## Navigating Waves of New Variants: Pandemic Resurgence Slows the Recovery

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### Context and timing
- Publication: IMF Regional Office for Asia and the Pacific.
- Date: NOVEMBER 10, 2021.
- Data reference points: Data as of Sep21st, 2021; vaccine data note: "Data as of Sep 21st, 2021."

### Pandemic dynamics and vaccination divergences
- Delta variant resurgence amid a slow start to vaccination has produced large cross-country divergences in cases and vaccine coverage across Asia.
- COVID-19 vaccine doses administered per 100 people: reported using OurWorld in Data; for multi-dose vaccines, each individual dose is counted, so doses per 100 people can exceed 100.
- ASEAN aggregate is calculated using weighted average by population.
- Chart timing note: Days elapsed until Delta variant reached 50 percent of COVID-19 cases measured from April 19 2021 (date Delta reached 50 percent of cases in India).

### Multispeed economic recovery and labor market effects
- Mobility and activity indicators show uneven recoveries:
  - Mobility index computed as the average of percentage changes from pre-pandemic baseline (median value during Jan 3–Feb 6, 2020) across retail, grocery and pharmacy, parks, transit, workplaces and inverse of residential (7 day moving-average).
  - Manufacturing and Services PMI: Index with 50+ = expansion; series shown for China MFR, China SVCs, Asia Excl. China MFR, Asia Excl. China SVCs.
- Employment and unemployment:
  - Asia: Change in Employment by Industry (Percent) shows contact-intensive sectors have lagged (essential, social, non-teleworkable categories defined in source).
  - Asia: Change in Unemployment Rate by Age (December2019 to June 2021, Percentage points) — youth (18-24) experienced larger increases in unemployment relative to rest of workforce (>24).

### Financial conditions, inflation, and supply pressures
- Financial conditions:
  - US and Asia 10-Year Yields shown as percent; simple average of 10 year yields for defined country groups.
  - Cumulative portfolio flows to selected EM Asia-economies measured in Millions of USD (China, India, Total Asia EMDEs, Total Asia EMDEs Excl. China and India, ASEAN).
- Inflation and commodity pressures:
  - Asia: Consumer Price Index and Producer Price Index Inflation (Percent) show rising inflation amidst increasing commodity prices and supply chain disruptions.
  - Commodity Prices (Index January 2019 = 100): Food, Base metals, Oil indices presented.
  - Container Price Index (Index January 2019 = 100): CTS Average Global, Asia to Asia, ROW to Asia*, Asia to ROW**.
    - Notes: *ROW to Asia = simple average of South, Central and North America to Asia indexes. **Asia to ROW = simple average of Asia to Europe, North America, Australasia & Oceania and the Indian subcontinent.

### Growth outlook and revisions (World Economic Outlook basis)
- Growth projections and revisions (selected Asia groups; source: IMF World Economic Outlook):
  - 2020: -3.1 -1.3 -2.7 -0.7 -2.4 -2.1 2.3 -4.6 -0.9 -7.3 -3.3 -8.5
  - 2021: 5.9 6.5 3.7 7.2 3.5 5.1 8.0 2.4 4.3 9.5 2.6 2.0
  - Revisions from April WEO (2021 projections): -0.1 -1.1 -0.1 -1.3 -1.0 1.1 -0.4 -0.9 0.7 -3.0 -1.9 -2.5
  - 2022: 4.9 5.7 3.4 6.3 4.1 3.3 5.6 3.2 3.3 8.5 5.5 5.5
  - Revisions from April WEO (2022 projections): 0.5 0.3 0.6 0.3 1.3 0.1 0.0 0.7 0.5 1.6 -0.3 -0.8
- Note: Revisions show the difference between October 2021 WEO and April 2021 WEO; positive numbers indicate upward revision.

### Growth downgrades linked to vaccination shortfalls
- Countries with lower vaccination coverage tend to have larger negative GDP growth revisions for 2021 and 2022 (visual relationship between GDP Growth Revision (October vs April 2021 WEO) and People vaccinated per 100 population).

