Transcript of Asia and Pacific Department Press Briefing

April 25, 2022


Communications Officer, IMF


Acting Director of the Asia and Pacific Department


Deputy Director of the Asia and Pacific Department


Deputy Director of the Asia and Pacific Department

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MS. YAN: Good evening, and good morning, to those who are joining us from Asia. Welcome to this Press Conference on Asia and Pacific Region's Economic Outlook. My name is Ying Yan, I am from the Communications Department. I am glad to be joined today by three speakers from the Asia and Pacific Department. We have Anne-Marie Gulde-Wolf, Acting Director of the Asia and Pacific Department. And also, Krishna Srinivasan, Deputy Director, and Sanjaya Panth, Deputy Director.

As you all know, last week, we released our forecasts for all the economies in the World in the World Economic Outlook, including those in Asia. As we speak, we have just released a blog on the Asia and Pacific Region's Economic Outlook on We hope you have had a chance to read it.

Today, Anne Marie will start with some opening remarks to highlight our key messages to the region, and then we will be happy to take your questions either on Webex or you can submit your questions on the IMF Press Center.

With that, Anne-Marie, the floor is yours.

MS. GULDE-WOLF: Thank you very much, Ting. A very good evening from Washington, and good morning, to all in Asia. It is my pleasure to share with you our views on the Economic Outlook and recommended policies for the Asia and Pacific Region. The Outlook for Asia, much like for the rest of the world, is being shaped by the shock of the Russian invasion of Ukraine. Asia has only a relatively small direct trade and financial exposure to Russia and Ukraine, but the reach in its economies will be impacted through higher commodity prices and slower growth in European trading partners.

Inflation in Asia, which was relatively low during the pandemic, has started rising following the spike in food and fuel prices. The shock from the war comes at a time when recovery from the pandemic is still incomplete and global financial conditions are tightening. New COVID waves are adding to headwinds in some countries, most notably, China. Lower growth in China is affecting many Asian trading partners that are tightly integrated. Monetary tightening in advanced economies is leading to higher interest rates in Asia as well, placing a further drag on growth. These headwinds will exacerbate the medium-term scarring effects from the pandemic that many emerging and developing economies in the region are expected to suffer; amplified by their higher debt burdens.

These headwinds to gross come at a time where policy space to respond is limited. Policymakers face a difficult tradeoff. They must balance the need to support an incomplete recovery, while also, responding to rising inflation amid tightening global financial conditions and high debt levels.

With this background, let me turn to our detailed forecast. According to our latest forecast, Asian GDP is expected to grow by 4.9 percent in 2022. That is 0.5 percentage points less than what we projected in January, and slower than last year's growth rate of 6.5 percent. The downgrade in Asia is smaller than in Europe, which has closer economic ties to Russia and Ukraine, but more so than commodity exporting regions like the Middle East and North Africa, and Latin America.

Despite the downgrade, Asia remains the world's most dynamic region, and an important source of global growth. Inflation in Asia is also starting to pick up after being much lower than in other regions last year. Inflation is now expected to increase to 3.4 percent in 2022, which is 1 percentage point higher than we expected in the January forecast. Therefore, the region faces a stagflationary outlook with growth being lower than previously expected and inflation being higher.

For China, we have revised down our 2022 Growth Forecast to 4.4 percent compared to 4.8 percent in the January Update. The revision reflects a sizable negative impact from the war in Ukraine and localized COVID outbreaks and lockdown. These negative effects are partly offset by the positive impact of policy stimulus.

In India, the difficult policy tradeoffs are evident from the fallout from the Ukraine war, especially, higher oil process expected to weigh on gross and increase current account deficits and push up inflation. While growth is still expected to be strong at 8.2 percent, this is 0.8 percentage points lower than in the January Update.

Growth in Japan has been revised down to 2.4 percent, a downgrade of 0.9 percentage points. Like China, this reflects a combination of the impact of the war, spillovers from Europe, and a bigger than anticipated hit from the Omicron wave. Despite a recent uptick, inflation remains subdued, allowing the BOJ to be more accommodative than the Fed and the ECB.

