The ASEAN+3 Regional Economic Outlook (AREO) provides a comprehensive assessment of recent developments and the outlook for the region, taking into account spillovers from the global economy and inter-linkages in international financial markets. It also presents staff’s thematic study on longer-term structural issues confronting the region.

The first part, on “Macroeconomic Prospects and Challenges”, contains AMRO staff’s regional outlook and assessment. Following growth of 5.3 percent in 2018, staff expect the region to remain resilient against trade headwinds and to achieve growth of about 5.1 percent in 2019-2020. This section also includes AMRO’s Global Risk Map, which summarizes staff’s view on the key external risks to the ASEAN+3 region, including their likelihood, imminence and impact. Simulations of adverse trade scenarios inform staff’s assessement of the impact of a further escalation in the global trade tension.  Analyses of each economy’s positions in the business, credit and property cycles also serve as inputs into staff’s monetary, fiscal and macroprudential policy recommendations.

The second part comprises this year’s thematic study, “Building Connectivity and Capacity for the New Economy.” This section discusses the key drivers that will shape the development priorities of the ASEAN+3 region as they embrace the “new economy” and embark on the next phase of the region’s growth trajectory. It also identifies the challenges to achieving those objectives, which would require leveraging on intra-ASEAN+3 investment, backstopped by a credible regional financial safety net, and developing the necessary professional expertise, technology and institutions.

Hyperlinks to download PDF by section:

Full Report

Foreword

Highlights – Also available in Bahasa Indonesia | Chinese | Japanese | Khmer | Korean | Lao | Myanmar | Thai | Vietnamese

ASEAN+3 Macroeconomic Prospects and Challenges

Appendix: Selected Key Macroeconomic Projections

Theme: Building Capacity and Connectivity for the New Economy

Annex: Developments in ASEAN+3 Economies

09:00am – 09.15am:  Registration

09:15am – 09.20am: Introduction and AMRO corporate video

09:20am – 09.40am:  Presentation on the key findings of the AREO 2019 by AMRO Chief Economist Dr Hoe Ee Khor

09:40am – 10.00am:  Q&A

Dr. Hoe Ee Khor

Dr. Khor is the Chief Economist of AMRO responsible for overseeing and developing the work on macroeconomic and financial market surveillance on East Asia and on the member economies in the region. He is also a member of the senior management team responsible for setting the strategic direction and management of AMRO.

Prior to joining AMRO, Dr. Khor was a Deputy Director of the Asia and Pacific Department (APD) at the International Monetary Fund (IMF), responsible for overseeing the surveillance work on six ASEAN and twelve Pacific Island countries.  Dr. Khor started his career as an economist at the IMF in 1981 and had worked on a wide range of economies in the Western Hemisphere and Asia and Pacific departments. He was the IMF Deputy Resident Representative in China from 1991-1993.

From 2009-2010, Dr. Khor was Head of Economic Development and Chief Economist at the Abu Dhabi Council for Economic Development (ADCED).

Dr. Khor joined the Monetary Authority of Singapore (MAS) in July 1996 and was Assistant Managing Director from 2001 to 2009 where he was responsible for economic research, monetary policy, macro-financial surveillance, and international relations.

Dr. Khor obtained his Bachelor’s Degree in Economics/ Mathematics from the University of Rochester and a Ph.D. in Economics from Princeton University.

The ASEAN+3 Region Grows at 5.4%, Supported by Resilient Domestic Demand and Stronger Export Growth

The region should leverage on complementarities, embrace technology, and strengthen multilateralism and regional integration.

Also available in Bahasa Indonesia | Chinese | Japanese | Khmer | Korean | Lao | Myanmar | Thai | Vietnamese

FIJI, May 1, 2019 – Despite heightened global risks and stronger external headwinds, the ASEAN+3 region is expected to remain resilient, growing at only a slightly slower pace in 2019–2020, compared to last year, says the new annual flagship report released today by the ASEAN+3 Macroeconomic Research Office (AMRO).

