{
  "title": "Transcript of the Asia and Pacific Department Press Briefing",
  "publication": "IMF News, October 13, 2023",
  "sourceUrl": "https://www.imf.org/en/news/articles/2023/10/13/tr101323-transcript-of-the-asia-and-pacific-department-press-briefing",
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  "summary": "Transcript of the Asia and Pacific Department Press Briefing",
  "publishDate": "2023-10-13",
  "sections": [
    {
      "heading": "Global outlook and main risks",
      "content": "- Global growth is forecast to slow from 3.5 percent in 2022 to 3 percent in 2023 and 2.9 percent in 2024.\n- Outlook is supported by continued consumption dynamism in the U.S., but faces pressures from:\n  - China's worsening property crisis;\n  - tight policy stances around the world;\n  - the consequence of Russia's war in Ukraine;\n  - growing geoeconomic fragmentation.\n- IMF blog mentioned: \"Asia Continues to Fuel Global Growth, But Economic Momentum is Slowing.\"\n- Full Regional Economic Outlook Report launch: October 18 (next Wednesday), in Singapore at 9 a.m. local time."
    },
    {
      "heading": "Asia-Pacific regional growth and contribution",
      "content": "- Asia-Pacific region growth: expected to grow by 4.6 percent in 2023 and by 4.2 percent in 2024.\n- Region projected to contribute to about two-thirds of global growth in 2023.\n- ASEAN economies: expected growth of 4.2 percent in 2023 and 4.6 percent in 2024; downward revision of 0.4 percentage points in 2023 and 0.3 percentage points in 2024 relative to April WEO.\n- GDP in the Pacific Island countries with high dependance on tourism is still more than 10 percent below pre-pandemic levels with challenges from higher fiscal deficits, elevated debt, and shrinking fiscal space."
    },
    {
      "heading": "Major economies in the region — forecasts and drivers",
      "content": "- China:\n  - Revised growth forecast: 5 percent for 2023 and 4.2 percent for 2024.\n  - Reopening boosted services and retail sales; manufacturing benefit proving short-lived.\n  - Real estate sector: further pressures on debt repayments, home sales, and investment.\n  - Manufacturing PMI: showed an expansion of activity in September; retail sales year-on-year growth improved but monthly data are volatile.\n- Japan:\n  - Projected to grow by 2 percent in 2023 (0.7 percentage point increase from April WEO forecast).\n  - Drivers: strong domestic demand, accommodative monetary and fiscal policies.\n- India:\n  - Expected to grow by 6.3 percent in both 2023 and 2024.\n  - Drivers: large public capital expenditure push and resilient domestic demand.\n- Korea:\n  - Near-term growth dampened by downturn in technology exports; expected to rebound next year as technology cycle turns.\n- Australia:\n  - Large public investment and robust external demand should lift growth, but domestic demand weakening due to rising mortgage payments and lower real disposable incomes."
    },
    {
      "heading": "Activity patterns across sectors and countries",
      "content": "- Services: continued resilience and strength across Asia (PMI evidence).\n- Manufacturing: weakness across Asia; persistent downturn of the technology cycle weighing on manufacturing in advanced economies and, in September, manufacturing activity in Asia's emerging markets excluding China moved into negative territory.\n- China-specific note: core inflation came at 0.7 percent; IMF does not see deflation in baseline and expects core inflation to continue rising as recovery continues and capacity utilization increases."
    },
    {
      "heading": "Inflation, monetary policy guidance, and risks",
      "content": "- Headline inflation has declined from post-pandemic peaks as global commodity prices receded and monetary policy bites, but signs of renewed price pressures have emerged more recently.\n- In a few advanced economies in Asia, core inflation remains sticky due to tight labor markets and positive output gaps.\n- Except for Japan, inflation is expected to return to within target ranges by the end of 2024.\n- Policy guidance:\n  - Central banks should \"stay the course\" with policies to ensure inflation is durably at target and expectations are anchored.\n  - With accommodative financial conditions in Asia's emerging markets there is \"no urgent need to ease monetary policy.\"\n  - Avoid rushing to cut rates unless inflation comes down to target ranges; targeted support to the poor and vulnerable recommended where subsidies are reduced."
    },
    {
      "heading": "Financial markets, vulnerabilities, and supervisory advice",
      "content": "- Financial conditions in advanced Asia have tightened as higher rates take hold; emerging Asia has seen accommodative conditions but is exposed to external pressures.\n- Recent developments:\n  - Rise in U.S. long-term yields after the September U.S. Fed meeting has exerted pressure.\n  - Long-term local currency sovereign yields in some Asia and Pacific economies have increased substantially since the FOMC meeting in September.\n  - Asian currencies have depreciated across the board, though to a limited extent compared to previous USD strengthening episodes.\n- Supervisory and policy recommendations:\n  - Financial supervisors should remain vigilant on systemic risks and calibrate macroprudential measures given higher leverage and rates.\n  - If financial stress emerges, deploy liquidity and other support measures promptly, and modernize resolution frameworks."
    },
    {
      "heading": "Structural challenges and policy priorities",
      "content": "- Region faces persistent medium-term output losses, China's structural slowdown, geoeconomic fragmentation, and inflation.\n- Policy priorities highlighted:\n  - Rebuild fiscal buffers after pandemic support; wind down broad pandemic measures and target assistance to poor and vulnerable.\n  - Bolster capital and liquidity buffers in financial sector.\n  - Use exchange rate flexibility to absorb shocks.\n  - Continue structural reforms to improve productivity, connectivity, digitalization, and business environment (examples for China: restructure distressed developers and unfinished projects, restructure local government debt, price adjustments, level playing field between private and state-owned enterprises, reduce internal restrictions on labor mobility).\n  - For Sri Lanka and similar cases: pursue SOE reforms and targeted cost-reflective pricing with compensatory targeted support for the poor and vulnerable."