In Korea, growth is expected to slow from a robust 4 percent in 2021 to 2.5 percent in 2022, a downgrade of 0.5 percentage points. Meanwhile, the increase in energy and food prices, global supply chain disruptions, as well as domestic demand pressures have pushed inflation above target with the BOK increasing rates four times since August '21, bringing the policy rate to 1.5 percent.

Australia is the only advanced economy where growth for 2022 has been revised up, marginally, by 0.1 percentage point, as the negative spillovers from the war in Ukraine and expected tightening of monetary policy are offset by stronger than expected 2022 Q4 GDP growth, and the recent surge in Australia's export commodity prices.

For ASEAN countries, the downgrade of 0.2 percentage points is smaller than others and reflects the positive terms of trade for some commodity exporters in the region. However, the war is adding to inflation pressures and tighter financial conditions, including spillovers from the ongoing monetary policy normalization in advanced economies, and are amplifying the policy challenges.

In Sri Lanka, the rise in food and fuel prices and hit to tourism has exacerbated pre-existing vulnerabilities and debt sustainability pressures, leading to social unrest and policy instability. The authorities have requested a Fund program and technical level discussions have started.

Finally, many of the smallest states and Pacific islands are large net importers of oil and food and are expected to be hit especially hard by the crisis. Food and fuel price increases are particularly painful for these countries given their large share in consumption baskets, often hurting the poorest and most-vulnerable households within each country. Growth in these countries has been revised down by 0.8 percentage points, on average. This downgrade is significantly larger at 2.3 percentage points if we exclude Papua New Guinea, a net oil and gas exporter.

There is significant uncertainty around our baseline forecasts with risks tilted to the downside. A further escalation in the war in Ukraine, new COVID waves, and a faster or larger than expected tightening in U.S. monetary policy are all downside risks. In addition, given the strong trade linkages within Asia, a larger than expected slowdown in China due to prolonged or more widespread lockdowns, or a longer than expected slump in the property market constitutes a significant risk for the region.

Over the medium term, the potential fragmentation of supply chains and geopolitical tensions are big risks to a region that has benefitted from globalization and relative peace over the last two decades. As we have described in our recent blog, this is a challenging time for policymakers as they try to address pressures on growth and tackling risking inflation. The extent of these tradeoffs varies across countries, thus requiring tailored policy responses. In broad terms, fiscal policy should aim to protect the vulnerable from rising food and fuel prices, preferably through targeted assistance, and this in a framework for medium-term consolidation. Monetary tightening will be needed in most countries with the speed of tightening depending on domestic inflation developments and external pressures. And supporting long-term growth remains a priority, especially, in those economies with larger expected scarring.

I look forward to taking your questions, thank you.

MS. YAN: Thank you very much, Anne-Marie. And thank you for joining us. I already see many journalist friends on this screen and Webex. And let me remind you that you can either submit your questions on IMF Press Center or join the Webex link to ask your questions live. First, we have a question from Leika Kihara, Reuters, Tokyo. Leika, please go ahead.

QUESTIONER: Good morning. I have three questions. The first one is about the implications from the Fed’s policy. We heard Fed chairman Powell has said a half-point interest rate hike will be on the table and signaled the chance of much faster rate hikes than initially anticipated by markets. Asia does have bigger buffers than before to counter any abrupt capital outflows. But given the expected fast pace of U.S. rate hikes, is there a risk the outflows could be bigger than some emerging Asian economies can swallow? How should policymakers in the region brace for the risk of market volatility? That's my first question.

My second question is about supply chains. When would Asia see supply chain disruptions clear up in a permanent fashion? How would the war in Ukraine and China's zero COVID policy affect the timing of this?

And lastly, my third question is about Sri Lanka. Can you update us on the IMF’s negotiations with Sri Lanka and its loan request? The country's Finance Minister I understand said that about $500 millions in need was considered. Can you confirm that will be the approximate size of the aid? What conditions would be required for the country to receive it? And do you have a time frame for when negotiations could conclude -– sorry -- will conclude given the urgency of the situation? Thank you very much.

