Looser fiscal policy has yet to manifest itself

The large supplementary budget passed in November provided no discernible boost to public spending last quarter, which supports our long-held view that the government only recorded a minuscule budget deficit last year. And while sluggish public spending contributed to the weakness in GDP last quarter, the latest activity data suggest that the economy will finally turn the corner this quarter. By the time the government has passed the regular budget for the coming fiscal year, the case for additional fiscal largesse will therefore have diminished.