Every economics student remembers the moment John Hicks entered their life through the sudden appearance of the IS–LM diagram on a lecture slide. Paired with the AD–AS model, these elegant frameworks often felt like abstractions destined to remain forever trapped in textbooks. Yet they can still cut through the noise and provide unexpected clarity, as I found recently when exploring and discussing the ASEAN countries and their many points of connection with the GCC countries.
Viewed through the IS–LM lens, much of ASEAN sits in a tentative demand-led recovery. Tourism is returning, supply chains continue to be redirected through Vietnam, Thailand and Malaysia, and governments are pushing forward investment programmes. The IS curve, in other words, is inching to the right.
On the LM side, conditions are cautiously easing. Liquidity is beginning to return, portfolio investors are edging back, and central banks are signalling a more accommodative stance. The money market curve is shifting just enough to turn a headwind into a potential tailwind. Hicks would no doubt smile at how neatly the region fits his model.
The richer picture emerges under AD–AS. Aggregate demand is strengthening, helped by rising consumption particularly in Indonesia and Vietnam, and by deepening regional trade. Real potential also lies on the supply side: expanded productive capacity, better logistics, digital adoption and stronger human capital.
These shifts move AS to the right, allowing faster growth without stoking inflation. We already see this in Malaysia’s digital ambitions, Vietnam’s climb up the manufacturing value chain, and Thailand’s heavy investment in transport and logistics.
Hicks’s curves, then, remain very much alive. In ASEAN’s case, they capture a simple story: short-run resilience paired with long-run structural opportunity.
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