MS. YAN: Thank you very much Leika. Actually, you've raised many good questions, but on Sri Lanka actually we received two related questions. One from Lalit Jha, Press Trust of India. His question is what's the IMF’s prescription on addressing the major challenges that Sri Lanka is facing? And also, from Madhusha, The Morning, in Sri Lanka. Her question is what are the measures Sri Lanka could take to prove that its debt is sustainable?

MS. GULDE-WOLF: Okay, thank you. Very interesting questions. Let me start with the issue of the fed interest rate rising. Obviously, increasing interest rates especially if more and faster increases in interest rates in the U.S. than was previously expected are going to have an impact on Asia. The various channels -– the first one is the trade channel and that one could actually be positive if the interest rate action in the U.S. response to higher demand in the U.S. that would mean that the appreciating U.S. dollar leads to higher demand and more exports from Asia to -– from Asia to the U.S. But through the financial channels there will be complexities that rise for Asia from higher funding costs and especially for those that have a debt in foreign currently and we have seen that Asia is now the largest –- globally the largest region with the largest debt, and within the debt there is corporate and sovereign debt that is denominated in foreign currency and those -– that would be most affected. So was mentioned, Asia is better prepared now than at the time of the taper tantrum.

There are higher -– most countries have higher reserves, better monetary frameworks and are generally more attuned to the risks. This said, if it presents a policy challenges and policymakers, especially Central Banks, need to remain watchful and nimble in their policy actions. Let me move on to the issue of supply chains. There the issue has been that in China is a very important trading partner for Asia. Growth within Asia has been growing very fast in part as a result of integrating supply chains within Asia. Trade within Asia is now half of Asia's overall trade in Asia. We have downgraded China somewhat, this notwithstanding it remains a dynamic economy and supply chain related trade remains –- continues going on. Going forward the countries that have integrated with China on the supply chain channel there might be some rebalancing, and this would be beneficial, but it will be requiring that those countries continue on a credible reform past.

Let me turn to Sri Lanka. The many questions that we received on Sri Lanka, clearly signals that this is a country that is on everybody's radar screen. There's a lot of attention given the deep economic problems the country faces right now, and I want to start by saying that we at the IMF are clearly very concerned about Sri Lanka and trying to work on finding a faster as possible solution for the country.

Let me go to the questions on what is needed at economic levels. There is the most important issue is for the -– to find a credible and coherent macroeconomic strategy that addresses the key risks in the country. And this would include on the fiscal side, revenue-based consolidation strategy that increases ability of the country to raise revenues and to address suspended most critical spending needs. Monetary policy has to be tightened to keep the inflation in check and we see a need for a flexible exchange rate. And I want to emphasize that in this adjustment measures, we have to be mindful of the most vulnerable, and fiscal policy has to be formulated in a way that protects the livelihood of the most vulnerable.

So, when I say there has to be a revenue-based consolidation, it would also mean that in –- wherever possible that this –- the taxes should be paid more by those that are well off compared to –- adjustment should not be forced on the most vulnerable segments of society. Now, we have received a program request from Sri Lanka, and we have had very good, fruitful, technical discussions on preparations for further negotiations with the authorities over the past weekend and a couple of days before. The number of concerns arise and, you know, we had a Country Report that was done in February -– a regular Country Report and did contain the debts of sustainability assessment. So, debt in Sri Lanka is as assessed as being unsustainable. We, therefore welcome the authorities' intent to engage with their creditors. The requirement for fund lending will be that progress towards debt sustainability and the first step to end this on this process has been taken by the authorities. Let me leave it here on Sri Lanka. Thank you.

MS. YAN: Thank you, Anne Marie. Next we have Enda Curran from Bloomberg Hong Kong. Good morning Enda.

QUESTIONER: Good morning Ting. Thank you all very much. My question is on inflation: You mentioned that inflation is accelerating across Asia. I wonder how concerned you are about the pickup in inflation in Asia. And second, do you see inflation in Asia transmitting globally as well through producer prices for example. Thank you.

