{ "title": "Transcript of Asia Pacific Department April 2024 Press Briefing", "publication": "IMF News, April 18, 2024", "sourceUrl": "https://www.imf.org/en/news/articles/2024/04/18/tr041824-apd-press-briefing", "canonical": "https://www.imf.org/en/news/articles/2024/04/18/tr041824-apd-press-briefing", "overlayPath": "/en/news/articles/2024/04/18/tr041824-apd-press-briefing/index.md", "summary": ": Good morning, everyone. Thank you for attending the IMF's press briefing on the Regional Economic Outlook for Asia and Pacific.", "publishDate": "2024-04-18", "sections": [ { "heading": "Growth", "content": "- Regional outturns and revisions\n - Growth for the region reached 5 percent in 2023, much stronger than a growth of 3.9 percent in 2022.\n - The 2023 outturn was 0.4 percentage points higher than what was projected in the October 2023 Regional Economic Outlook.\n - The region is projected to grow by 4.5 percent in 2024, an upward revision of 0.3 percentage points relative to October.\n - The region is projected to grow by 4.3 percent in 2025.\n - With this, Asia would contribute about 60 percent of global growth.\n- Drivers of growth (by country group)\n - China and India: investment expected to contribute disproportionately to growth, much of it public, especially in India.\n - Emerging Asia (outside China and India): robust private consumption will remain the main growth engine.\n - Some advanced economies (e.g., Korea): positive impulse from exports (including strong global demand for high end semiconductors); domestic demand to strengthen only gradually." }, { "heading": "Inflation and Monetary Policy", "content": "- Regional inflation dynamics and groupings\n - Group 1 (inflation still above target): Korea, Australia, New Zealand — persistent price pressures from services.\n - Group 2 (headline and core inflation contained): most Asian emerging markets and Japan.\n - Group 3 (low inflation): China and Thailand — owed to falling commodity prices and weak demand.\n- Outlook and policy guidance\n - Expectation that inflation will converge to central bank targets, requiring a differentiated policy approach:\n - \"Tighter for longer\" stance where inflation is elevated.\n - Accommodative macroeconomic policies where there is sizable slack.\n - U.S. monetary policy impacts:\n - IMF staff analysis shows U.S. interest rates have a strong and immediate impact on Asian financial conditions and exchange rates.\n - Recommendation: Asian central banks should focus on domestic inflation and avoid making decisions overly dependent on anticipated Federal Reserve moves; following the Fed too closely could undermine domestic price stability.\n- Exchange rates and intervention views\n - Many Asian currencies have depreciated, largely reflecting interest rate differentials with the U.S.\n - On the Japanese yen:\n - The yen has depreciated by about 9 percent against the U.S. dollar so far this year (speaker’s assessment).\n - Japanese authorities are committed to a flexible exchange rate regime; G7 reaffirmation of commitment to a market-determined exchange rate was noted.\n - Guidance to authorities: allow exchange rates to move to act as shock absorbers while focusing monetary policy on domestic inflation pressures." }, { "heading": "China: Performance, Risks, and Policy Implications", "content": "- Recent data and assessment\n - China's GDP in the first quarter of 2024 grew by 5.3 percent year-on-year.\n - The Q1 outturn was higher than staff projections (staff projection cited as 4.6 percent) and higher than market projections.\n - Other high-frequency indicators (manufacturing and PMI services in March) were reported as \"quite strong\".\n - The property sector remains subdued; inflation turned negative in late 2023 and early 2024 but returned to positive in February (March CPI cited as 0.1 percent in baseline remarks).\n- Spillovers and channels\n - A more protracted slowdown in China would negatively affect the region through multiple channels:\n - Lower Chinese export prices (observed in H2 2023) can pressure profit margins of competitors and reduce export volumes for countries producing similar goods (e.g., Vietnam and Korea).\n - IMF past analysis cited: a one percentage point increase in Chinese growth has a 0.3 percentage point effect on growth in other countries in the region over the medium term.\n - Upside channel: robust, well-targeted policy support in China (for example, measures addressing stresses in the property sector) can restore consumer confidence and boost domestic demand.\n- Policy advice for China\n - Distinguish support that boosts domestic demand (e.g., addressing property sector stresses, strengthening social safety nets) from measures that primarily boost supply capacity (which could reinforce deflationary pressures).\n - Address misallocation risks: scale back industrial policies that distort competitive neutrality, and accelerate SOE reform to prevent prolonged support for unprofitable SOEs." }, { "heading": "Trade, Shipping Disruptions, and Geoeconomic Risks", "content": "- Red Sea and shipping impacts\n - Attacks on cargo ships in the Red Sea forced rerouting of vessels between Asia and Europe, driving up container prices and shipping costs.\n - Shipping disruptions are particularly detrimental for Pacific Island countries that depend heavily on imports and are poorly connected to global shipping networks.\n- Geoeconomic fragmentation\n - Rapid implementation of trade restrictions in Asia and elsewhere poses a large risk; Asia has benefited substantially from trade integration, making geoeconomic fragmentation a major downside risk." }, { "heading": "Fiscal Policy and Debt Sustainability", "content": "- Regional fiscal assessment and recommendations\n - Governments should focus on consolidation to curb the rise in public debt and rebuild fiscal buffers.