Fiscal impact of Iran crisis expected to show up in Q2 data, AMRO says

The fiscal impact of the Iran crisis is expected to become evident in second-quarter data for ASEAN+3 economies, according to the ASEAN+3 Macroeconomic Research Office (AMRO). In a report covered by BusinessWorld, AMRO said that higher energy costs during the period and expanding subsidies are key risks to the fiscal outlook of the region.

AMRO noted that the conflict in the Persian Gulf has driven up oil prices, straining government budgets across the ASEAN+3 bloc, which includes China, Japan, South Korea, and the 10 ASEAN member states. The increased spending on subsidies to cushion the impact on consumers and businesses is expected to widen fiscal deficits in several economies.

The report emphasizes that the full fiscal repercussions may not have been captured in first-quarter data, as the crisis escalated late in the period. Second-quarter figures, due for release in the coming months, are anticipated to provide a clearer picture of the economic toll, with AMRO urging policymakers to prepare for sustained fiscal pressures.