MS. GULDE-WOLF: Yes, thank you for the question on inflation. I mean, as you know, inflation in 2021 was lower in Asia than in most other regions of the world. Asia is now catching up in most countries, not all of them. I mean inflation remains low in Japan and China, for example. Inflation, two sources, to some extent, it reflects increasing demand in some of the Asian countries, but in most countries, inflation really reflects spillovers from the war in the Ukraine, rising food and fuel prices, and that is definitely a concern.

Now looking at policy measures, we have to look at the monetary policy rule in different countries which is quite different. But our expectation is that in most countries, we will have to see some monetary tightening over the next periods where the speed of tightening will be depending on country specific factors.

What is important to stress is communication. We really think that communication by central banks has an important role to play in stabilizing expectations and in addressing the inflationary challenges within the monetary frameworks. Thank you.

MR. YAN: Thank you. And next we have Shu Takaoka, JiJi Press, Japan. Shu, please go ahead.

QUESTIONER: Thank you very much. Thank you very much for taking my question. My question is on the Japanese Yen's depreciation and as you mentioned earlier that the Japanese yen depreciated drastically for the BoJ’s monetary policy and you have said that the BOJ could do more accommodative as the Federal Reserve or European Central Bank.

And my question is, but on the other hand, Yen's sharp depreciation could prove some risk on Japanese economy in terms of inflation. And what is your view on this point that is further potential regarding Yen could pose some risk on growth of Japan?

MR. YAN: Thank you, Shu.

MR. PANTH: Thank you very much for that question. I think, you know, there are two things that have happened over the last few weeks that I think fundamentally explain what's been happening to the Japanese yen. First and foremost, we've had a fairly large increase in fuel prices, commodity prices in general but fuel prices particularly for Japan, and that is put some strains on the current account in terms of the import bill.

The second, is the increase in inflation that we're seeing globally, and the sharper tightening stance taken by the Fed and more generally, going forward on that, the signals that we're getting out of that we talked about a little earlier. Now one has to keep in mind that Japan's situation is very different from that of the other central banks in the advanced economies, in particular, places like the U.S., in the sense that inflation has yet to pick up significantly in Japan.

You know, inflation, right now, is very much below the Bank of Japan's target of reaching it at 2 percent on a sustained basis going forward. We may see headline inflation pick up a little bit going ahead in the next few months. But our sense is that, that continues to be temporary and, basically, core inflation, once you strip out some of the one-off things, has not really increased. So, the Bank of Japan is, in our view, very appropriately, continuing to conduct an accommodative monetary policy which is very appropriate given Japan's situation, which I said, is very different from that of others.

So, the hope is that inflation will pick up. And, in fact, we would like to see that happening a little bit and so would the Bank of Japan. So, in that sense, we are not concerned at all. However, that is not to say that there is not an impact on people because of the weakening yen in the sense that while, of course, imports have become more expensive, households have felt some of that. But exports are also increasing, on the other hand, a little bit, offsetting that. Plus, Japan's current account has also been very much now in the surfaces side. It's not just a trade balance. So, yes, it will have an impact on some people. It's a little bit of a mixed bag, as I said. And there, we do see the scope for supporting the households in a very targeted manner on the inflationary side. But, overall, the policy is driven by fundamentals, and it is aimed at getting inflation up, which is appropriate for Japan's current situation. Thank you.

MR. YAN: Thank you, Sanjaya. Now let's move on to questions about China. We have Maoling Xiong, Xinhua News Agency. Maoling?

QUESTIONER: Thank you, Ting, for taking my question. I want to just ask about China's economy. The IMF just revised down the forecast for China's economy and, among other factors, there is the COVID-19 spread and the lockdown. So, what are the main challenges for the Chinese economy at this point, and also, China recently released guidelines to accelerate the establishment of the unified domestic market. I was wondering whether that would be helpful in supporting the economic growth amid headwinds. Thank you.

MR. YAN: Thank you, Maoling. Maybe Krishna, before you answer, we have one more question online received on China, so we can answer them together. This is from Qingting Zheng, 21st Century Business Herald. Her question is, how do you see the impact of the latest lockdowns on inflation in China? How much space is there for the PBC to cut interest rates? What is your suggestion for Chinese policymakers at this moment? Also, on China, from Anthony Rowley, South China Morning Post, he's asking about China's Renminbi. So, to what extent is the use of renminbi increasing in Asia as a transaction currency and what are the implications?

