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Southeast Asian Economic Outlook 2010

image of Southeast Asian Economic Outlook 2010

The global financial crisis has offered an important opportunity for Southeast Asian countries to rethink past growth strategies and project new development visions. This inaugural edition of the Southeast Asian Economic Outlook looks at current efforts to rebalance growth for the region and at what form growth will take in the future.

The analyses and discussions presented in this volume highlight the need to implement five-year development plans with a view to rebalancing growth and instituting a credible fiscal policy framework conducive to greater fiscal discipline. In particular, well-designed fiscal rules, independent fiscal agencies and a medium-term budgetary framework are crucial elements. Although such institutions are becoming increasingly important across OECD countries, there is room for improving the institutional settings in Southeast Asia.

The 2010 Outlook also addresses the fact that the future development of Southeast Asian countries is likely to be uneven across sectors and economies, unless necessary measures are taken. Sectors of new growth in the region will need to be supported by going beyond the current narrow range of electronic products and developing more niche and speciality products that are priorities of the Association of Southeast Asian Nations.

Another area of policy action proposed is to develop more integrated transport networks. Given the huge investment needs for infrastructure development, new financing methods, such as infrastructure revenue bonds, should be further explored to promote public-private partnerships in the region.

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Medium-Term Growth and Development Outlook

OECD Development Centre

The global financial crisis has highlighted the need for Southeast Asian economies to rebalance the sources of economic growth. More open economies in the region need to rely less on exports and more on domestic demand, although some need to improve the competitiveness of their exports. Economic projections developed for the SAEO 2010 suggest that this rebalancing process is now underway. Growth in the region as a whole will reach pre-crisis levels by 2015 but will be more dependent on domestic investment, followed by private consumption, and less dependent on net exports than before the crisis. Governments in the region need to strengthen their fiscal frameworks in order to meet the challenge of reducing fiscal deficits to sustainable levels while financing infrastructure and other programmes essential to achieving their development goals. The fiscal frameworks will need to incorporate credible medium-term budgetary targets and the means to achieve them. Well-designed fiscal rules and independent fiscal institutions could further strengthen the frameworks.

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