{
  "title": "Transcript of the Press Conference on Asia Pacific",
  "publication": "IMF News, October 14, 2017",
  "sourceUrl": "https://www.imf.org/en/news/articles/2017/10/14/tr101317-transcript-of-the-press-conference-on-asia-pacific",
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  "summary": "Global recovery is \"quite broad based\" and Asia \"continues to [be] the main growth engine of the world.\"",
  "publishDate": "2017-10-14",
  "sections": [
    {
      "heading": "Key messages and regional outlook",
      "content": "- Global recovery is \"quite broad based\" and Asia \"continues to [be] the main growth engine of the world.\"\n- Region’s economic output projections:\n  - 5.6 percent in 2017\n  - 5.5 percent in 2018\n  - Revision: 0.1 percent higher than expected in the April report\n- Asia's contribution to global growth:\n  - \"about 63 percent of the whole global economy\"\n  - China: \"34 percent\"\n  - India: \"about 13 percent\"\n  - \"India and China alone account for close to 50 percent of the global economic growth\"\n- Drivers of the current upswing:\n  - Export growth (including rising intraregional trade)\n  - Investment\n  - Rising domestic demand and consumption\n- Short-term window of opportunity:\n  - Favorable tailwinds provide scope to implement structural reforms to address medium-term challenges."
    },
    {
      "heading": "Country-specific assessments and projections",
      "content": "- China\n  - Growth projection revised up to 6.8 percent in 2017.\n  - Factors: pickup in producer prices, boosted corporate profit, stronger first-half momentum.\n  - Medium-term growth projection increased assuming a sufficiently expansionary macro policy mix to meet the target of doubling 2010 GDP by 2020.\n  - Risks: further large increase in debt due to expansionary policies; corporate debt concentrated in the state-owned enterprise sector.\n  - Fiscal context: IMF measure of fiscal deficit (including local governments and other items) \"about 12 percent of GDP, last in 2016 and '17.\"\n  - SOE footprint: assets rose from \"around 120 percent of GDP\" pre-global financial crisis to \"around 200 percent of GDP\" currently; SOE profits weaker than private sector and receive substantial state support.\n- Japan\n  - Growth forecast: 1.5 percent in 2017, \"well above their potential growth rate.\"\n  - Japan sustained above-potential growth for six consecutive quarters through the first half of 2017.\n  - Inflation and labor:\n    - Headline inflation reached .7 percent in August; core inflation .2 percent.\n    - Expected inflation: .4 percent in 2017 in IMF projections.\n    - Medium-term projection: inflation to edge up to \"something like 1-1.5 percent\" over the medium term.\n    - Challenge: re-anchor inflation expectations toward 2 percent; labor market duality and wage dynamics need structural reform.\n  - Policy: continued accommodative Bank of Japan stance; coordinated fiscal, monetary and structural policies; medium-term fiscal consolidation required without undermining growth.\n- India\n  - Growth in fiscal year 2017 revised downward to 6.7 percent.\n  - Reasons for slowdown: structural weakness in corporate and banking sectors; transitory shocks from the November currency exchange initiative and the July Goods and Service Tax reform rollout.\n  - Outlook: expected to return gradually to medium-term growth path; recent high-frequency data suggest rebound already underway.\n  - Structural priorities:\n    - Resolve nonperforming loans; rebuild capital buffers in public-sector banks; enhance debt recovery mechanisms.\n    - Fiscal consolidation via revenue measures and subsidy reductions.\n    - Address infrastructure gaps, labor and product market efficiency, and agricultural reforms.\n    - Labor market: reduce around 250 labor laws across central and state levels; close gender employment gap; invest in gender-specific training and infrastructure to boost female labor participation.\n- Korea\n  - Growth revised up to 3 percent, supported by pickup in business investment despite geopolitical tensions.\n- Australia\n  - 2017 growth revised downward, largely due to weather-related temporary disruptions.\n- New Zealand\n  - 2017 growth revised upward, driven by restocking and supportive fiscal policy.\n- ASEAN\n  - Growth expected to accelerate to five percent in 2017.\n  - High intra-ASEAN trade, export strength and investment are key contributors.\n- Small states and Pacific Island countries\n  - After 2016 deceleration, activity expected to rebound in 2017 with recovery from natural disasters and global expansion.\n- Mongolia\n  - IMF Extended Fund Facility started in April; early program outcomes positive (growth up, balance of payments stabilized, fiscal improvements).\n  - Program: three-year EFF; authorities urged to maintain momentum and continue implementation despite government transitions.\n- Indonesia\n  - IMF forecast: growth to pick up to 5.3 percent next year from 5.2 percent this year.\n  - Inflation manageable within target band.\n  - Policy priorities:\n    - Fiscal reform to boost tax revenue (tax revenue as a share of GDP \"around 10 percent\").\n    - Structural reforms: liberalize FDI regime, streamline regulations, improve youth employment (youth unemployment estimates range \"between 20 to 30 percent\"), boost formal employment and education.\n- Bangladesh\n  - Reported about 500,000 refugees (Rohingya) have entered Bangladesh; \"too early to conduct a proper assessment of the economic impact\"; IMF in close consultation with authorities and stands ready to assist if needed."
    },
    {
      "heading": "Risks and vulnerabilities",
      "content": "- Downside risks to the Asian upswing include:\n  - Tightening of global financial conditions and potential sudden capital outflows.\n  - Escalation of geopolitical tensions (notably on the Korean Peninsula).\n  - Potential peak and slowdown in the tech cycle that has supported exports (e.g., mobile demand).\n  - Transitory nature of global trade expansion drivers (commodity price increases, inventory cycles).\n- Rising leverage and balance-sheet vulnerabilities:\n  - Increase in private sector debt (corporate and household) across many economies.\n  - Household debt rising in several advanced Asian economies from low levels.\n  - Bank balance sheets with limited buffers in some cases; need for stronger capital positions.\n- Medium-term secular headwinds:\n  - Population aging (risk Asia becomes \"old before becoming rich\" in some cases).\n  - Productivity slowdown since the global financial crisis.\n  - Rising income inequality, notably in large Asian emerging economies."
