How should Australia and South-East Asia countries respond to the crisis?
Apart from these general considerations, how more specifically should Australia and countries in South-East Asia react to the crisis? First of all, it should be said that unprecedented actions already taken have averted a total collapse of the banking sector, which obviously would have had disastrous economic consequences. But financial markets remain tense and credit is not flowing to firms. This could be a question of time, as the full effect of the financial rescue packages come on stream. But the bleak outlook described above suggests that additional action is needed. The choice of the policy instruments should be made carefully. Pressures to increase subsidies to non-viable sectors should be resisted. Rather, actions in three areas could help sustain demand while also boosting the supply side of the economy in the long-term. First, the schedule of already planned investments in infrastructure could be put forward. Second, reforms could improve the functioning of certain markets, f
