ASEAN needs to strengthen economic health screenings

A rigorous and timely assessment of the economic situation and near-term prospects lays the foundation for detecting risks, vulnerabilities, and challenges that could potentially lead to economic and financial instability, he explained, adding that it was better to prepare and prevent than repair and repent.
Li was speaking at the ASEAN+3 Economic Cooperation and Financial Stability Forum in Japan, which saw the launch of AMRO’s flagship report, the ASEAN+3 Financial Stability Report (AFSR).
This is the second edition of the forum and follows on from the inaugural event held in Singapore last year. The forum brings together policymakers, academia, and industry thought leaders to discuss issues concerning the macro-financial stability and economic outlook of the ASEAN+3 region, comprising the10 member states of the Association of Southeast Asian Nations (ASEAN) and China, Japan, and Korea.
Stressing the importance of AMRO’s surveillance work, which he said should be more customised to the region, hence more responsive to emerging challenges, and further broadened to cover longer-term structural issues, Li suggested that ASEAN needs to enhance resilience against spillovers or contagion from shocks to safeguard the region’s financial stability.

“In the geo-fragmented and shock-prone post-pandemic world, this involves rebuilding policy space and fiscal buffers, ensuring adequate foreign exchange reserves, and strengthening the balance sheets of financial institutions.
“This can be achieved through various strategies and structural reforms, including leveraging digitalisation in all its forms to boost efficiency and enhance productivity; fostering a gradual and responsible green transition; and actively participating in the reconfiguration of global supply chains and foreign direct investment. All these areas are interlinked, allowing us to further benefit from integrated economies of scale.”

Regional cooperation
Li said that the region needs to intensify its cooperation. “Safeguarding growth and stability calls for regional solutions and collective efforts. Strengthening intraregional cooperation in areas such as supply chain, interconnectivity, cross-border flows, digital integration and the transition to net zero, will further expand the region’s opportunities for sustainable growth, heal the scarring effect and better prepare us for future shocks.”
Li expressed the view that AMRO and the ASEAN+3 Finance Process can play a more critical role in enhancing the regional financial safety net and fostering policy coordination.
One of the key priorities is to continue strengthening the ASEAN+3 regional financing arrangements, including the Chiang Mai Initiative Multilateralisation (CMIM). This effort involves exploring new facilities and developing more robust and reliable financing structures to prevent, mitigate, and resolve future crises.
“Let us show the world how the ASEAN+3 spirit of cooperation can make our region a long-lasting bright spot in this highly complex and treacherous world,” Li concluded.