in sequential quarterly real GDP growth in both economies.
Both economies should get a lift in coming quarters from domestic fiscal expansion, some improvement in the global trade cycle and now substantial global fiscal policy stimulus.

 

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Fiscal update: The Gap Widens

By Romeo Bernardo & Margarita Gonzales

 

Summary

As expected, the country's fiscal deficit continued to expand due to weakening revenues and accelerated spending. Tax collections dropped on account of slowing nominal growth and a sharp import decline, while outlays ballooned as national government cranked up spending under its economic resiliency plan.

The NG's Q1 deficit, at more than double the size of last year's fiscal gap, is already over half the government's new full-year target of P199.2 billion (2.5% of GDP). The country now has a primary deficit in contrast to a year-ago surplus.

With the rest of the year still ahead, will there a tapering of the fiscal deficit enough for the government to meet its official goals?

 

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