Regional Conference on Navigating the New Normal in ASEAN Plus Three Economies
According to the International Monetary Fund, the world’s economic growth remains subdued as the growth in developing economies is weaker than expected. The sign of sluggish global growth continues to show due to several macroeconomic risks, for example, trade tensions, weak investment due to lack of investor confidence, abrupt shifts in risk sentiment, disinflationary pressure, and deeper than envisaged economic slowdown in the People’s Republic of China (PRC) and Eurozone. Taking into account these factors, the global economy is moving towards a new normal.
Asia has been a champion of economic success over the past five decades, with the winning mixed product of economic integration via global trade and foreign direct investment, high savings rates, large investments in human and physical capital, and sound macroeconomic policies. A shift from successful economic recovery from economic turmoil, including the Asian financial crisis in 1997-98 and the global financial crisis in 2008, is starting to show.
Similar to other parts of the world, Asia is experiencing economic and sociocultural challenges that could threaten its economic and financial stability. The challenges range from trade tensions between the United States and the PRC, uncertainty caused by a “no-deal” Brexit, recent monetary easing policy by many central banks around the world, digital disruption, the PRC’s economic slowdown, and slowing productivity growth in the region possibly caused by rising population aging. All these threats and risks are forcing the global economy towards a new equilibrium, or the new normal paradigm. In response to this new normal, appropriate and timely policy design, including economic reforms, is required to obtain economic resilience and stability.
Having said this, the Association of Southeast Asia Nations (ASEAN) and the plus three countries – the PRC, Japan, and the Republic of Korea – face the same new normal paradigm. To maintain robust economic growth and financial stability in their economies, a new policy framework design is proposed to avoid policy missteps and avoid escalation of economic turmoil possibly caused by trade tensions, technological disruption, financial shocks, and other potential risks. Economic reforms that are well tailored to a country’s needs are mandatory to boost productivity, resilience, and equality.