{
  "title": "Transcript of October 2019 Asia and Pacific Department Press Briefing",
  "publication": "IMF News, October 18, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/10/18/tr101819-transcript-of-october-2019-asia-and-pacific-department-press-briefing",
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  "summary": "Asia Pacific growth is expected to be the slowest since the global financial crisis in the context of prolonged global uncertainty.",
  "publishDate": "2019-10-18",
  "sections": [
    {
      "heading": "Regional economic outlook and headline findings",
      "content": "- Asia Pacific growth is expected to be the slowest since the global financial crisis in the context of prolonged global uncertainty.\n- Asia still accounts for more than 70 percent of the global growth in 2019.\n- Regional growth projection: 5.0 percent in 2019 and 5.1 percent in 2020.\n- Inflation across Asia is projected to remain subdued reflecting softening demand.\n- Main policy priority: address the causes of policy uncertainty and restore the rules of the multilateral trade system.\n- Near-term policy guidance: support growth where necessary while safeguarding financial and fiscal stability."
    },
    {
      "heading": "Country and subregion projections and developments",
      "content": "- China\n  - Growth expectations: 6.1 percent in 2019 and 5.8 percent in 2020 (reflecting transition and trade tensions).\n  - Q3 growth: 6.0 percent in the third quarter, down from 6.2 percent in the second quarter.\n  - Medium-term projection: growth to slow gradually to about 5.5 percent.\n  - China accounts for nearly 40 percent of global growth in 2019.\n- Japan\n  - Growth projection: 0.9 percent in 2019 and 0.5 percent in 2020.\n  - October 1 consumption tax increase noted as temporary fiscal support to cushion private consumption decline.\n  - Climate and mitigation targets: mid-term goal of reducing greenhouse gas emissions by 26 percent by 2030 relative to the 2013 level; long-term goal of reducing them by 80 percent by 2050.\n  - Carbon pricing: Tax for Climate Change Mitigation (TCCM) gradually increased to as much as 289 yen per ton of CO2 emissions in 2016.\n- India\n  - Growth expectation: 6.1 percent in fiscal year 2019, picking up to 7.0 percent in 2020.\n  - Monetary policy stimulus and the announced corporate income tax cut expected to help revive investment.\n  - Financial sector concerns: non-performing loans and non-bank financial institutions require attention; state-level fiscal health is a concern.\n- Korea\n  - Revised growth: 2.0 percent in 2019 and 2.2 percent in 2020 (also referenced as 2 percent next year in parts of the discussion).\n  - Inflation projected at 1 percent (below the 2 percent target range).\n  - Fiscal support: supplementary/expansionary budget welcomed; about 1.2 percent of GDP of additional fiscal measures for next year (if approved), focused on vulnerable households, SMEs, and job training.\n  - Longer-term: aging population implies need for efficient spending and revenue increases to avoid debt increases.\n  - Alternative longer-term projection mentioned: 2.9 percent in 2024 (context: outlook reflecting possible orderly resolution of U.S.-China trade conflict).\n- Hong Kong SAR\n  - Declining growth expected to continue in the near term due to U.S.-China trade tensions and domestic socio-political situation affecting exports.\n- ASEAN\n  - Growth projected around 4.6 percent in 2019 and 4.8 percent in 2020; first-half 2019 softened due to weak exports.\n- Pacific Island countries\n  - Growth generally firm; region revised upward mostly due to a gross rebound in PNG after last year's earthquake.\n- Bangladesh\n  - IMF projection referenced by questioner: 7.8 percent GDP growth this year (questioner’s figure).\n  - Strengths: sustained outward-oriented growth driven by ready-made garments.\n  - Risks: severe liquidity and financial sector issues; high rate of non-performing loans; need to address structural weaknesses and create space for better lending and diversification.\n- Thailand\n  - Growth weakened (around 2.6 percent in the first half of the year); high trade openness (imports and exports close to 70 percent) and manufacturing exposure linked to the slowdown.\n  - Policy recommendation: expansionary policy mix; frontloading public investment; accommodative monetary policy combined with macroprudential measures; structural reforms (pensions, human capital, regional development).\n- Bhutan\n  - Growth projections discussed: 5.5 percent in 2019 and 2020; referenced projection of 7.2 percent (noted as one of the fastest growing).\n  - Growth closely tied to hydropower exports to India and implementation of projects financed by India.\n  - Debt: debt stands at 100 percent of GDP but assessed in context of contractual hydropower investments expected to yield export revenues.\n  - IMF team to visit in December to update numbers.\n- Australia\n  - Revised forecasts: 1.7 percent growth this year and 2.3 percent growth next year.\n  - Policy response: series of Reserve Bank policy rate cuts; current-year budget personal income tax cuts providing fiscal support.\n  - Recommendation: if further downside shocks occur, fiscal policy should provide additional spending-side support; structural reforms (tax, female labor participation, infrastructure) are important."
    },
    {
      "heading": "Downside risks and spillovers",
      "content": "- Trade tensions: possible further intensification of trade tensions between the U.S. and China represents a significant downside risk despite recent announcements.\n- Faster-than-expected slowdown in China: would cause significant trade and financial spillovers across the region due to close trade links and integration in global value chains.\n- Global financial conditions: a shift in market sentiment, tightening of global financial conditions, or escalation of trade tensions could reverse benign capital flows and create difficult policy trade-offs for Asian policymakers.\n- Overall risk stance: risks to the projections are skewed downward."
