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Project: Global Economic Uncertainties

Global Economic Uncertainties and Southeast Asian Economies

Image Copyright: Matthew Traucht


Southeast Asia entered its worst post-1997 recession phase during the global economic breakdown in 2008-9. The region was able to decouple itself from the ripple effects of global financial shocks and bounced back strongly in 2009-10, thanks to its growing domestic markets, limited financial exposure to the crisis epicenters, and timely stimulus packages. Major Southeast Asian countries like Singapore, Malaysia and Thailand exhibited a v-shaped recovery with staggering respective GDP growth rates of 15.0, 6.5 and 6.2 percent in 2010 – up from a sharp contraction in 2009. In addition, Indonesia, the Philippines and the CLMV countries demonstrated exceptional resilience. More recently, however, Europe’s worsening financial and banking crisis and a sluggish recovery of the United States have dampened Southeast Asia’s growth prospects. According to the latest estimates by Asian Development Bank (ADB), the escalating global economic uncertainties forced Southeast Asia’s growth forecast to be revised downward to 6.6 per cent in 2012 and 7.1 per cent in 2013 from the earlier estimates of 6.9 per cent and 7.3 percent, respectively.

The current global economic circumstances underscore the risks of disproportionate dependence on exports as a key engine of growth and the unsustainable features of overproduction in developing Asia, upheld by undue consumption in the United States and the European Union. There is a need, therefore, for Southeast Asia to bolster domestic demand and to place more emphasis on intra-regional sources of economic potential. For the time being, the region is in dire need of an optimal mix of macroeconomic and trade policy measures that differ by country, underpinned by domestic demand, to revive domestic economies. More importantly, a new phase of Southeast Asia’s economic policy needs to address several socio-economic issues including a lack of social security, underdeveloped and incomplete intra-region financial markets, rapidly growing income inequality, and limited competition among service products. The region needs to put in place a shield against emerging challenges such as a shift of demand towards East Asia; it also needs to manage capital flows, escalating intra-regional trade linkages, and the growing significance of intra-industry trade and trade in differentiated products.

 

Current Projects:

To this end, ISEAS and Chulalongkorn University’s ASEAN Studies Center and Faculty of Economics jointly organised an international conference on “Global Economic Uncertainties and Southeast Asian Economies” from 22nd to 23rd August 2013 at Chulalongkorn University, Bangkok. The conference papers will be released as a book publication (forthcoming, 2014).
The conference had the following objectives:
  • To discuss the developments of macroeconomic and trade policy mix against the backdrop of the Euro zone sovereign debt crisis and the long recovery prospects for major countries in Southeast Asia (e.g. Singapore, Thailand, Malaysia, Indonesia, the Philippines and Vietnam).
     
  • To assess the effectiveness of policy responses to global economic unrest.
     
  • To identify opportunities and challenges facing Southeast Asia in the midst of the global economic slump when developing Southeast Asia leverages on an ever-expanding role in the global business environment.
     
  • To rethink the East Asian model of export-led growth where enormous gains were driven principally by export demands from advanced economies.
     
  • To pioneer the key areas of regional cooperation and macroeconomic and trade policy reforms that potentially strengthen regional economies.
 

Recent Research Products:

“Malaysia in the Midst of Global Economic Uncertainties”. ISEAS Working Papers, No.4, October 2013. Revised version of paper presented at the conference on “Global Economic Uncertainties and Southeast Asian Economies” (August 2013, Bangkok).

"Special Focus on “The Global Debt Crisis and Southeast Asia”. Journal of Southeast Asian Economies, Vol. 30, No. 2, August 2013. To access the publication, clcik on the thumbnail below.

 

For further information on this research project, please contact Dr Francis Hutchinson : fhutchinson@iseas.edu.sg