Impact of Eurozone Financial Shocks on Southeast Asian Economies

Arbeitspapier

Five years after the Global Financial Crisis, the economies of the United States (US) and the eurozone continue to struggle. How will Southeast Asian economies be affected should there be a further deterioration in conditions in the eurozone? In this paper, we present estimates using a Global Vector Autoregression model of the direct impacts in Southeast Asia of a further shock to the eurozone. We find that although the direct impacts are likely to be muted, it could trigger a much larger adjustment should it lead to a reassessment of risks and asset valuations. This is a real possibility given that vulnerability in the region has increased following massive inflows of capital and the build-up of debt related to successive bouts of quantitative easing, initially in the US and now in Japan. In light of a possible reassessment of risks and asset valuations, and with the International Monetary Fund’s resources already stretched, there is a pressing need to improve regional financial safety nets, which are currently unworkable, to deal with the fallout.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ADB Working Paper Series on Regional Economic Integration ; No. 116

Classification and Topics

• Classification: Wirtschaft ; Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications ; Central Banks and Their Policies ; Current Account Adjustment; Short-term Capital Movements ; International Lending and Debt Problems
• Subject: eurozone crisis ; asset bubbles ; contagion ; regional financial safety nets ; Chiang Mai Initiative ; ASEAN ; ASEAN+3

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Menon, Jayant ; Ng, Thiam Hee
• Event: Veröffentlichung
• (who): Asian Development Bank (ADB)
• (where): Manila
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/109613
• Last update: 10.03.2025, 11:44 AM CET