{ "title": "Transcript of Asia and Pacific Department Press Briefing", "publication": "IMF News, October 13, 2022", "sourceUrl": "https://www.imf.org/en/news/articles/2022/10/14/tr101322-transcript-of-asia-and-pacific-department-press-briefing", "canonical": "https://www.imf.org/en/news/articles/2022/10/14/tr101322-transcript-of-asia-and-pacific-department-press-briefing", "overlayPath": "/en/news/articles/2022/10/14/tr101322-transcript-of-asia-and-pacific-department-press-briefing/index.md", "summary": "Transcript of Asia and Pacific Department Press Briefing", "publishDate": "2022-10-13", "sections": [ { "heading": "Regional growth outlook and shocks", "content": "- April WEO growth forecasts for Asia and Pacific downgraded by 0.9 percentage points in 2022 and 0.7 percentage points in 2023.\n- Growth projected at 4.0 percent in 2022 and 4.3 percent in 2023 for Asia and Pacific.\n- Region’s recent past average growth: 5.5 average growth over the previous two decades.\n- Key materialized shocks:\n - Significant tightening of global financial conditions raising government borrowing costs and depreciating Asia’s currencies.\n - War in Ukraine provoking a sharp slowdown in Europe and keeping global commodity prices high and volatile.\n - China’s uncharacteristic and sharp slowdown weakening regional and global momentum." }, { "heading": "Inflation, monetary policy, and exchange rates", "content": "- Inflation dynamics:\n - Asia saw more modest inflation in 2021; 2022 saw sharp volatility in global commodity markets after Russia’s invasion of Ukraine, putting additional pressure on headline inflation in the first half of 2022.\n - Rising food prices drove headline inflation, particularly in Asian EMDEs; core inflation has also risen as output gaps close.\n - Core inflation now exceeds central bank targets in most Asian economies.\n- Monetary policy guidance:\n - Advice for most of the region: monetary policy should continue tightening.\n - Exceptions: China and Japan, where recovery has been weaker, slack remains substantial, inflation has not risen as sharply, and policy space exists.\n - Baseline: inflation expected to have peaked by end-year.\n - Risk: large exchange rate depreciations could lead to higher and more persistent inflation, requiring more monetary tightening.\n- Exchange rates and trade:\n - Many Asian currencies have depreciated sharply in 2022.\n - Tightening of U.S. monetary policy widened interest rate differentials—a main factor driving depreciation across Asia.\n - War in Ukraine contributed to deterioration of terms of trade for many countries in the region." }, { "heading": "Fiscal policy, debt, and vulnerabilities", "content": "- Fiscal guidance:\n - Fiscal consolidation should continue to support monetary policy stance and stabilize debt.\n - Given limited fiscal space, interventions to mitigate global food and energy shocks on vulnerable households should be well targeted, temporary, and budget neutral to sustain consolidation.\n- Debt dynamics and risks:\n - Asia is now the largest debtor in the world besides being the biggest saver.\n - Several countries are at high risk of debt distress.\n - Public and private debt dynamics worsened following the pandemic because of slower growth, rising rates, and higher debt levels.\n - Asia’s share of global debt rose from 25 percent pre-pandemic to 38 percent.\n - Large depreciations and rising interest rates could trigger financial stress in countries with high leverage among non-financial corporates and households, unhedged balance sheets, and refinancing risks.\n - If interest rates rise substantially, the fiscal balance needed to stabilize debt would increase, crowding out fiscal space for other priorities." }, { "heading": "Fragmentation, trade, and integration", "content": "- Geo-economic fragmentation:\n - Signs of growing geo-economic fragmentation are a concern.\n - Asia and Pacific play a central role in global production and would suffer significant losses under sharp fragmentation scenarios that divide the world into separate trading blocs.\n - The Regional Economic Outlook (launch on October 28) contains a chapter documenting potential losses from fragmentation scenarios.\n- Regional integration:\n - Inter-regional trade in Asia constitutes over half of total Asian trade.\n - RCEP is welcomed as it demonstrates continued appetite for further regional integration and has the potential to promote trade, investment, and growth.\n - Continued efforts at multilateral solutions, including through the WTO, remain important." }, { "heading": "Country-specific points and forecasts", "content": "- China:\n - Growth forecast revised to 3.2 percent for this year and 4.4 percent for next year.\n - Main headwinds: zero-COVID strategy and continuing stress in the real estate sector, plus weak external demand.\n - Recommended policy actions: find a safe exit from zero-COVID; comprehensive strategy to address real estate distress (including completion of presold houses and resolving property distress); provide more targeted fiscal support to boost consumption via improved social safety nets and targeted transfers; address medium-term productivity and labor force challenges.\n- India:\n - Forecasted growth next year: 6.1 percent.\n - IMF view: 6.1 percent remains a bright spot globally; limited fiscal space constrains large-scale fiscal support; monetary policy likely to maintain a tightening bias given inflation; structural reforms and addressing scarring are key to mitigate slowdown risks.\n- Bangladesh:\n - Growth forecast this year: 7.2 percent; forecast for next year: 6 percent.\n - Taka has depreciated by about 20 percent; reserves have gone down but remain at a comfortable level.