Front Matter

Front Matter

Ana Corbacho, and Shanaka Peiris
Published Date:
October 2018
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Edited by

Ana Corbacho and

Shanaka J. Peiris


© 2018 International Monetary Fund

Cover design: Winking Fish, Inc.

Cataloging-in-Publication Data

IMF Library

Names: Corbacho, Ana. | Peiris, Shanaka J. (Shanaka Jayanath), 1975- | International Monetary Fund.

Title: The ASEAN way : sustaining growth and stability / edited by Ana Corbacho and Shanaka J. Peiris.

Other titles: Association of South East Asian Nations way

Description: Washington, DC : International Monetary Fund, [2018] | | Includes bibliographical references.

Identifiers: ISBN 9781513558905 (paper)

Subjects: LCSH: ASEAN. | Economic development—Southeast Asia. | Monetary policy—Southeast Asia.

Classification: LCC HC441.A712 2018

DISCLAIMER: The views expressed in this book are those of the authors and do not necessarily represent the views of the IMF’s Executive Directors, its management, or any of its members.

Recommended citation: Corbacho, Ana, and Shanaka J. Peiris, eds. 2018. The ASEAN Way: Sustaining Growth and Stability. Washington, DC: International Monetary Fund.

ISBN: 978-1-51355-890-5 (Paper)

978-1-48435-530-5 (ePub)

978-1-48435-532-9 (Mobi)

978-1-48435-533-6 (PDF)

Please send orders to:

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P.O. Box 92780, Washington, D.C. 20090, U.S.A.

Tel.: (202) 623–7430 Fax: (202) 623–7201





The resilience and sustained growth over the past 20 years of the five founding members of the Association of Southeast Asian Nations (ASEAN)—Indonesia, Malaysia, the Philippines, Singapore, and Thailand—have been among the strongest across emerging markets. This book shares many lessons from the ASEAN-5 countries’ policy reforms and economic resurgence after the Asian financial crisis, including the consensus-based “ASEAN Way” of collaborating and integrating trade, finance, and labor markets on the path toward an ASEAN Economic Community. Cooperative frameworks also underpin the region’s financial safety net under the Chiang Mai Initiative Multilateralization.

Overall, the ASEAN-5 economies’ monetary policy frameworks have performed well, delivering both output and price stability during a period of significant domestic and regional turbulence and transformation. A gradual move toward greater exchange rate flexibility, coupled with the flexible inflation- targeting frameworks put in place in Indonesia, the Philippines, and Thailand, and the somewhat different approaches of Malaysia and Singapore, helped sustain growth with low inflation. The ASEAN-5 also overhauled financial regulation and supervision and undertook financial reforms aimed at restructuring banks and nonfinancial corporations and developing local current bond markets. These policy reforms helped these countries withstand the global financial crisis and preserve financial stability.

Global financial cycles have had a pervasive impact on ASEAN-5 business cycles, transmitted partly through financial conditions and capital flows. Real economy factors, such as external demand from the United States and more recently China, have also been important, but global financial factors have tended to dominate. To lean against the wind of capital flows and preserve financial stability, regional policymakers have relied on several policy levers, including macroprudential and microprudential measures, exchange rate adjustment, and foreign exchange market intervention. These policy tools have supplemented monetary policy. The extensive use of macroprudential policies in the ASEAN-5, a frontier area in macro policymaking globally, provides lessons on their potential effectiveness. Empirical and model-based approaches show that macroprudential policies helped manage the financial cycle in ASEAN-5, allowing macro policies to focus on the business cycle and sustain growth.

Global financial spillovers will continue to test the resilience of ASEAN-5 economies. Sustaining growth and stability will demand further upgrading of policy and institutional frameworks, exploiting macroeconomic policy synergies, and enhancing resilience through regional financial integration. Against the backdrop of elevated global uncertainty, the policy challenges that will face the ASEAN-5 may vary more than those they faced during recent decades, given different starting conditions. Whereas some economies must grapple with persistently weak inflation amid high household leverage, others must carefully orchestrate an infrastructure push and manage continued global financial volatility.

The IMF remains a committed partner in the region’s growth and transformation. I hope this book will inspire a broader conversation on how the ASEAN way of collaboration and integration in the areas of trade, finance, and labor markets can guide the path forward not just for Southeast Asia, but also for other emerging market and developing economies.

Christine Lagarde

Managing Director International Monetary Fund


This publication benefited from valuable guidance from Changyong Rhee and Odd Per Brekk, Director and Deputy Director in the IMF’s Asia and Pacific Department. It also benefited from insights from panelists and participants at numerous seminars and events, including at ASEAN-5 central banks, the ASEAN+3 Macroeconomic Research Office (AMRO)–IMF annual conferences, the South East Asian Central Banks (SEACEN) deputy governors’ conference, and at the IMF.

We express our strong appreciation for support from Hoe Ee Khor (AMRO), who guided our early work; IMF Executive Director Juda Agung; and coauthors and contributors Mia Frances R. Agcaoili, Julian T. S. Chow, Geraldine Dany-Knedlik, Ding Ding, Ichiro Fukunaga, Juan Angel Garcia, David Grigorian, Jaime Guajardo, Minsuk Kim, Rui C. Mano, Dirk Muir, Pablo Lopez Murphy, Aubrey Poon, Khristine L. Racoma, Sohrab Rafiq, Sherillyn R. Raga, Umang Rawat, Manrique Sáenz, Yiqun Wu, and Xiaohui Wu.

We are indebted to the IMF’s Editorial and Publications Division. Special thanks go to Gemma Rose Diaz for managing the production of the book, as well as to Sherrie Brown, Patricia Loo, and Lucy Morales for their editorial contributions. We also thank Jeffrey Hayden and Linda Griffin Kean for their unwavering support.

We are very grateful to Francis Joseph Landicho and To-Nhu Dao, from the Asia and Pacific Department, for their excellent job coordinating the production of the manuscript.

Ana Corbacho and Shanaka J. Peiris


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