SINGAPORE -- Singapore, South Korea, Taiwan and Thailand have the most flexible macro-economic policies in Asia, a Salomon Smith Barney (SSB) report said on Tuesday.

Each of the four has discretion in its fiscal policy, SSB noted, although each has at various points constrained monetary policy by efforts to control its nominal exchange rate.

With the possible exception of Thailand, their fiscal positions allow for temporary stimulus should this become necessary to offset weaker external demand, the investment bank added.

"What flexibility policy-makers have, and their willingness to use it, are indispensable in accessing where Asian economies are likely to go and what financial market prospects this will create," SSB said.

There is a greater willingness on the part of governments to use policy flexibility in the aftermath of last year's recession, the report pointed out.

"In 2001, some countries, like Taiwan, seemed constrained by perceptions of the status quo or rules of thumb that were out of sync with very large external shocks," SSB noted. "These perceptions have shifted, making it more likely that policy flexibility, where it exists, will be used."

In Taiwan, SSB noted, real interest rates have fallen and the pace of real appreciation has slowed.

Countries with less flexibility are China, Hong Kong, India, Indonesia, Malaysia and the Philippines, AFP reported, arising from commitments to fix exchanged rates in the cases of Hong Kong, Malaysia and China.