### Medium-term scarring and heterogeneity
- Medium Term GDP Loss: Difference in Cumulative Growth Rates (2020-25) computed as current projection relative to pre-COVID-19 forecast (percentage points, weighted average).
  - Current projections use October 2021 WEO and April 2021 WEO database; pre-COVID-19 forecast uses January 2020 WEO database.
- Factors associated with larger medium-term output losses include:
  - Low Fiscal Support
  - Tourism Dependent status (tourism-dependent countries include Maldives, Vanuatu, Kiribati, Fiji, Thailand, Philippines and Cambodia)
  - Low Vaccination
  - Lockdown Stringency
- Regional comparison includes EMDE, Asia ex-China, EMDE SSA LAC, World, MECA, China, AE Asia, AE, USA.

### Vaccine strategy lessons and impacts
- Determinants of vaccine rollouts (impact of 1 standard deviation change on vaccinations per 100 population): factors examined include cumulative cases (end-2020), vaccine procurement (Jan 2021), health index, domestic production, vaccine acceptance (Jan 2021).
- Cumulative COVID-19 cases by end-2020 shown as per 100 population (simple average) across regions.
- Health and economic effects of vaccines:
  - Effect of a 20 ppt increase in administration of a first COVID-19 dose per capita: daily effects on new COVID-19 cases, new ICU admissions, new COVID-19 fatalities measured per capita 21 days following administration.
  - Role of initial conditions: impact differs when containment measures or outbreak severity are low versus high.
- Economic activity:
  - Effect of COVID-19 vaccines on economic indicators proxied by NO2 emissions (emissions as percent of population): impacts measured after 1 day for first dose, second dose, and vaccine surprise (difference between expected and actual full doses administered).
  - Vaccine surprises analyzed across quartiles of population vaccinated; statistical significance noted at 90 percent level in original analysis.
- Cross-country spillovers:
  - Neighboring COVID-19 cases and neighboring COVID-19 vaccines affect a country's own COVID-19 cases per capita and NO2 emissions per capita after 7 and 30 days, respectively.

### Risks: monetary policy, leverage, GVCs
- US monetary policy tightening risk:
  - Decomposition of 10-Year US Bond Yield into expected interest rate and term premium (percent).
  - Impulse response estimation: impact of a 100 basis points exogenous US monetary policy shock on Real GDP and Investment at 2 and 4 quarters (responses shown for 50th and 5th percentiles).
- Heterogeneous amplification by firm and country characteristics:
  - Investment responses to a 100-basis points shock vary with leverage, foreign currency liability share, and firm size (cumulative impulse responses at 8 quarters, percent change in firm investment ratio).
  - Non-financial corporations: Debt to Asset Ratio (Percent, weighted average) displayed for 2012 and 2020 across listed Asian economies.
- External buffers and fiscal space:
  - Reserves (Percent of GDP) and Government Debt (Percent of GDP) shown for EM Asia and Other EM in 2012 and 2020.
- Global Value Chains (GVCs):
  - Impulse response to a 6 percentage points decline in partner country growth at five-year horizon measured as percent of total exports (backward linkages, forward linkages, total GVC).
  - Backward linkages presented as percent of total exports with regional averages using 2019 GDP weights.

### Policy recommendations (summarized)
- Maintain the fiscal support for longer where possible, and create fiscal space for priority spending.
- Fiscal stimulus measures since March 2020 are reported as weighted average percent of GDP, decomposed into "above the line" and "below the line" components.
- Fiscal stance, 2020-22: Change in structural primary fiscal balance (percent of potential GDP) and cyclically adjusted balance (percent of potential GDP, black line) shown for Asia, AEs and Asia, EMDEs across 2020, 2021, 2022 with axis markers -8 -6 -4 -2 0 2 4.

### Public debt and fiscal policy in Asia and the Pacific
- Public Debt (Percent of GDP) timeline illustrated for 2009, 2011, 2013, 2015, 2017, 2019, 2021, 2023, 2025 with marked percentiles: 25/75 Percentile and Median (Projections).
- Pacific Island Countries, Asia EMDE LIDCs, Asia AE, Maldives, Sri-Lanka, Mongolia highlighted in debt comparisons.
- Note: MTEF corresponds to Medium Term Expenditure Framework. AEs includes a total of 7 countries, EMDEs includes 16 countries and PICs includes 10 countries.