    },
    {
      "heading": "Scenarios on geoeconomic fragmentation and trade reconfiguration",
      "content": "- IMF analysis on de‑risking/geofragmentation scenarios (\"friendshoring\" and \"reshoring\"):\n  - Both scenarios reduce global growth and reduce China's growth.\n  - Historical/quantified linkage: when Chinese growth declines by 1 percentage point, on average other economies' growth declines by 0.3 percentage points over the medium term.\n  - Short-term trade diversion may benefit some countries (e.g., Vietnam) from FDI or assembly relocation, but over the long run aggregate demand losses mean \"everybody loses.\"\n  - Recommendation: fight against forces of fragmentation and de‑risking; promote integration."
    },
    {
      "heading": "Country-specific notes and program status references",
      "content": "- Korea: began retrenching fiscal support in the second half of 2022 and continued in 2023 to build fiscal buffers.\n- Sri Lanka:\n  - IMF emphasizes cost-recovery pricing and targeted support; SOE and electricity sector reforms part of program engagement.\n  - Debt restructuring engagements and financing assurances will be assessed in reviews; IMF does not negotiate private creditor agreements but assesses consistency with debt targets and macro framework.\n- Nepal:\n  - Growth stalled last year; projected mild recovery of 3.5 percent for the year supported by strong tourism and additional hydropower capacity.\n  - Increased absorption of external concessional financing and improved domestic revenue mobilization recommended.\n  - Progress: ECF-supported program has made good progress and led to a staff level agreement on the third review under the ECF.\n- Bangladesh:\n  - IMF projection: 6 percent growth for FY '24 (unchanged from FY '23); government target cited at 7.5 percent for FY '24.\n  - Policy advice: maintain macro stability (tight monetary policy, unified exchange rate flexibility, prudent fiscal stance) while pursuing revenue mobilization and structural reforms to raise medium-term potential.\n- Indonesia:\n  - IMF forecasts 5 percent growth in 2023 and 5 percent in 2024.\n  - Macro policies described as prudent: inflation control, prudent fiscal stance, structural dynamism.\n  - IMF hopes continuity of reform-oriented policies through upcoming political cycles.\n\nTranscript of the Asia and Pacific Department Press Briefing — October 13, 2023, 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/2023/10/13/tr101323-transcript-of-the-asia-and-pacific-department-press-briefing"
    }
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    "Published: October 13, 2023",
    "Global growth is forecast to slow from 3.5 percent in 2022 to 3 percent in 2023 and 2.9 percent in 2024.",
    "Outlook is supported by continued consumption dynamism in the U.S., but faces pressures from:",
    "IMF blog mentioned: \"Asia Continues to Fuel Global Growth, But Economic Momentum is Slowing.\"",
    "Full Regional Economic Outlook Report launch: October 18 (next Wednesday), in Singapore at 9 a.m. local time.",
    "Asia-Pacific region growth: expected to grow by 4.6 percent in 2023 and by 4.2 percent in 2024.",
    "Region projected to contribute to about two-thirds of global growth in 2023.",
    "ASEAN economies: expected growth of 4.2 percent in 2023 and 4.6 percent in 2024; downward revision of 0.4 percentage points in 2023 and 0.3 percentage points in 2024 relative to April WEO.",
    "GDP in the Pacific Island countries with high dependance on tourism is still more than 10 percent below pre-pandemic levels with challenges from higher fiscal deficits, elevated debt, and shrinking fiscal space.",
    "China:",
    "Japan:",
    "India:",
    "Korea:",
    "Australia:",
    "Services: continued resilience and strength across Asia (PMI evidence).",
    "Manufacturing: weakness across Asia; persistent downturn of the technology cycle weighing on manufacturing in advanced economies and, in September, manufacturing activity in Asia's emerging markets excluding China moved into negative territory.",
    "China-specific note: core inflation came at 0.7 percent; IMF does not see deflation in baseline and expects core inflation to continue rising as recovery continues and capacity utilization increases.",
    "Headline inflation has declined from post-pandemic peaks as global commodity prices receded and monetary policy bites, but signs of renewed price pressures have emerged more recently.",
    "In a few advanced economies in Asia, core inflation remains sticky due to tight labor markets and positive output gaps.",
    "Except for Japan, inflation is expected to return to within target ranges by the end of 2024.",
    "Policy guidance:",
    "Financial conditions in advanced Asia have tightened as higher rates take hold; emerging Asia has seen accommodative conditions but is exposed to external pressures.",
    "Recent developments:",
    "Supervisory and policy recommendations:",
    "Region faces persistent medium-term output losses, China's structural slowdown, geoeconomic fragmentation, and inflation.",
    "Policy priorities highlighted:",
    "IMF analysis on de‑risking/geofragmentation scenarios (\"friendshoring\" and \"reshoring\"):",
    "Korea: began retrenching fiscal support in the second half of 2022 and continued in 2023 to build fiscal buffers.",
    "Sri Lanka:",
    "Nepal:",
    "Bangladesh:",
    "Indonesia:",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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