Global Financial Crisis and Policy Responses in Southeast Asia : Towards Prudent Macroeconomic Policies

The global fi nancial crisis hit the Southeast Asian economies through fi nancial and real sectors by the combination of lower global demand and tighter credit demand effect. The challenge for policymakers in this region is not just to prevent the escalation of the crisis and to mitigate the downturn, but also to ensure a good starting position once the rebound sets in. Policymakers should avoid taking on an excessive level of debt or creating the conditions for an infl ationary bubble by the current reaction to the global slowdown. A prudent counter-cyclical policy is necessary, and we should not ignore the medium and long-term sustainability.