Policies Need to be Flexible, Creative to Speed up Pandemic Recovery, Say IMF Reps in Asia

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Policies Need to be Flexible, Creative to Speed up Pandemic Recovery, Say IMF Reps in Asia

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Media Inquiries

International Monetary Fund
Regional Office for Asia and the Pacific
Press Officer: Yuko Maeda
Tel: 81-(0)3-3597-6719
Email: oapmedia@imf.org

Event summary and context

• The event was held on July 30, 2020, Tokyo, Japan and was a public webinar hosted by the IMF Regional Office for Asia and the Pacific (OAP) as the first of a new Asia-Pacific Regional Webinar series.
• More than 400 people participated in the webinar from 18 countries within and beyond the region.
• Resident representatives from the IMF for Malaysia, the Philippines and Singapore presented assessments and policy advice on economic impacts of COVID-19 and recovery strategies.

Economic outlook and sectoral impacts

• Singapore:
  • Singapore is going through “its worst severe downturn since Independence” in 1965.
  • Construction and customer-facing services, including tourism and retail sales, were most affected.
  • The unemployment rate increased significantly in the second quarter.
  • IMF commended Singapore’s swift policy response with substantive monetary and fiscal measures to support the economy and people’s livelihoods.
  • Investment in innovation including fintech and upskilling of the workforce could help Singapore emerge stronger from the crisis.
• Malaysia:
  • The government’s movement control order had been effective in containing the spread of COVID-19.
  • The pandemic shock hit the economy hard, prompting the government to take robust measures amounting to 20.4% of GDP.
  • Recovery so far is uneven by sector, unemployment has risen sharply, and inflation remains low.
  • COVID-19 could accelerate digitalization, innovation and adoption of new technology; Malaysia is well positioned for that.
• Philippines:
  • The pandemic had a severe impact on the Philippine’s economy, which had been “a top performer in the region with a strong structural reform momentum”.
  • A sharp GDP contraction in 2020 is expected before a rebound in 2021, as the Philippines continues its effort to flatten the infection curve.
  • The government responded with timely easing of monetary and fiscal policies and targeted assistance to affected households and businesses, especially micro, small and medium enterprises.

Policy recommendations and priorities

• Broad guidance emphasized by IMF resident representatives:
  • Policymakers need to be creative and flexible to support recovery.
  • Policy interventions should focus on saving lives and protecting livelihoods.
  • Balance immediate spending against preserving fiscal space for the future: “It’s a delicate balance: how much you spend now and how much fiscal space you reserve for the future.”
  • There is no one-size-fits-all solution; each country must work through fiscal space, liquidity situation and long-term development goals.
• Specific measures to mitigate medium- and long-term scarring:
  • Strengthen social protection programs.
  • Increase support for small businesses, particularly micro, small and medium enterprises.
  • Mitigate loss of workers’ skills and reduce bankruptcies through targeted measures.
  • Invest in innovation, fintech and workforce upskilling to support structural adjustment and recovery.

Discussion highlights and participant concerns

• A key concern among participants was how macroeconomic policies can effectively deal with prolonged effects of the pandemic given limited resources in many countries.
• IMF representatives echoed the need for creativity and flexibility in policy choices to address pressing issues along the recovery process.

Speakers and credentials

• Jochen Schmittmann:
  • Head of the IMF’s Resident Representative Office in Singapore covering Asian financial markets as well as Malaysia and Singapore macroeconomic analysis.
  • Previously worked in the IMF’s Asia and Pacific, Western Hemisphere, Finance and Monetary and Capital Markets departments.
  • Published on behavioral finance, sustainable finance, currency hedging and the economic impact of demographic change in Asia.
  • Holds a Ph.D. in Financial Economics from Goethe University Frankfurt.
• Yongzheng Yang:
  • IMF’s Resident Representative to the Philippines.
  • Previously a Deputy Division Chief in the Asia and Pacific Department and IMF mission chief for Myanmar.
  • Served as the IMF’s Resident Representative in Pacific island countries from 2010 to 2014 and was mission chief for Papua New Guinea and Samoa.
  • Worked on countries in Africa and Central Asia; joined the IMF in 2001.
  • Taught at The Australian National University (ANU) and Macquarie University for 10 years.
  • Holds a Ph.D. in economics from the ANU.

Content in this bundle

• IMF Response to COVID-19 Crisis – Exceptional Times Call for Exceptional Actions
  • IMF Response to COVID-19 Crisis – Exceptional Times Call for Exceptional Actions (Markdown version)
  • IMF Response to COVID-19 Crisis – Exceptional Times Call for Exceptional Actions (PDF)
• Malaysia – Current Economic Developments
  • Malaysia – Current Economic Developments (Markdown version)
  • Malaysia – Current Economic Developments (PDF)
• Welcome to a visually integrated Fund
  • Welcome to a visually integrated Fund (Markdown version)
  • Welcome to a visually integrated Fund (PDF)
• Singapore – Current Economic Developments
  • Singapore – Current Economic Developments (Markdown version)
  • Singapore – Current Economic Developments (PDF)

References

• OAP Home