ASEAN economies remain a ‘bright spot’ amid slow global growth, geoeconomic fragmentation

Finance Secretary Benjamin E. Diokno, World Bank (WB) Governor for the Philippines, and Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila, Jr. convened with fellow finance ministers and central bank governors during the ASEAN Roundtable organized by the International Monetary Fund (IMF) on October 11, 2023 in Marrakech, Morocco as part of the 2023 WB-IMF Annual Meetings.

IMF Asia and Pacific Department Director Krishna Srinivasan and Research Department Director Pierre-Olivier Gourinchas presented their latest updates on the global and regional economic outlook, observations on inflation and monetary policy, and the effects of China’s slowdown on Asia and the Pacific.

While slowing global growth has impeded strong post-pandemic recovery, IMF Managing Director Kristalina Georgieva remarked that the ASEAN has remained a bright spot, owing to the region’s promising growth trajectory, decisive fiscal and monetary actions on inflation, and progress on delivering structural reforms.

The IMF findings also implied that China’s growth is expected to slow down over the medium term, which may pose downside risks on Asian economies. Addressing the impact of geoeconomic fragmentation would require stronger regional integration and constructive global dialogue.

In his intervention, Secretary Diokno shared, “The Philippines is expected to be less affected by China’s slower economic growth given that the potential slowdown in exports could be partially mitigated by the demand from our large domestic market.”

He added that sharp swings in market sentiment and risk premia could trigger a sudden tightening of financial conditions, capital outflows, and depreciation of the local currencies. Intensification of geo-political tensions and fragmentation could also disrupt supply chains and investment.

The Finance Secretary also noted that financial systems in the ASEAN+3 region, except Hong Kong, are likely to be exposed less to risks arising from the downturn in China’s property sector.

With the theme, “Charting a course towards durable disinflation in ASEAN economies amidst structural shifts in the global economy”, the Roundtable Meeting allowed finance ministers and central bank governors in the region to share their country’s views on these challenges and how the Fund can assist.