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The Big Split: Why Did Output Trajectories in the ASEAN-4 Diverge after the Global Financial Crisis?

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  • Agnes Isnawangsih
  • Mr. Vladimir Klyuev
  • Ms. Longmei Zhang

Abstract

The global financial crisis originated in advanced economies, but had a major impact on emerging markets. The impact, however, was not uniform. Even in a relatively homogenous group of countries such as ASEAN-4 (Indonesia, Malaysia, the Philippines and Thailand), there were considerable differences both in terms of instantaneous impact of the crisis and in terms of output performance relative to trend. There are several main reasons for the divergence. First, trade shocks had a larger impact on more open economies (Malaysia and Thailand). Second, countercyclical fiscal stimulus in Indonesia and the Philippines was larger and was sustained longer. Third, idiosyncratic factors pushed output up in Indonesia and down in Thailand. Such factors include investment-friendly structural reforms and fortuitously timed election spending in Indonesia, as well as political instability and natural disasters in Thailand.

Suggested Citation

  • Agnes Isnawangsih & Mr. Vladimir Klyuev & Ms. Longmei Zhang, 2013. "The Big Split: Why Did Output Trajectories in the ASEAN-4 Diverge after the Global Financial Crisis?," IMF Working Papers 2013/222, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2013/222
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    References listed on IDEAS

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    1. Mr. Mark R. Stone & Mr. Etienne B Yehoue & Kotaro Ishi, 2009. "Unconventional Central Bank Measures for Emerging Economies," IMF Working Papers 2009/226, International Monetary Fund.
    2. Mark Aguiar & Gita Gopinath, 2007. "Emerging Market Business Cycles: The Cycle Is the Trend," Journal of Political Economy, University of Chicago Press, vol. 115(1), pages 69-102.
    3. Olivier J. Blanchard & Mitali Das & Hamid Faruqee, 2010. "The Initial Impact of the Crisis on Emerging Market Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(1 (Spring), pages 263-323.
    4. Mr. John C Bluedorn & Rupa Duttagupta & Mr. Jaime Guajardo & Petia Topalova, 2013. "Capital Flows are Fickle: Anytime, Anywhere," IMF Working Papers 2013/183, International Monetary Fund.
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    Cited by:

    1. Rahul Anand & Kevin C Cheng & Sidra Rehman & Longmei Zhang, 2014. "Potential Growth in Emerging Asia," IMF Working Papers 14/02, International Monetary Fund.
    2. Mr. Vladimir Klyuev, 2015. "Structural Transformation — How Does Thailand Compare?," IMF Working Papers 2015/051, International Monetary Fund.
    3. Rahul Anand & Mr. Kevin C Cheng & Sidra Rehman & Ms. Longmei Zhang, 2014. "Potential Growth in Emerging Asia," IMF Working Papers 2014/002, International Monetary Fund.
    4. Nur Ain Shahrier & Chuah Lay Lian, 2019. "Estimating Malaysia’S Output Gap: Have We Closed The Gap?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(03), pages 647-674, June.

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