MR. SRINIVASAN: Thank you. Thank you, Maoling. It's a good question. Let me take the second question asked first which is on the internal market. I think the regulations they passed and the guidelines they've passed to unify domestic market. I think it's a welcome step. In short, it's a welcome step.

Why is that the case? Because China, being a large market, if you want to reach the full potential, you don't want local barriers and you don't want local protections and so on. So, in that sense, having these guidelines is very helpful.

Now, going beyond that, to achieve high quality growth, which is balance including green, China needs to work on one thing which is very, very important, which is declining productivity. We've seen productivity declining quite sharply in China, and that needs to be addressed. And again, that takes more important in the context of decoupling pressures in terms of technology, and China's shrinking workforce.

So, how to you address productivity? I think that goes beyond addressing just unifying the domestic market. You need to work in all terms of opening the domestic market for competition. You want to ensure greater market neutrality between private firms and state ones and the prices allowing market base policy mechanisms to work. So, that's in terms of the second question.

In terms of the first question you asked, what are the reasons why we marked down the forecast, we explained that in quite a lot of detail in the World Economic Outlook. Mainly, you've seen there has been, of course, impact of the war in Ukraine. But also, there's been a significant rise in COVID cases and associated lockdowns, right? These are two factors which has made us revise our forecast down which is offset by some policy support providing by the government in the context of the budget.

So, going forward, the question is, do they have support macro policies spaced to provide support and the short answer is yes. They have made some changes in terms of monetary easing and so on. But we believe that more than monetary easing at this point in time, they need more fiscal support and, again, it's just not the quantum of the fiscal support as it is the composition for fiscal support. And here, we believe that fiscal support that allows an increase in domestic consumption will both help rebalance the economy and also, help in meeting its carbon objectives, climate objectives, over the medium term. Again, focused fiscal support through transfers to vulnerable households is the way to go and that's where we think emphasis should be placed.

Now, again, Anthony, you had a question on the renminbi. I think that has the renminbi has increased in terms of its role and that reflects growing cross-border trade. But let me put things in perspective. If you look at the value of global payment transactions, the renminbi accounts for about 2.2 percent, okay? And similarly, if you look at global reserves, what proportion reserves are held in renminbi? It's, again, 2.8 percent. Again, these numbers have increased, but from very low base. And, how currency becomes more international is a market driven process. And as China continues to grow and liberalize its capital account and its show of the global economy, you will see an increase in the role of the renminbi going forward. Thank you.

MR. YAN: Thank you, Krishna. I see one more hand on webex, Gabriel Yin from CCTV.

QUESTIONER: Hi, yes Ting, thank you for doing this. I have two questions. One is that on the latest WEO we see that other Asian economies, Vietnam, India, are all projected to have more than six percent growth; I wonder, do you see some kind of rebalance of Asian supply chain going on? And the second question is related to the Russia-Ukraine situation. We see the energy sector is facing a lot of turbulence which might hinder this green transition to clean energy. I wonder you think the Asian Pacific region, especially China, will have a specific role to play in safeguarding this transition? Thank you very much.

MS. YAN: Thank you, Gabriel.

MS. GULDE-WOLF: Maybe I can start with the supply chains and then ask Krishna for the rest of the question. So, on the supply chain as we discussed already before, the growing integration of Asia is very visible in the growing trade between Asian economies. And most of that trade really is based on intermediate inputs. So, this integration—and we have seen that even under pre-COVID—that this is a very fast-growing integration that has financial and that has real aspect. We view this as a way for the lower income Asian economies to catch up, but it requires that those countries continue on their reform path, which is something that we emphasize in our engagement with them.

We see this as a beneficial development, and we would hope that it continues at this stage with an integration that countries have with China and among them it is a development that is going on. Maybe I can pass it on to Krishna?