### Medium-term fiscal frameworks
- Classification of countries by existence of:
  - Fiscal Rule
  - MTEF
  - Fiscal Rule & MTEF
  - None
- Axis labeled with counts 0 2 4 6 8 10 across PICs, EMDEs, AEs.

### Monetary policy, housing, and inflation outlook
- Within-target inflation provides space for continued monetary accommodation, with attention to financial risks and supportive corporate restructuring.
- Asia Selected Economies: Real House Price Index (Index, 2015 = 100) for Australia, Japan, Korea, New Zealand, China, India, ASEAN-5.
- Headline and Core CPI Inflation:
  - Inflation Targeting Range and Inflation Target indicated.
  - Latest Headline Inflation and Latest Core CPI shown for Australia, China, Hong Kong SAR, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan Province of China, Thailand, Vietnam.
- Note: Inflation in Japan was lowered by about 1 percentage point by a policy-induced drop in mobile phone charges.

### Facilitating balance sheet repair and debt resolution
- Emphasis on facilitating balance sheet repair and restructuring.
- Reinforcing debt resolution frameworks to flatten the insolvency curve.
- Out-of-court restructuring and in-court options (Reorganization, Liquidation) presented as complementary tools.

### Effects of reducing Non-Tariff Barriers (NTBs)
- Effect of Reducing NTBs (Percent) reported for:
  - Real GDP (%)
  - Productivity (%)
  - Investment (%)
- Short Term and Medium Term magnitudes shown on axis 0.0, 0.5, 1.0, 1.5, 2.0, 2.5, 3.0 with APD EMDE and ROW and AE EMDE comparisons.
- Non-tariff Barriers Index ranges from 0 to 20 (higher score means higher restrictions). PICs are excluded from APD-EMDE aggregate.
- Estimation details:
  - Impulse response to a two standard deviation decrease in NTB Index after the first (short term) and fifth (medium term) year.
  - Standard errors calculated using Driscoll-Kraay.
  - All results significant at the 90 percent confidence level.

### Climate emissions and adaptation exposure
- Annual CO2 emissions by region in 2019 shown for Asia (excl. China & India), China, India, United States, North America (excl. USA), South America, Africa, EU-27, Europe (excl. EU-27), Oceania, International transport.
- Asia plays an important role in curbing emissions.
- Asia: Adaptive capacity and physical exposure indices plotted for countries including AUS, JPN, KOR, NZL, SGP, BRN, CHN, FJI, FSM, IDN, IND, LKA, MDV, MNG, MYS, PHL, THA, TON, VUT, WSM, BGD, BTN, KHM, LAO, MMR, NPL, PNG, SLB, TLS, VNM.
- Index scales:
  - Adaptive capacity index from .30 to .80 (greater capacity).
  - Exposure index from .15 to .65 (larger values indicate greater risk).
- Countries grouped by Advanced economies, Emerging markets, Low-income countries in the exposure-capacity space.

### APD Capacity Development (CD)
- APD Capacity Development activities:
  - Collaborating between RCDCs to facilitate virtual peer-to-peer across APD.
  - Meeting demand on priority topics through boots on the ground.
  - Using external facilities to bypass connectivity issues in PICs.
  - Involving high-level policy makers on key medium-term issues.
- CD Delivery Projects in APD (Number by department) shown across departments FAD, ICD, LEG, MCM, STA with axes 0 10 20 30 40 50 60 70 and years FY2019, FY2020, FY2021, FY2022 (proj.).
- Note: FY2022 based on projections.

*IMF Regional Office for Asia and the Pacific, "Navigating Waves of New Variants: Pandemic Resurgence Slows the Recovery", NOVEMBER 10, 2021.*

### Section 1

### Navigating Waves of New Variants: Pandemic Resurgence Slows the Recovery

### Context and timing
- Publication: IMF Regional Office for Asia and the Pacific.
- Date: NOVEMBER 10, 2021.
- Data reference points: Data as of Sep21st, 2021; vaccine data note: "Data as of Sep 21st, 2021."