\n - Bangladesh has requested a program from the IMF composed of a regular UCT program and Resilience and Sustainability Trust program; negotiation mission to begin next week.\n- Vietnam:\n - First eight months growth: 8.8 percent.\n - Growth forecast this year revised to 7 percent (instead of 6 percent in prior outlook); forecast for next year: 6.2 percent.\n - Sources of growth: fiscal support, vaccination progress, strong export performance, manufacturing, and domestic consumption.\n - Recent financial jitters noted; State Bank of Vietnam supported liquidity and communication; need to improve transparency in the financial sector and examine banking–property interlinkages.\n- Indonesia:\n - Projected real GDP growth for 2023: 5 percent.\n - Challenges: risk from a steeper-than-expected global tightening cycle and China slowdown; commodity price declines could affect growth and the current account.\n - Strengths: low public debt largely in local currency and strong policies and institutions.\n- Nepal:\n - Program with the IMF ongoing; post-Covid recovery continuing.\n - Growth forecast: 4.2 percent this year.\n - Reserves have declined but remain above six months of imports.\n - Nepal Rastra Bank has raised interest rates; IMF supports maintaining a tightening bias and conservative implementation of measures; supports phase-out of import restrictions planned in October.\n- Sri Lanka:\n - IMF reached a staff-level agreement on a four-year EFF program on September 1.\n - Initial disbursement requires IMF Board approval contingent on authorities taking prior actions and on reaching a solution on the debt situation.\n - Sri Lanka’s debt is assessed as unsustainable at this stage.\n - Two financing assurances needed for Board approval:\n - Official bilateral creditors’ assurance to restore debt sustainability in the context of the program.\n - Assurance that good faith efforts are underway to deal with private sector debt.\n - Timeline for debt negotiations is uncertain and depends on creditors and complexity; IMF is working with World Bank, Asian Development Bank, and Asian Investment Bank to help close the financing gap and address longer-term growth problems.\n - Sri Lanka remains a middle-income country; EFF is a regular IMF facility (non-concessional)." }, { "heading": "Policy recommendations and priorities", "content": "- Short-term:\n - Continue monetary tightening where inflation and core inflation are above targets to anchor expectations.\n - Implement targeted, temporary, and budget-neutral social support to shield vulnerable households from food and energy shocks where fiscal space is limited.\n - Use macroprudential tools and strengthen financial sector transparency to limit financial stability risks from currency depreciations and rising rates.\n- Medium-term:\n - Address real economy scarring (education disruptions, labor market shifts) to prevent long-term human capital losses.\n - Enhance productivity through structural reforms and digitalization; narrow digital divides and promote digital literacy (IMF programs such as Govtac support digitalization and government reform implementation).\n - Reduce risk of geo-economic fragmentation by lowering trade policy uncertainty and rolling back damaging trade restrictions; pursue multilateral solutions.\n - Strengthen debt transparency, debt management, and frameworks to handle sovereign and private debt distress.\n\nTranscript: Asia and Pacific Department press briefing, October 13, 2022 (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- Nepal and the IMF\n- New Zealand and the IMF\n- Sri Lanka and the IMF\n- Vietnam and the IMF\n- Transcripts\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2022/10/14/tr101322-transcript-of-asia-and-pacific-department-press-briefing" } ], "bullets": [ "[Markdown version](/en/news/articles/2022/10/14/tr101322-transcript-of-asia-and-pacific-department-press-briefing/index.md)", "[Structured JSON version](/en/news/articles/2022/10/14/tr101322-transcript-of-asia-and-pacific-department-press-briefing/index.json)", "[Bundle manifest](/en/news/articles/2022/10/14/tr101322-transcript-of-asia-and-pacific-department-press-briefing/bundle-manifest.json)", "Published: October 13, 2022", "April WEO growth forecasts for Asia and Pacific downgraded by 0.9 percentage points in 2022 and 0.7 percentage points in 2023.", "Growth projected at 4.0 percent in 2022 and 4.3 percent in 2023 for Asia and Pacific.", "Region’s recent past average growth: 5.5 average growth over the previous two decades.", "Key materialized shocks:", "Inflation dynamics:", "Monetary policy guidance:", "Exchange rates and trade:", "Fiscal guidance:", "Debt dynamics and risks:", "Geo-economic fragmentation:", "Regional integration:", "China:", "India:", "Bangladesh:", "Vietnam:", "Indonesia:", "Nepal:", "Sri Lanka:", "Short-term:", "Medium-term:", "[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)", "[Nepal and the IMF](http://www.imf.org/external/country/NPL/index.htm)", "[New Zealand and the IMF](http://www.imf.org/external/country/NZL/index.htm)", "[Sri Lanka and the IMF](http://www.imf.org/external/country/LKA/index.htm)", "[Vietnam and the IMF](http://www.imf.org/external/country/VNM/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)" ], "alternates": { "markdown": "/en/news/articles/2022/10/14/tr101322-transcript-of-asia-and-pacific-department-press-briefing/index.md", "json": "/en/news/articles/2022/10/14/tr101322-transcript-of-asia-and-pacific-department-press-briefing/index.json", "bundleManifest": "/en/news/articles/2022/10/14/tr101322-transcript-of-asia-and-pacific-department-press-briefing/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T01:34:56.339Z" }