East Asia Forum Quarterly: Volume 10, Number 4, 2018

Abstract

‘Brighter prospects, optimistic markets, challenges ahead’. That was the title of the International Monetary Fund’s World Economic Outlook update in January this year. How quickly things change. Since that report was published, turbulence, volatility and crises have dominated the landscape. The trade war between the United States and China has escalated at an alarming rate. The World Trade Organisation appellate body looks set to be shut-down. Argentina is in crisis. Turkey is not far off. Markets have been rattled in Indonesia, Myanmar, Italy and Spain as financial conditions tighten. The fallout from Brexit is more uncertain than ever. Populist politicians continue their rise. China’s financial system remains problematic. The United States faces bitterly contested congressional and presidential elections with a possible 2020 recession thrown into the mix. Geopolitical tensions remain high with Iran, North Korea and Russia. With all these risks, now is a good time to review our capacity to respond to crises. This issue of East Asia Forum Quarterly does that. It explores the major financial and economic risks facing the Asia Pacific today and the region’s capacity to withstand and respond should those risks materialise. The authors in this edition start by surveying the major risks facing the region and its economies. They explore the capacity of global institutions like the IMF to respond in different crisis scenarios. They look at the critical role played by regional financing institutions, such as the Chiang Mai Initiative Multilateralization, in supporting stability. They explore what role development banks can play in bolstering financial resilience and supporting countries facing a crisis. They examine how bilateral currency swap lines can be better coordinated and what role they should play in supporting countries in trouble. They assess what can be done domestically to strengthen the resilience of Asia’s economies and financial systems and how regional forums like APEC can support these initiatives. As the Chinese proverb tells us, ‘The best time to plant a tree is 20 years ago. The second-best time is now’. The same is true in preparing for crises. Asian Review features a fresh assessment of Chinese foreign policy and the strategic repositioning of APEC beyond 2020.