### Pandemic dynamics and vaccination divergences
- Delta variant resurgence amid a slow start to vaccination has produced large cross-country divergences in cases and vaccine coverage across Asia.
- COVID-19 vaccine doses administered per 100 people: reported using OurWorld in Data; for multi-dose vaccines, each individual dose is counted, so doses per 100 people can exceed 100. ASEAN aggregate is calculated using weighted average by population.
- Chart timing note: Days elapsed until Delta variant reached 50 percent of COVID-19 cases measured from April 19 2021 (date Delta reached 50 percent of cases in India).

### Multispeed economic recovery and labor market effects
- Mobility and activity indicators show uneven recoveries:
  - Mobility index computed as the average of percentage changes from pre-pandemic baseline (median value during Jan 3–Feb 6, 2020) across retail, grocery and pharmacy, parks, transit, workplaces and inverse of residential (7 day moving-average).
  - Manufacturing and Services PMI: Index with 50+ = expansion; series shown for China MFR, China SVCs, Asia Excl. China MFR, Asia Excl. China SVCs.
- Employment and unemployment:
  - Asia: Change in Employment by Industry (Percent) shows contact-intensive sectors have lagged (essential, social, non-teleworkable categories defined in source).
  - Asia: Change in Unemployment Rate by Age (December2019 to June 2021, Percentage points) — youth (18-24) experienced larger increases in unemployment relative to rest of workforce (>24).

### Financial conditions, inflation, and supply pressures
- Financial conditions:
  - US and Asia 10-Year Yields shown as percent; simple average of 10 year yields for defined country groups.
  - Cumulative portfolio flows to selected EM Asia-economies measured in Millions of USD (China, India, Total Asia EMDEs, Total Asia EMDEs Excl. China and India, ASEAN).
- Inflation and commodity pressures:
  - Asia: Consumer Price Index and Producer Price Index Inflation (Percent) show rising inflation amidst increasing commodity prices and supply chain disruptions.
  - Commodity Prices (Index January 2019 = 100): Food, Base metals, Oil indices presented.
  - Container Price Index (Index January 2019 = 100): CTS Average Global, Asia to Asia, ROW to Asia*, Asia to ROW**.
    - Notes: *ROW to Asia = simple average of South, Central and North America to Asia indexes. **Asia to ROW = simple average of Asia to Europe, North America, Australasia & Oceania and the Indian subcontinent.

### Growth outlook and revisions (World Economic Outlook basis)
- Growth projections and revisions (selected Asia groups; source: IMF World Economic Outlook):
  - 2020: -3.1 -1.3 -2.7 -0.7 -2.4 -2.1 2.3 -4.6 -0.9 -7.3 -3.3 -8.5
  - 2021: 5.9 6.5 3.7 7.2 3.5 5.1 8.0 2.4 4.3 9.5 2.6 2.0
  - Revisions from April WEO (2021 projections): -0.1 -1.1 -0.1 -1.3 -1.0 1.1 -0.4 -0.9 0.7 -3.0 -1.9 -2.5
  - 2022: 4.9 5.7 3.4 6.3 4.1 3.3 5.6 3.2 3.3 8.5 5.5 5.5
  - Revisions from April WEO (2022 projections): 0.5 0.3 0.6 0.3 1.3 0.1 0.0 0.7 0.5 1.6 -0.3 -0.8
- Notes: Revisions show the difference between October 2021 WEO and April 2021 WEO; positive numbers indicate upward revision.

### Growth downgrades linked to vaccination shortfalls
- GDP Growth Revision (October vs April 2021 WEO) plotted against People vaccinated per 100 population: countries with lower vaccination coverage tend to have larger negative revisions for 2021 and 2022 (visual relationship in source charts).

### Medium-term scarring and heterogeneity
- Medium Term GDP Loss: Difference in Cumulative Growth Rates (2020-25) computed as current projection relative to pre-COVID-19 forecast (percentage points, weighted average).
  - Current projections use October 2021 WEO and April 2021 WEO database; pre-COVID-19 forecast uses January 2020 WEO database.
- Factors associated with larger medium-term output losses include:
  - Low Fiscal Support
  - Tourism Dependent status (tourism-dependent countries include Maldives, Vanuatu, Kiribati, Fiji, Thailand, Philippines and Cambodia)
  - Low Vaccination
  - Lockdown Stringency
- Regional comparison bar shows differences across EMDE, Asia ex-China, EMDE SSA LAC, World, MECA, China, AE Asia, AE, USA.

