MACRO VIEW: SWEET NOTHING
We have observed with growing concern the persistent misalignment of economic stability with economic prosperity. Businesses thrive in predictable environments and abhor volatility. While stability is valuable and a key ingredient for growth, it alone is not a driver for prosperity. Further, while indicators have been coming through positively, the prosperity component seems to be lagging behind.
The second quarter of every year is particularly crucial in shaping the economic outlook, as it often sets the tone for fiscal and monetary direction over the subsequent four quarters. This is typically when new tax measures, administrative procedures, and incentive structures are introduced. It is also the period when public expenditure priorities become more apparent, often going beyond the routine.
Last year, this period was marked by historic unrest when bottom-up policies led to nationwide economic protests. While a full year has passed—offering ample time to course-correct, refine engagement, and temper expectations—2Q25 once again experienced disruptions. This time, however, the Finance Bill was not at the center of the unrest. Rather, it reflected a broader shift to deeper public participation in economic and governance discourse.
In the sections that follow, we distil the key takeaways across five critical areas: fiscal space, monetary policy, the business environment, the foreign exchange market, and the overall economic landscape over the review period.
