Excellencies, distinguished guests, ladies and gentlemen.
It is my great pleasure to welcome you to the 2nd ASEAN+3 Economic Cooperation and Financial Stability Forum.
Following our inaugural launch in Singapore last year, we are pleased to convene once again, this time in the historic city of Kanazawa. This event is made possible through the strong support of the Japanese authorities and our co-host, the Asian Development Bank Institute.
I extend my heartfelt gratitude to all the ASEAN+3 member authorities, partner institutions, esteemed speakers, and participants, for your support and active engagement.
The recent years have been nothing short of a testament to the remarkable resilience of the ASEAN+3 region and the strength that our economies collectively embody. Navigating through a series of global shocks and challenges, our region remains the fastest growing region in the world today. AMRO expects the ASEAN+3 region to grow by 4.3 percent this year and 4.5 percent in 2024. More than 40 percent of global growth is expected to come from our region.
These statistics speaks volumes about the robustness of our economic foundations, the effectiveness of our policies, and the determined spirit of our people.
But how truly resilient is the region? Looking ahead, the landscape is changing, and the challenges we face are evolving. As the theme of this year’s Forum “Safeguarding Growth and Stability in a Complex World: Challenges and Solutions” suggests, the world we are living in and the situation we are facing, are constantly evolving and increasingly complex.
The persisting geopolitical tensions, tighter monetary conditions, slowdown in global trade, and volatile commodity and food prices, among others, make the global economic outlook fragile. Over the medium-term, we are likely to experience the weakest growth of the global economy. Adding to this is the confluence of long-term challenges that loom on the horizon – rapidly aging populations, the environmental threat posed by climate change, and the ongoing geo-economic reconfiguration.
This is the global context that the region will be operating in. Despite our resilience, the string of shocks in recent years has somewhat weakened our fundamentals. Our policy space has become more constrained now than in the pre-pandemic era. Our indebtedness has risen markedly. The region’s total private and public debt was only a hair’s breadth away from 300 percent of the region’s GDP at the end of 2022.
Overall, the heightened complexity makes the navigation in the current environment more challenging – especially given the expectation of a higher-for-longer global interest rate environment and a more fragile and weaker global growth outlook. Indeed, based on the structural trends that we are facing, AMRO’s forecast is for an average regional GDP growth of 4.5 percent for the remainder of this decade. This compares with an average of 5.4 percent between 2011 and 2019.
In these unprecedented and complex circumstances, how do we safeguard the region’s growth and stability?
With an elevated mission to safeguard the region’s macroeconomic and financial resilience and stability, AMRO positions itself as the region’s trusted policy advisor and has been deliberating on the optimal strategies to address these evolving challenges. Today, I would like to offer three recommendations:
First, we need to have regular and thorough health screenings. “Better to prepare and prevent than repair and repent.” A rigorous and timely assessment of the economic situation and near-term prospects lays the foundation for detecting risks, vulnerabilities, and challenges that could potentially lead to economic and financial instability.
It underscores the importance of AMRO’s surveillance work, which is more customized to the region, and hence more responsive to emerging challenges, and has been further broadened to cover longer-term structural issues.
Here, I am pleased to announce that today, we will be launching the inaugural issue of AMRO’s second flagship report, the ASEAN+3 Financial Stability Report (or AFSR). As a pioneering regional financial stability report, the AFSR underscores our firm commitment to monitoring, protecting, and enhancing the financial stability of our region.
Second, we need to enhance resilience. Building resilience against spillovers or contagion from shocks is key to safeguarding our financial stability. In the geo-fragmented and shock-prone post-pandemic world, this involves rebuilding policy space and fiscal buffers, ensuring adequate foreign exchange reserves, and strengthening the balance sheets of financial institutions.
In addition, the foundation for resilience lies in developing a healthy, robust economy. This can be achieved through various strategies and structural reforms, including leveraging digitalization in all its forms to boost efficiency and enhance productivity; fostering a gradual and responsible green transition; and actively participating in the reconfiguration of global supply chains and foreign direct investment. All these areas are interlinked, allowing us to further benefit from integrated economies of scale.
To support ASEAN+3 member economies in building resilience, AMRO has strengthened our research and surveillance capabilities. We have established a dedicated research group to focus on macro-critical structural issues of strategic importance to the ASEAN+3 economies. On top of that, we are optimizing our technical assistance functions to better serve the policy and capacity needs of member economies, thereby assisting the region in building greater resilience.
Third, we need to intensify regional cooperation. In an increasingly interconnected world, safeguarding growth and stability calls for regional solutions and collective efforts. Strengthening intraregional cooperation in areas such as supply chain security, interconnectivity, cross-border flows, digital integration, and the transition to net zero, will further expand the region’s opportunities for sustainable growth, heal the scarring effect, and better prepare us for future shocks.
In this context, AMRO and the ASEAN+3 Finance Process, can play a more critical role in enhancing the regional financial safety net and fostering policy coordination. One of the key priorities is to continue strengthening the ASEAN+3 regional financing arrangements, including the CMIM. This effort involves exploring new facilities and developing more robust and reliable financing structures to prevent, mitigate, and resolve future crises. Likewise, AMRO is creating platforms to facilitate knowledge sharing and policy coordination, with new initiatives such as the Regional Knowledge Hub and the ASEAN+3 Finance Think-tank Network.
I would like to end by quoting a proverb, “a single arrow is easily broken, but not ten in a bundle”. In Japanese, Hitosuji no yawa orubeshi, to suji no yawa origatashi. Let us show the world how the ASEAN+3 spirit of cooperation can make our region a long-lasting bright spot in this highly complex and treacherous world.
I now declare the Second ASEAN+3 Economic Cooperation and Financial Stability Forum open and look forward to our discussions. Thank you.