During the meeting, the Ministers of Finance and the Governors of the ASEAN Central Banks underlined three main pillars to promote financial stability and integration in the ASEAN region, as well as strengthen economic growth, amidst the challenges of the COVID-19 pandemic, namely connectivity, sustainability and responsiveness of ASEAN.
The meeting was also attended by several international institutions, namely the International Monetary Fund (IMF), the Asian Development Bank (ADB), and the ASEAN+3 Macroeconomic Research Office (AMRO) as ASEAN partners. The presence of these institutions is intended to exchange views on current global and regional economic conditions as well as policy recommendations that can be taken by the authorities. Going forward, the Minister of Finance and the Governor of the ASEAN Central Bank will continue to strengthen regional financial cooperation to achieve a more advanced, resilient and integrated ASEAN region.
By holding the chairmanship of ASEAN in 2023, Airlangga Hartanto as the Coordinating Minister (Menko) for the Economy stated that Indonesia was pushing for the Association of Southeast Asian Nations (ASEAN) to become the anchor of global economic stability through its chairmanship in ASEAN 2023. According to the Coordinating Minister for the Economy, namely Airlangga, stated that “The government continues to encourage ASEAN to become a stable and peaceful region to become the anchor of global economic stability,”
What about Economic Stability?
Economic stability is a fundamental factor to ensure sustainable economic growth. Economic stability is also a basic prerequisite for achieving increased people’s welfare through high growth and improving the quality of growth. Efforts to maintain economic stability are carried out through measures to control the inflation rate, exchange rate stability, and low interest rates. These efforts face tough challenges, such as the high prices of some foodstuffs and international oil prices.
Economic stability or inflation is very important to provide certainty for economic actors. Macroeconomic stability is achieved when the relationship between the main macroeconomic variables is in balance, for example between domestic demand and national expenditure, balance of payments, fiscal revenues and expenditures, as well as savings and investment. The relationship doesn’t always have to be in a very precise balance. Fiscal imbalances and balance of payments remain in line with economic stability, provided that these must be financed on an ongoing basis.
An unstable economy creates high costs for the economy and society. This instability will make it difficult for the community to plan ahead, especially in the longer term needed for investment. Low levels of investment will lead to a reduction in the potential for long-term economic growth. There are high fluctuations in production growth which can reduce the skill level of the long unemployed workforce. High inflation and high fluctuations create enormous costs for society. The heaviest burden due to high inflation will be felt by the poor who experience decreased purchasing power. So that high fluctuating inflation makes it difficult to distinguish prices caused by changes in demand and supply of goods or services from price increases caused by excess demand.