    },
    {
      "heading": "Policy recommendations and guidance",
      "content": "- General policy framework\n  - Near-term policies should support growth where warranted but must also mitigate long-term vulnerabilities.\n  - Monetary policy: generally accommodative depending on local circumstances; avoid overburdening monetary policy given “low for too long” rates in advanced economies.\n  - Fiscal policy: support domestic demand where there is fiscal space; country-specific—“one size does not fit all.”\n  - Financial sector policies: strengthen oversight where low interest rates and other factors create financial stability risks.\n  - Macroprudential and microregulatory tools: consider these to supplement monetary policy and limit negative side effects of prolonged low rates.\n  - Structural reforms: push ahead to strengthen resilience and lay the foundation for sustainable, inclusive growth.\n- Country-specific fiscal guidance examples\n  - India: limited fiscal space; support for corporate income tax cut judged positive for investment but need to continue fiscal consolidation for long-term stability.\n  - Korea and Thailand: some room for temporary fiscal stimulus to offset short-term headwinds; ensure medium-term fiscal sustainability (efficiency, targeted spending, revenue mobilization in light of aging populations).\n  - Japan: fiscal policy could be first line of defense in a downturn; October 1 consumption tax increase seen as a step toward creating fiscal space to finance growing social security and healthcare costs; recommendation for further gradual consumption tax increases over time to address underlying structural demographic issues.\n  - Australia: balance between preserving fiscal buffers and providing support; additional fiscal support should be available if further shocks occur, with emphasis on spending-side measures."
    },
    {
      "heading": "Financial sector and structural reform considerations",
      "content": "- Financial stability\n  - High non-performing loans in some countries (e.g., Bangladesh) endanger financial stability and constrain lending needed for investment and diversification.\n  - Non-bank financial institutions in India remain a concern; need for regulatory parity and better coordination among financial regulators.\n- Structural reform challenges\n  - Structural reforms often entail short-term costs that may be politically difficult; pursue reforms in good times and early in electoral cycles to minimize political costs and concentrate benefits over time.\n  - Structural measures cited include pension reform, human capital investment, tax reforms to stimulate business investment, measures to increase female labor force participation, and infrastructure investment."
    },
    {
      "heading": "Climate change and environmental policy",
      "content": "- Asia’s vulnerability\n  - Asia is highly vulnerable to climate change impacts (including populous low-lying areas and frequent disasters), and environmental degradation affects quality of life.\n  - Climate change presents both risks and an opportunity to develop new technologies and leapfrog to cleaner growth models; addressing emissions and environmental standards is also essential for maintaining export competitiveness.\n- Policy examples and lessons from Japan\n  - Japan’s mitigation targets: reduce greenhouse gas emissions by 26 percent by 2030 relative to 2013; reduce emissions by 80 percent by 2050.\n  - Carbon pricing in Japan: Tax for Climate Change Mitigation (TCCM) on fossil fuels, increased to as much as 289 yen per ton of CO2 emissions in 2016; revenues used for renewable energy expansion and energy efficiency.\n  - Subnational measures: cap-and-trade schemes in Tokyo and Saitama; forest environment transfer tax introduced in April (year of transcript) to improve forest management and contribute to CO2 reduction.\n  - Recommendation: other Asian countries can learn from Japan’s experience; green financing, green infrastructure investment, carbon pricing, and subsidy reform cited as policy tools.\n\nTranscript of October 2019 Asia and Pacific Department Press Briefing — IMF Communications Department\n\n---\n\n\n References\n\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2019/10/18/tr101819-transcript-of-october-2019-asia-and-pacific-department-press-briefing"
    }
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    "Published: October 18, 2019",
    "Asia Pacific growth is expected to be the slowest since the global financial crisis in the context of prolonged global uncertainty.",
    "Asia still accounts for more than 70 percent of the global growth in 2019.",
    "Regional growth projection: 5.0 percent in 2019 and 5.1 percent in 2020.",
    "Inflation across Asia is projected to remain subdued reflecting softening demand.",
    "Main policy priority: address the causes of policy uncertainty and restore the rules of the multilateral trade system.",
    "Near-term policy guidance: support growth where necessary while safeguarding financial and fiscal stability.",
    "China",
    "Japan",
    "India",
    "Korea",
    "Hong Kong SAR",
    "ASEAN",
    "Pacific Island countries",
    "Bangladesh",
    "Thailand",
    "Bhutan",
    "Australia",
    "Trade tensions: possible further intensification of trade tensions between the U.S. and China represents a significant downside risk despite recent announcements.",
    "Faster-than-expected slowdown in China: would cause significant trade and financial spillovers across the region due to close trade links and integration in global value chains.",
    "Global financial conditions: a shift in market sentiment, tightening of global financial conditions, or escalation of trade tensions could reverse benign capital flows and create difficult policy trade-offs for Asian policymakers.",
    "Overall risk stance: risks to the projections are skewed downward.",
    "General policy framework",
    "Country-specific fiscal guidance examples",
    "Financial stability",
    "Structural reform challenges",
    "Asia’s vulnerability",
    "Policy examples and lessons from Japan",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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