    },
    {
      "heading": "Monetary, fiscal, and financial policy guidance",
      "content": "- Monetary policy\n  - Subdued inflation in Asia provides scope for accommodative monetary policy in most countries, but countries differ:\n    - Where inflation has been below target long-term (e.g., Korea, Thailand): avoid de-anchoring inflation expectations.\n    - Japan: re-anchor inflation expectations toward 2 percent.\n    - In economies with low inflation but very high credit growth (e.g., China): low interest rates can exacerbate financial stability risks; monetary policy should consider financial stability.\n- Financial sector policy\n  - Strengthen macroprudential measures and tighten financial sector policies where credit growth is rapid.\n  - Maintain exchange rate flexibility as the main shock absorber in the event of capital outflows.\n- Fiscal policy\n  - Countries with fiscal space should support structural reforms (e.g., labor market reforms).\n  - Countries with limited fiscal space should use the favorable conjuncture to rebuild fiscal buffers.\n  - In China specifically: focus on composition of fiscal policy to rebalance from investment toward consumption and social spending rather than immediate stimulus; medium-term reduction of fiscal deficit needed.\n- Structural reform emphasis (country-specific)\n  - Financial market and banking sector reforms to rein in credit expansion.\n  - Labor market reforms, human capital investment and measures to address automation and labor-force entry.\n  - Fiscal reforms to mobilize domestic revenue and build fiscal buffers.\n  - SOE reform (China): accelerate and deepen reforms to reduce excessive state footprint and address corporate debt concentration."
    },
    {
      "heading": "Q&A highlights (selected)",
      "content": "- Renminbi internationalization\n  - RMB inclusion in the SDR was a \"big step\"; renminbi internationalization expected to continue over the medium term, but not in a straight line—depends on continued rebalancing (shift toward consumption, services, and less reliance on debt).\n- Japan inflation timing and drivers\n  - Modest uptick in inflation; structural labor reforms (reducing duality, stronger nominal wage focus) needed for stronger wage pressures.\n  - Bank of Japan accommodative stance supported; combined fiscal/monetary/structural approach recommended.\n- India structural reforms\n  - Priorities: resolve banking sector nonperforming loans, rebuild public bank capital, continue fiscal consolidation, address infrastructure and labor/product market inefficiencies, close gender employment gap.\n- China macro policy stance\n  - Current growth strong, no need for expansionary stimulus; focus on fiscal composition, social spending, and rebalancing.\n  - SOE reform should go deeper and faster to support rebalancing while maintaining growth.\n- Mongolia program message\n  - Good start under the EFF but reforms must continue; improvements may be partly driven by external factors, so sustained program implementation is critical.\n- Vulnerability to normalization\n  - Countries with large private-sector debt and weak balance sheets are most at risk from normalizing global rates; Asia is more resilient than in past crises but vulnerabilities remain.\n- Most critical medium-term challenges\n  - No single priority; varies by country:\n    - Advanced economies: population aging and labor-market participation issues (including female participation).\n    - Middle-income/frontier economies: infrastructure needs, credit expansion control, and revenue mobilization.\n- China’s role in the upswing\n  - China's growth and regional economic integration remain important for Asia; deeper market opening and regional investment (e.g., Belt and Road initiatives) can be positive for regional growth.\n\nTranscript of the Press Conference on Asia Pacific, October 13, 2017 — IMF Communications Department\n\n---\n\n\n References\n\n- People's Republic of China and the IMF\n- Bangladesh and the IMF\n- India and the IMF\n- Indonesia and the IMF\n- Japan and the IMF\n- Mongolia and the IMF\n- Transcripts\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/10/14/tr101317-transcript-of-the-press-conference-on-asia-pacific"
    }
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    "Published: October 14, 2017",
    "Global recovery is \"quite broad based\" and Asia \"continues to [be] the main growth engine of the world.\"",
    "Region’s economic output projections:",
    "Asia's contribution to global growth:",
    "Drivers of the current upswing:",
    "Short-term window of opportunity:",
    "China",
    "Japan",
    "India",
    "Korea",
    "Australia",
    "New Zealand",
    "ASEAN",
    "Small states and Pacific Island countries",
    "Mongolia",
    "Indonesia",
    "Bangladesh",
    "Downside risks to the Asian upswing include:",
    "Rising leverage and balance-sheet vulnerabilities:",
    "Medium-term secular headwinds:",
    "Monetary policy",
    "Financial sector policy",
    "Fiscal policy",
    "Structural reform emphasis (country-specific)",
    "Renminbi internationalization",
    "Japan inflation timing and drivers",
    "India structural reforms",
    "China macro policy stance",
    "Mongolia program message",
    "Vulnerability to normalization",
    "Most critical medium-term challenges",
    "China’s role in the upswing",
    "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)",
    "[Bangladesh and the IMF](http://www.imf.org/external/country/BGD/index.htm)",
    "[India and the IMF](http://www.imf.org/external/country/IND/index.htm)",
    "[Indonesia and the IMF](http://www.imf.org/external/country/IDN/index.htm)",
    "[Japan and the IMF](http://www.imf.org/external/country/JPN/index.htm)",
    "[Mongolia and the IMF](http://www.imf.org/external/country/MNG/index.htm)",
    "[Transcripts](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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