The ASEAN+3 Regional Economic Outlook (AREO) 2019 provides an assessment of the regional economic outlook and the risks and challenges facing the regional economies. In this year’s edition, the report also includes a thematic study titled “Building Connectivity and Capacity for the New Economy.”

“While regional growth is softening from 5.3% last year to 5.1% in 2019 and 5.0% in 2020, the longer-term economic fundamentals remain intact,” said AMRO Chief Economist Dr Hoe Ee Khor. “Regional policymakers should stand ready to use available policy space to ease monetary and fiscal policies to mitigate the downside risks and support the economy if external conditions were to worsen.”

The downside risks confronting the region are mainly external, stemming from an escalation in global trade tensions, a sharper slowdown in global growth, and volatility shocks from financial markets. Notwithstanding the softer outlook, the region’s long term fundamentals remain intact, supported by robust consumption and growing intra-regional trade amid a rising middle class, rapid urbanization, and adoption of digital technology.

However, as downside risks have become more pronounced, policymakers have little room for complacency. While current macrofinancial policy stances are generally appropriate, authorities in the region should be ready to recalibrate the policy mix to safeguard growth while preserving financial stability. These include some easing of monetary policy stance where appropriate; sustaining supportive fiscal policy, while combining targeted fiscal measures and structural policies to incentivize structural adjustments; and maintaining tight macroprudential policy to guard against the build-up of financial vulnerabilities.

To support the region’s growth prospects and foster resilience, ASEAN+3 should prioritize longer-term policies, especially those focused on building capacity and connectivity to leverage on the Fourth Industrial Revolution and sustain growth in the new economy. On this issue, the AREO 2019 contains a thematic study on how the region can do so, after more than two decades of prospering with the “manufacturing for exports” strategy.

Three key drivers will shape capacity and connectivity priorities in the region for the medium to long term. These are: new demands arising from the global transition to the Fourth Industrial Revolution or more broadly the new economy, East Asia’s maturing and increasingly affluent populations with an expanding middle class, and the tension between burgeoning intra-regional demand and headwinds from protectionist tendencies in the trade and technology space.

Against this backdrop, developing economies in the region continue to face three key challenges to growth: the funding, foreign exchange, and factors gaps. The funding gap captures the shortfalls between the low domestic savings and large investment needs of lower-income economies while the foreign exchange gap has to do with the financing constraint on emerging economies arising from the need to accumulate foreign reserves to mitigate risks related to sudden capital outflows. The factors gap captures non-financial constraints, including the need to develop human capital, expertise, technological capacity, and governance frameworks.

To address these challenges, there is a strong need for ASEAN+3 economies to leverage on intra-regional savings and investments; strengthen regional financial safety nets, including the Chiang Mai Initiative Multilateralisation (CMIM); and redouble efforts to develop ASEAN+3’s technological capacity, professional expertise in various fields, and further strengthen institutions for growth and governance.

“Rapid economic growth in the ASEAN+3 region will generate new infrastructure demand and sharpen the collective focus on meeting projected investment shortfalls,” says Dr Khor. “Transition to the technology-heavy and services-driven new economy could accentuate strains arising from conventional gaps facing the region, and it is imperative that the developing economies invest in human capital and leverage on the complementarities in the region. There is therefore a greater need than ever before for ASEAN+3 to embrace technology, integration, multilateralism, and further strengthening of regional financial safety nets.”

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About AMRO:

The ASEAN+3 Macroeconomic Research Office (AMRO) is an international organization, established to contribute to securing the economic and financial stability of the ASEAN+3 region, which includes 10 members of the Association of Southeast Asian Nations (ASEAN) and China; Hong Kong, China; Japan; and Korea. As an international organization, AMRO fulfils its mandate by conducting regional economic surveillance, supporting the implementation of the regional financial arrangements, the Chiang Mai Initiative Multilateralisation (CMIM), and providing technical assistance to its members.

[To be updated]