The pandemic has hit ASEAN countries considerably hard, threatening the region with economic recession. Millions have become unemployed, driving household incomes sharply downward, and gravely impacting consumer spending.

ASEAN member states are now exploring drastic measures to keep the economy afloat, but figures in 2018 show that several member states have sizable debt (more than 30 percent) as a proportion of their gross domestic product, making them particularly vulnerable to external shocks.

ASEAN deficits ballooned since the global financial crisis in 2008, during which ultra-low interest rates and quantitative easing (QE) in the United States, European Union and Japan triggered hot money flows into ASEAN. This rush of capital fueled an economic boom in ASEAN, driving property prices and exchange rates sharply upward. Cheap credit also means unprecedented government borrowing, which culminated in today’s fiscal deficits.    

Today, ASEAN currencies are depreciating rapidly, and capital outflow is a serious concern. With limited money in the public coffers, a damning pandemic and a collapsing private sector, some economists are even suggesting that ASEAN countries should adopt QE too.

Will this race to the hinterlands of debt ever stop? What impact will the incessant printing of money in countries around the world do to the global financial system?

As evident in the US and EU, QE has led to excessively low bond yields, spectacular falls in bank shares and severe income inequality in these countries, the latter of which has led to the rise of populism in Europe and America that we see today.

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