MR. PANTH: Let me just take that question. I think that a question was asked in the beginning in terms of when we see supply chains normalizing and so on. Supply chains have been disrupted since 2020, since the beginning of the pandemic. And what we've seen more recently is two things. One is the war in Ukraine, which again led to shortages of commodities and inputs which are integral to supply chains. And second, we saw the rise of COVID outbreaks in China and more frequent associated lockdowns.

So, the sooner you see the war end and the sooner you see the pandemic behind us, the sooner will supply chains normalize. Again, China has an important role to play. China is the largest economy in the region so there's no question that as things get resolved in China, in terms of the COVID outbreaks and so on, you will see supply chains becoming more normal. But this does not mean that other countries don't have a role to play going forward. You'll see other countries—we've seen countries like Vietnam and Bangladesh become part of supply chains, and that trend will continue as global creed continues to gain momentum after the crises are behind us.

MS. YAN: Thank you. We also received several questions on other countries in the region. We have one question Bloomberg India: The IMF has lowered India's FY23 GDP growth projection to 8.2% from 9%, India's growth is seeing slowing further to 6.9% next year, what is the country's growth potential in the near time? Can it sustain a growth of about 7% in the next few years? This is on India.

And another question on Indonesia from Bisnis, Indonesia; the question is, what do you think of the Indonesian economic performance coming out of COVID? Are you concerned about the increasing debt level?

MS. GULDE-WOLF: Okay, maybe I can take the question on India. In fact, the growth in India has been downgraded from nine to eight-point-two percent. So, while still strong, it is a significant downgrade and I think that on India we really see the difficult policy tradeoff for policymakers supporting the worldwide controlling of inflation which has already started going up and which now outside of the RBI spend—I mean the reason why inflation has gone up is really the spillovers from the war in the Ukraine where India is particularly dependent on oil and commodity imports.

So, in the short run, we think that a commodity fiscal stance is appropriate, supporting vulnerable households, and putting focus on infrastructure investment. In terms of monetary policy, well-communicated monetary policy actions are needed but probably some monetary tightening. You asked about growth potential, and I think that is one of our key messages. To enhance India's growth potential, it is important to address structural weaknesses of the Indian economy that provide bottlenecks to achieve longer-lasting growth. These bottlenecks are in the labor market, land market, better educational outcomes, and very much also getting higher share of females into the labor force.

So, in sum, the potential is definitely there but it will require policy actions.

MR. PANTH: Thank you. I'd be happy to take the question of Indonesia, which had two parts. One is how we view its performance over the last few months and then a little bit of a questioning of debt, as well.

So, first on the question of how we view economic performance. Indonesia's economic activity rebounded quite strongly in 2021 and it has continued to strengthen in 2022. Inflation, in the last print was about 2.6%, which is comfortably within the RBI's target bound of three plus-or-minus one percent. And overall, financial conditions remain stable. The economy's performing quite well, in fact in Indonesia's one of the countries in the region that stands to benefit from the higher commodity prices. So, the current account should be improving going forward and it will also have a positive effect on the fiscal revenue.

However, of course, the balance of risks even though it's improving it's still tilted to the downside and here it primarily is externally driven. One is the extent to which there will be global growth slowdown, which will impact exports, on volumes of exports in particular, and the second one is tightened global financial positions. So, we need to watch out for those, but the performance has been very good so far.

As far as your debt question is concerned, as you know after every Article IV, we conduct a very in-depth assessment of both public and external debt. We finished our Article IV consultation of Indonesia just a few weeks ago and in that report, we found that both the external and public debt remain moderate and sustainable. So, although there has been an increase in debt during the pandemic reflecting the government's appropriate policy response to support the economy, debt remains moderate and sustainable in the case of Indonesia.

Furthermore, this assessment is underscored by the fact that Indonesia has committed to the three percent of deficit target going forward over the median term. So, that adds to our further comfort on the debt side. Thank you very much.

MS. YAN: Thank you, Sanjay. I think we also have a question on green energy transition to be answered. Krishna, would you like to answer?

MR. PANTH: Yes. So, green transition I think clearly global energy prices have been volatile most recently because of the war in Ukraine and it's too early to assess whether it's how much supply or how much demand factors play a role in this. But, as the largest economy in the region and the biggest carbon emitter, China clearly has a major role to play in safeguarding the transition to green energy.

