## Global Challenges Facing ASEAN and Policy Priorities

_IMF News, November 13, 2022_

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**Canonical URL:** [Global Challenges Facing ASEAN and Policy Priorities](https://www.imf.org/en/news/articles/2022/11/13/sp111322-md-global-challenges-facing-asean-and-policy-priorities)

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## Bibliographic details
- Authors: Managing Director Kristalina Georgieva
- Published: November 13, 2022

---

### Global economic outlook — shocks, growth, and risks
- In the last three years—a relatively short period of time—we have been hit by "shock upon shock upon shock": a global pandemic, a war in Europe, and a cost-of-living crisis.
- These shocks led to supply chain interruptions and a very rapid increase of energy and food prices, creating stubbornly high inflation and tightening financial conditions.
- Global growth trajectory:
  - 6 percent in 2021
  - 3.2 percent in 2022
  - Projected 2.7 percent for 2023
- Risk assessment:
  - There is a 25 percent probability that growth may actually fall below 2 percent in 2023.
- Strategic concern:
  - A troubling trend toward increased fragmentation at a time when global cooperation is most needed.

### ASEAN outlook — a relative bright spot
- Growth projections for ASEAN:
  - 5 percent this year
  - 4.7 percent next year
- Reasons for stronger performance:
  - Steady progress on reforms
  - Tremendous integration of ASEAN economies
- Caveat:
  - ASEAN economies face scarring from the pandemic and the global slowdown; policies should account for this scarring and the broader global context.

### Policy priorities — monetary, fiscal, and structural opportunities
- Monetary policy:
  - Priority is to fight stubborn inflation.
  - Central banks must tighten and do so until there is a tangible reduction in inflation.
  - Major central banks, including the Fed, are expected to "stay the course."
  - Tighter policy regimes are not expected to be short-lived; countries need to consider this in their monetary and exchange rate policies, recognizing that the strong dollar accompanies high interest rates.
- Fiscal policy:
  - Fiscal support should be prudently directed to those who need help the most.
  - Policy targeting is important because scarce public resources may be required for an extended period.
- Structural and medium-term opportunities for ASEAN:
  - Supply chain changes are creating new opportunities.
  - Opportunities from the new green climate-resilient economy are available to be captured.
  - Digitalization has already led to higher performance in the region, while carrying its own risks.
- Strategic recommendation:
  - ASEAN should play a key role in preventing fragmentation and encouraging global cooperation, leveraging its economic integration and reform progress.

*Source: Global Challenges Facing ASEAN and Policy Priorities, Kristalina Georgieva, November 13, 2022.*

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## References

- [https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva)
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_Source: https://www.imf.org/en/news/articles/2022/11/13/sp111322-md-global-challenges-facing-asean-and-policy-priorities_