ASEAN Beyond the Crisis: Prospects and Challenges of Recovery Aladdin D. Rillo Head, Finance Integration Division The ASEAN Secretariat Regional Conference on Impact of the Global Economic and Financial Crisis to the Vulnerable Sectors in the

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ASEAN Beyond the CrisisProspects and
Challenges of Recovery Aladdin D. RilloHead,
Finance Integration DivisionThe ASEAN
SecretariatRegional Conference on Impact of the
Global Economic and Financial Crisis to the
Vulnerable Sectors in the Region28-29 July
2009Jakarta, Indonesia
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ASEAN has not decoupled from the global
financial crisis, with impact on real economy
more severe than expected
Real GDP Growth ( change)
Contribution to Growth ASEAN5 (In percent, per
year)
Source ASEC database
Source ASEC database
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with decline in economic growth now more
evident in 1st Quarter 2009
Real GDP Growth ASEAN-5 and Viet
Nam (year-to-date change)
Export and Import Growth ASEAN-5 and Viet
Nam (year-to-date change)
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as asset prices and currencies have fallen
sharply
Stock Price Indexes (year-to-date, change)
Currencies (year-to-date, change)
Latest closing as of 31 December 2008, based on
US value of local currency (quarterly average ).
Negative values indicate depreciation of local
currency Source Bloomberg
Latest closing as of 30 September 2008 Source
Bloomberg
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and liquidity and financing conditions have
come under pressure
JP Morgan EMBI Sovereign Stripped Spreads (
basis points)
External Balances ASEAN-5 (Percent to GDP)
Source ASEC database
Source ADB Economic Monitor (December 2008)
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Amid the crisis, ASEAN has remained resilient so
far but will continue to be tested this year

• Countries in the region have responded with
  individual stabilization measures, comprising of
  monetary easing
• measures

ASEAN Policy Rates (In percent)
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• and well-targeted fiscal stimulus programs

Fiscal Stimulus Packages in ASEAN ( to GDP US
billions)
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• Regional measures have so far been encouraging,
  but more coordinated responses are still needed
• Chiang Mai Initiative Multilaterization (CMIM)
• - US120 billion swap facility as liquidity
  support
• - Supplementary to international financing
  arrangements
• Asian Bond Markets Initiative (ABMI)
• - focuses on local-currency denominated bond
  markets
• - increases the regions resilience to external
  shocks

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How can ASEAN contribute to global economic
recovery?

• Rebalance growth away from external demand toward
  domestic demand
• - ASEAN needs to adjust by restructuring
  production away from exports to domestic markets
• - need to implement vigorous measures that
  promote domestically sourced growth
• - increase reliance on private investment
  as key source of growth

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• Stabilize financial systems and promote financial
  market development
• - strengthen risk assessment, management and
  surveillance of financial systems
• - develop local currency bond markets by
  mobilizing regional savings (e.g., Asian Bond
  Markets Initiative)
• - develop and integrate capital markets,
  including the need to strengthen supervisory and
  regulatory frameworks

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• Strengthen and deepen regional cooperation
• Trade Liberalization
• - maintain open trade and FDI regimes
• - rotation of demand away from exports to
  advanced markets in favour of regional sources
  (e.g., intra-regional trade)
• - promote existing integration initiatives
  (e.g., ASEAN Economic Community 2015) and free
  trade areas

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• Financial Integration
• - information exchange to facilitate
  collective assessment of economic conditions,
  risks and vulnerabilities
• - strengthen financial and liquidity support
  by exploring
• other regional financing arrangements
• Exchange rate coordination
• - avoid beggar-thy-neighbour policies
• - movement toward greater exchange rate
  flexibility
• -

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• Participate in credible reforms of global and
  regional financial architecture
• - need to increase Asias participation and
  voice in international forums like G-20, IMF, WTO
  and BIS/FSF
• - need for reforms in key areas such as
  regulation and supervision early warning
  systems regulatory cooperation and coordination
  and crisis management
• - need to act promptly and collectively to
  respond to changing financial and economic
  conditions

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Final thoughts crisis and challenges of
development - Key challenge rejuvenate
economic growth without derailing development
strategies- Need to look beyond and not to
lose sight of social impact of the crisis to
vulnerable groups- Economic recovery must be
accompanied by social development and social
cohesion- But more coordinated responses
are needed to facilitate recovery
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Thank You!