### Vaccine strategy lessons and impacts
- Determinants of vaccine rollouts (impact of 1 standard deviation change on vaccinations per 100 population): factors examined include cumulative cases (end-2020), vaccine procurement (Jan 2021), health index, domestic production, vaccine acceptance (Jan 2021).
- Cumulative COVID-19 cases by end-2020 shown as per 100 population (simple average) across regions (AFR APD EUR MC D WHD etc.).
- Health and economic effects of vaccines (Deb et al. references in source):
  - Effect of a 20 ppt increase in administration of a first COVID-19 dose per capita: daily effects on new COVID-19 cases, new ICU admissions, new COVID-19 fatalities measured per capita 21 days following administration.
  - Role of initial conditions: impact differs when containment measures or outbreak severity are low versus high.
- Economic activity:
  - Effect of COVID-19 vaccines on economic indicators proxied by NO2 emissions (emissions as percent of population): impacts measured after 1 day for first dose, second dose, and vaccine surprise (difference between expected and actual full doses administered).
  - Vaccine surprises analyzed across quartiles of population vaccinated; statistical significance noted at 90 percent level in original analysis.
- Cross-country spillovers:
  - Neighboring COVID-19 cases and neighboring COVID-19 vaccines affect a country's own COVID-19 cases per capita and NO2 emissions per capita after 7 and 30 days, respectively (effects reported in percent of population and NO2 as percent of population RHS).

### Risks: monetary policy, leverage, GVCs
- US monetary policy tightening risk:
  - Decomposition of 10-Year US Bond Yield into expected interest rate and term premium (percent).
  - Impulse response estimation: impact of a 100 basis points exogenous US monetary policy shock on Real GDP and Investment at 2 and 4 quarters (responses shown for 50th and 5th percentiles).
- Heterogeneous amplification by firm and country characteristics:
  - Investment responses to a 100-basis points shock vary with leverage, foreign currency liability share, and firm size (cumulative impulse responses at 8 quarters, percent change in firm investment ratio).
  - Non-financial corporations: Debt to Asset Ratio (Percent, weighted average) displayed for 2012 and 2020 across listed Asian economies.
- External buffers and fiscal space:
  - Reserves (Percent of GDP) and Government Debt (Percent of GDP) shown for EM Asia and Other EM in 2012 and 2020.
- Global Value Chains (GVCs):
  - Potential impact of pandemic on GVCs: impulse response to a 6 percentage points decline in partner country growth at five-year horizon, measured as percent of total exports (backward linkages, forward linkages, total GVC).
  - Backward linkages presented as percent of total exports with regional averages using 2019 GDP weights.

### Policy recommendations (summarized)
- Maintain the fiscal support for longer where possible, and create fiscal space for priority spending.
- Fiscal stimulus measures since March 2020 are reported as weighted average percent of GDP, decomposed into "above the line" and "below the line" components (chart axis 0 to 35).
- Fiscal stance, 2020-22: Change in structural primary fiscal balance (percent of potential GDP) and cyclically adjusted balance (percent of potential GDP, black line) shown for Asia, AEs and Asia, EMDEs across 2020, 2021, 2022 with axis markers -8 -6 -4 -2 0 2 4.

*Source: IMF Regional Office for Asia and the Pacific, "Navigating Waves of New Variants: Pandemic Resurgence Slows the Recovery", NOVEMBER 10, 2021.*

### Section 2

### apdreo-presentation-shortversion - Section 2

### Public debt and fiscal policy in Asia and the Pacific
- Public Debt (Percent of GDP) timeline illustrated for 2009, 2011, 2013, 2015, 2017, 2019, 2021, 2023, 2025 with marked percentiles: 25/75 Percentile and Median (Projections).
- Pacific Island Countries, Asia EMDE LIDCs, Asia AE, Maldives, Sri-Lanka, Mongolia are highlighted in debt comparisons.
- Note: MTEF corresponds to Medium Term Expenditure Framework. AEs includes a total of 7 countries, EMDEs includes 16 countries and PICs includes 10 countries.

