Asean+3 growth at risk on economic fallout


ASEAN+3 Macroeconomic Research Office (AMRO) projected that Asean+3’s economy to grow at 4.7% this year and 4.6% in 2023, while Asean at 5.1% and 5.2% respectively, underpinned by the region’s high vaccination rates.

AMRO chief economist Dr Hoe Ee Khor said that the Asean+3 could anticipate a strong economic recovery with the recovery from the Covid-19 pandemic.

“Now, as we move through 2022, it appears as though the region may finally have gained some ground in its long battle against the virus and we can now look forward to a fuller opening-up and a strong economic recovery,” Hoe said at the Asian Development Bank (ADB) and Amro joint webinar on Economic Recovery in ASEAN+3 on Friday.

However, the war in Ukraine is an emerging risk to the outlook as its effects are already being felt in the region through higher energy prices.

“While Asean+3 economies have limited direct exposure to Russia and Ukraine, they will not remain unscathed if the war drags on.

“The economic fallout — disrupted global supply chains, higher global inflation, and lower global growth would undoubtedly hurt Asean+3 exports and growth,” he said.

Meanwhile, within the Asean+3 region, financial risks are still elevated in many economies due to the pandemic.

“Macro-financial policies continue to be focused on alleviating the pandemic’s impact on households and firms and supporting an economic recovery,” he noted.

However, he said that more businesses and individuals could come under financial stress if the recovery is delayed.

“Given the less supportive global policy settings in 2022, the region’s policymakers will have to undertake a crucial balancing act — avoiding a premature withdrawal of policy support to sustain the recovery,” he added.

At the same time, policymakers should facilitate the reallocation of capital and labour to new and expanding sectors and restore policy space to prepare for future risks.

He also urged Asean+3 policymakers to be nimble as they navigate the complex environment, strengthen economic recovery and rebuild policy space.

“This will not be our last crisis. We must rebuild, and continuously innovate and learn as we prepare for the next crisis,” he further said.