Increased integration of international trade and finance has magnified spillovers globally and within the ASEAN+3 region, further highlighted by the COVID-19 pandemic. Having information on the transmission channels and magnitudes of these shocks could help countries adopt strategies to mitigate their impact and perhaps better diversify their economic relationships. This Analytical Note models the transmission of shocks to the GDP of (1) China, and (2) the G2, to the ASEAN+3 region. The channels of transmission are estimated from two perspectives: (1) geographical, and (2) sectoral. The results reflect China’s importance in the global supply chain; the unchallenged dominance of goods trade for the ASEAN+3 region, but also the importance of services trade, underscoring the region’s susceptibility to external spillovers and spillbacks.
Analytical Notes