Now, that said, in many Asian economies' countries are providing targeted support to protect the vulnerable households from the rise in energy prices and we welcome that because we want those measures to be temporary and we want those to be targeted for those who are most vulnerable. But going beyond this near term, I think in the median term what we see—the current events clearly tell you one thing, and this is you have to, there are sufficient incentives right now, move towards clean energy and also diversify where you access your energy from.

So, these are developments which will happen, and we will wait to see how that happens. But China clearly has a role in safeguarding the transition to green energy.

MS. YAN: Thank you. As we are towards the end of the press conference, let me take two more questions. One is on Pacific Islands. So, could you tell us more about the impact of the pandemic and how the war in Ukraine is on the Pacific Islands and what has the IMF done to help these countries since the pandemic? And another question from the Vietnam Economic Times: how do you compare the recovery of Vietnam's economy with other countries in Asia? What should the country do to achieve growth rate at six percent in 2022 and seven-point-two percent in 2023?

MR. PANTH: Thank you very much on the Pacific Islands. Three questions. One is on the Pandemic, and the second is the war in Ukraine, and third is where the Fund has come in to help.

So, beginning first with the Pandemic. The Pandemic has had different impacts on the different Pacific Islands, depending on their circumstances. Particularly the countries that were most reliant on tourism have seen the largest impact, because they've had to close down borders for a long period of time. And that has affected them, and that has caused scarring going forward.

As you know, countries have started re-opening their borders. Fiji has done that as well. We see a prospect for a rebound. But, again, this is something that will vary in individual countries, because in some countries you're beginning to see localized Covid outbreaks. So far, they'd avoided that, but you're beginning to see that. These are some of the less tourism dependent economies, but we still see that.

So, in a sense, some of, on that side, there's been —- It's varied, but it's the tourism dependent economies that have suffered the most. But they're also well also prosperous for a rebound, they're being the strongest going forward.

In terms of the War in Ukraine, I think the first and foremost channel by which that affects the Pacific Islands is through the import bill. Food, as well as fuel, it's adding to inflationary pressures in the region, and we'll see that continuing to go forward. But, you know, especially if the war escalates further, if commodity prices rise further.

Finally, in terms of how the IMF has assisted, you know, we have a multifaceted engagement with the region. We have, you know, a lot of technical assistance in the region, which we've been able to provide, even through long distance. We have a Regional Center in Fiji, PFTAC, that engages with the countries. We've also had ongoing policy dialogue, we've had Article IVs with various countries. And then also, very fundamentally, financial assistance, when it has been required.

This was, for example, the case with Papua New Guinea, where we had a disbursement of about $350 million in June 2020, under our Rapid Credit Facility. We also had a disbursement to Tonga, which, again now, this was last year, but now following the natural disaster, we're engaging with them again on follow up financial assistance.

So, we, you know, continuous dialogue as well as financial assistance. Thank you very much.

MS. GULDE-WOLF: Let me take the question on Vietnam. Vietnam really was an early success case in dealing with Covid. So, in 2020, it was the country that was growing fastest in all of Asia. And unfortunately, that also led to a slow start of the vaccination campaign, and in 2021, we saw a significant downgrade of our growth, from more that 5 percent to 2.6 percent, as the country was forced by a new wave of Covid to impose very strict restrictions on mobility. Luckily, now in 2022, we see signs of the economy rebounding, rebounding strongly. This is based on a very successful vaccination campaign. We see rising retail sales, production, exports going up, and we see a shift of living with Covid, which has allowed much higher mobility than what we saw before.

We now project growth at 6 percent for this year, and 7.2 percent in 2023, as economy normalizes, and recently approved fiscal support package that we find appropriate is starting to show its effect. This phase will package —- will also help compensate some of the still sluggish household demand, as households rebuild their buffers.

Let me leave that here. Thank you.

MS. YAN: Thank you Anne Marie. Thank you, Krishna and Sanjay. And thank you everyone for joining us today. This concludes our press conference.

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