Asean, comprising open trading nations and net importers of energy, has been severely impacted by the economic disruptions linked to the pandemic and the economic fallout arising from the ongoing geopolitical conflicts, notably, through higher food and energy prices and more restrictive trade flows.
As a result, economic growth in Asean declined in the last two years: to about -3.8% in 2020 and 3.2% in 2021. The outlook for 2022 and the next year is set to improve, boosted by economic reopening. Nonetheless, downside risks to the outlook are many. The key ones are rising global inflation, monetary policy tightening in the US, and possible further fallout from geopolitical conflicts that could lead to recessionary conditions worldwide.
Therefore, in the context of policy, the first and most immediate area of concern is rising inflationary pressure together with the more hawkish stance of US monetary policy to fight inflation that could pose threats to the region's growth and financial stability.
