Remarks by IMF’s Deputy Managing Director Kenji Okamura at a Regional Economic Outlook Event

IMF News, May 19, 2022

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Published: May 19, 2022

Context and opening

Event held in Tokyo, May 20, 2022; webpage dated May 19, 2022.
First face-to-face event in Tokyo since early 2020.
Speaker’s first return to Tokyo as Deputy Managing Director of the IMF.
Remarks delivered "As prepared for delivery."

Main channels by which the war in Ukraine affects Asia and the Pacific

Two main channels identified:
- Higher commodity prices.
- Effects of slower growth in Europe.
Regional manifestations:
- Consumers across Asia are experiencing higher food and energy prices.
- Exporters face weaker demand from European trading partners.
- Strained supply chains make getting goods to market slower and more expensive.

Inflation, monetary policy, and global spillovers

Global inflationary pressures are rising; in the US and Europe, prices are "now rising at the fastest rates in a generation."
A "decade of unconventional monetary accommodation is now being withdrawn faster than was previously expected."
Risk noted that drifting inflation expectations could require "an even more forceful tightening."
Need for careful consideration of implications for global markets and "spillover risks, particularly for the most vulnerable economies."
Asia-specific inflation observations:
- In 2021, food prices in emerging and developing Asia grew by less than 2 percent.
- This is compared with over 9 percent in peer countries in Africa, Europe, and Latin America.
- "In many of the region’s economies, inflation remains below central bank targets."

Policy trade-offs and IMF stance

2022 characterized as "another challenging year for Asia’s policymakers" due to the combination of pandemic, war, and tighter global financial conditions.
Key trade-off identified:
- Support growth through more stimulus? Or withdraw that support to stabilize debt and inflation?
Emphasis that trade-offs "will be different depending on country circumstances" and require:
- Calibrated policies.
- Clear communication.
IMF commitment:
- "We at the Fund remain firmly committed to supporting our member countries in the region as they tackle these challenges."

Source: Remarks by IMF’s Deputy Managing Director Kenji Okamura at a Regional Economic Outlook Event (Tokyo, May 20, 2022; published May 19, 2022), IMF Communications Department.