Coronavirus: Room for fiscal policy – Standard Chartered

Europe and the Pacific region can use fiscal policies to cushion the impact of coronavirus in the opinion of economists at Standard Chartered Bank.

Key quotes

“The euro area, Australia, New Zealand, the Philippines, Indonesia, Malaysia, and Taiwan all have room to add to their fiscal deficits, without this leading to an increase in their debt to GDP ratios, even in the short term.”

“However, a number of economies that already have a projected deficit that exceeds this differential would likely have to accept a higher level of debt to GDP to further support their economies.” 

“Following any extra stimulus to counter the coronavirus shock, deficits would need to come in below real funding costs minus GDP growth spread in order to bring the policy back to a more sustainable path.”