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Swelling Deficits Are Southeast Asia's Next Stability Test

  • Government spending could cushion growth but shake markets
  • Trade tensions, currency turmoil already adding to risks
Pedestrians walk along an elevated walkway in Kuala Lumpur, Malaysia, on May 18, 2018. 
Photographer: Sanjit Das/Bloomberg
Updated on

Southeast Asian governments are staring down swelling budget deficits in the latest test for regional stability.

As higher U.S. interest rates and a stronger dollar roil currencies in the region and oil prices spike, governments from the Philippines to Malaysia are facing rising debt. A less rosy growth picture also means tax revenues may come in below targets, threatening budget goals.