An Asian strategy for recovery and reconstruction after COVID-19

Key message

Asian nations should proactively coordinate financial, trade, public health and food security policies to avoid prolonged economic stagnation and international disruption from the COVID-19 pandemic.

The weight and potential of Asian economies will be central to global economic recovery from the COVID-19 crisis. Cooperation in Asia to effect immediate action and frame ongoing collaboration will help avoid unintended international consequences of nationally driven policy responses and a deeper and prolonged downturn. Regional and multilateral frameworks will increase capacity to contribute constructively to regional and global recovery.

Action

To address looming financial problems, central banks and finance ministries should expand bilateral currency swap arrangements and agree on a new issuance of Special Drawing Rights (SDRs) to create a stronger regional financial safety net. More than 100 countries have sought IMF assistance as Covid-19 triggers a wave of financial crises. Asian countries need macroeconomic policy space and financial stability simultaneously to combat the public health and economic dimensions of the crisis. Extending bilateral currency swap lines and expanding liquidity facilities with regional development banks will strengthen regional safety nets.

Support the development, production and equitable distribution in Asia of diagnostic tests, a vaccine and treatments through collective commitment of funds to the WHO’s COVID- 19 Tools (ACT) Accelerator and expansion of the COVID-19 ASEAN Response Fund to include ASEAN+6 nations.

Keep medical and food markets open. Trade in medical equipment and supplies should not be restricted after critical domestic needs have been met. Asia must commit to reducing or eliminating tariffs and non-tariff measures on medical goods and services. Food security depends on access to international markets and export restrictions need to be eliminated. Current bilateral initiatives can be consolidated into a regional agreement.

Lead the development of protocols for people movement to fast track the resumption of international commerce, travel for study, scientific exchange, temporary labour movement, and tourism, via the introduction of protocols of health certification for international travel.

Embrace the accelerated digital transformation that COVID has brought to health management as a source of dynamism, greater opportunities for participation, higher productivity and economic growth. Asia can initiate a proactive agenda for collective governance of digital infrastructure that includes regulatory coherence, privacy standards and data sharing. This is now essential to new work practices, new production modes, supply chain management and delivery of goods and services, including government services.

Conclude the RCEP agreement immediately to ensure regional trade solidarity. Collective Asian efforts are large enough to help safeguard the international system. Initial conclusion of RCEP with 15 members will send a global signal, ensure food security, vastly improve energy security and keep markets open in East Asia. The RCEP group needs to keep open a path for eventual Indian membership and actively promote cooperation with South Asia in the global effort to fight the pandemic and contain its economic impact.

ASEAN should lead collective Asian action to implement this agenda through its ASEAN+3 and ASEAN+6 groupings, engaging the East Asian Summit countries, including the United States, and the APEC and G20 forums, while stepping up to lead reforms in the WTO and IMF.