### Medium-term fiscal frameworks
- Medium-term fiscal frameworks in Asia and the Pacific (Number of countries) classified by:
  - Fiscal Rule
  - MTEF
  - Fiscal Rule & MTEF
  - None
- Axis labeled with 0 2 4 6 8 10 corresponding to counts across PICs, EMDEs, AEs.

### Monetary policy, housing, and inflation outlook
- Within-target inflation provides space for continued monetary accommodation, with a close eye on financial risks and supportive corporate restructuring.
- Asia Selected Economies: Real House Price Index (Index, 2015 = 100) plotted for Australia, Japan, Korea, New Zealand, China, India, ASEAN-5 with index range shown from 90 to 150.
- Headline and Core CPI Inflation chart shows:
  - Inflation Targeting Range and Inflation Target
  - Latest Headline Inflation and Latest Core CPI
  - An axis ranging from -1% to 7% with countries: Australia, China, Hong Kong SAR, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan Province of China, Thailand, Vietnam.
- Note: Inflation in Japan was lowered by about 1 percentage point by a policy-induced drop in mobile phone charges.

### Facilitating balance sheet repair and debt resolution
- Focus areas:
  - Facilitating balance sheet repair and restructuring.
  - Reinforcing debt resolution frameworks to flatten the insolvency curve.
- Out-of-court restructuring and in-court options (Reorganization, Liquidation) are emphasized as complementary tools.

### Effects of reducing Non-Tariff Barriers (NTBs)
- Effect of Reducing NTBs (Percent) reported for:
  - Real GDP (%)
  - Productivity (%)
  - Investment (%)
- Short Term and Medium Term magnitudes shown on an axis 0.0, 0.5, 1.0, 1.5, 2.0, 2.5, 3.0 with APD EMDE and ROW and AE EMDE comparisons.
- Non-tariff Barriers Index ranges from 0 to 20 (higher score means higher restrictions). PICs are excluded from APD-EMDE aggregate.
- Estimation details:
  - Figure corresponds to the impulse response to a two standard deviation decrease in NTB Index after the first (short term) and fifth (medium term) year.
  - Standard errors are calculated using Driscoll-Kraay.
  - All results are significant at the 90 percent confidence level.

### Climate emissions and adaptation exposure
- Annual CO2 emissions by region in 2019 are shown for: Asia (excl. China & India), China, India, United States, North America (excl. USA), South America, Africa, EU-27, Europe (excl. EU-27), Oceania, International transport.
- Asia has an important role to play in curbing emissions.
- Asia: Adaptive capacity and physical exposure indices plotted for countries identified by ISO-like labels (e.g., AUS, JPN, KOR, NZL, SGP, BRN, CHN, FJI, FSM, IDN, IND, LKA, MDV, MNG, MYS, PHL, THA, TON, VUT, WSM, BGD, BTN, KHM, LAO, MMR, NPL, PNG, SLB, TLS, VNM).
- Index scales:
  - Adaptive capacity index from .30 to .80 (greater capacity).
  - Exposure index from .15 to .65 (larger values indicate greater risk).
- Countries are grouped by Advanced economies, Emerging markets, Low-income countries in the exposure-capacity space.

### APD Capacity Development (CD)
- APD Capacity Development activities highlighted.
- Pandemic response and best practices include:
  - Collaborating between RCDCs to facilitate virtual peer-to-peer across APD.
  - Meeting demand on priority topics through boots on the ground.
  - Using external facilities to bypass connectivity issues in PICs.
  - Involving high-level policy makers on key medium-term issues.
- CD Delivery Projects in APD (Number by department) chart shows counts across departments FAD, ICD, LEG, MCM, STA with axes labeled 0 10 20 30 40 50 60 70 and years FY2019, FY2020, FY2021, FY2022 (proj.).
- Note: FY2022 based on projections.

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_Source: https://www.imf.org/-/media/files/oap/oap-home/2021/apdreo-presentation-shortversion.pdf_