\n - Forecasts show debt ratios would stabilize for most economies on current fiscal plans, provided governments underpin these plans with concrete policies and follow through.\n - Even with stabilization, debt would remain significantly higher than before the Pandemic.\n- Growth-friendly consolidation strategy\n - Priority on revenue mobilization: collect more revenue and streamline expenditure rather than across-the-board expenditure cuts that would harm growth.\n - Reducing debt service costs would free up budgetary space for development needs, social safety nets, and climate mitigation/adaptation." }, { "heading": "Country Highlights and Specific Figures", "content": "- India\n - Registered strong growth; IMF projects 6.8 percent for FY ‘24, ‘25.\n - Drivers: private consumption and public investment (CapEx in infrastructure); some recent uptick in private investment.\n - Inflation about 4.7 percent (noted as \"close to the mid target of 4 percent\").\n - Downside risks: volatile global commodity prices (notably oil), food price shocks, weather-related shocks, and geoeconomic fragmentation.\n - Policy priority: invest in education and health to equip a growing young labor force (about 15 million people added to the labor force every year).\n- Sri Lanka\n - Program outcomes/indicators cited:\n - Real GDP expanded by 3 percent year on year in the second half of 2023.\n - March inflation was 0.9 percent versus a 70 percent peak in September 2022.\n - Reserves increased by 2.5 billion in 2023.\n - Primary balance reached a surplus of 0.6 percent of GDP in 2023.\n - Caveat: negotiations on debt restructuring (official and private creditors) continue; progress with official creditors described as encouraging, private creditor discussions ongoing.\n - Ongoing priorities: fiscal consolidation, reserve rebuilding, structural reforms including governance and anti-corruption.\n- Vietnam\n - Projected growth \"close to 6 percent in 2024\" as a rebound from a challenging 2023.\n - Medium-term growth expectation: about 6.5 percent.\n - Drivers: relatively strong external demand and supportive policy stance; need to improve policy mix and business environment to realize potential.\n- Bangladesh\n - Program context: hit by multiple shocks; emphasis on monetary tightening to tackle high inflation.\n - Policy recommendation highlighted: transition to a more flexible exchange rate regime to build external resilience and reserves.\n- Korea\n - Export impulse expected from strong global demand for high end semiconductors.\n - Exchange rate moves: volatility noted but \"limited currency mismatches and manageable pass through to inflation\" reduce macro balance-sheet risks.\n - Monetary policy guidance: focus on domestic inflation (which remains above target in some economies), maintain a tight stance where appropriate.\n- Nepal and low-income countries\n - Concern highlighted: some low-income countries allocate more to debt repayment than capital expenditure, risking crowding out of capital spending.\n - Recommendation: pursue growth-friendly fiscal consolidation with emphasis on revenue mobilization (reduce exemptions, improve tax efficiency) rather than large cuts to capital spending." }, { "heading": "Near-term shocks and quantified effects", "content": "- Example provided from IMF Research Department:\n - A 10 percent increase in oil prices would weigh down global output by 0.15 percent in the following year and increase global inflation by about 0.4 percentage points.\n - Implication: oil importers in the region (e.g., Nepal) would experience larger adverse impacts from oil price rises; shipping route disruptions (e.g., Red Sea) raise shipping costs and affect trade-dependent countries." }, { "heading": "Events and Next Steps", "content": "- Regional Economic Outlook launch\n - The Regional Economic Outlook for Asia and Pacific will be launched on April 30th in Singapore.\n\nTranscript of Asia Pacific Department April 2024 Press Briefing — IMF Communications Department, April 18, 2024\n\n---\n\n\n References\n\n- Australia and the IMF\n- Bangladesh and the IMF\n- India and the IMF\n- Japan and the IMF\n- Nepal and the IMF\n- New Zealand and the IMF\n- Republic of Korea and the IMF\n- Singapore and the IMF\n- Sri Lanka and the IMF\n- Vietnam and the IMF\n- IMF Policy Advice -- A Factsheet\n- Transcripts\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/04/18/tr041824-apd-press-briefing" } ], "bullets": [ "[Markdown version](/en/news/articles/2024/04/18/tr041824-apd-press-briefing/index.md)", "[Structured JSON version](/en/news/articles/2024/04/18/tr041824-apd-press-briefing/index.json)", "[Bundle manifest](/en/news/articles/2024/04/18/tr041824-apd-press-briefing/bundle-manifest.json)", "Published: April 18, 2024", "Regional outturns and revisions", "Drivers of growth (by country group)", "Regional inflation dynamics and groupings", "Outlook and policy guidance", "Exchange rates and intervention views", "Recent data and assessment", "Spillovers and channels", "Policy advice for China", "Red Sea and shipping impacts", "Geoeconomic fragmentation", "Regional fiscal assessment and recommendations", "Growth-friendly consolidation strategy", "India", "Sri Lanka", "Vietnam", "Bangladesh", "Korea", "Nepal and low-income countries", "Example provided from IMF Research Department:", "Regional Economic Outlook launch", "[Australia and the IMF](http://www.imf.org/external/country/AUS/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)", "[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)", "[Republic of Korea and the IMF](http://www.imf.org/external/country/KOR/index.htm)", "[Singapore and the IMF](http://www.imf.org/external/country/SGP/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)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[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/2024/04/18/tr041824-apd-press-briefing/index.md", "json": "/en/news/articles/2024/04/18/tr041824-apd-press-briefing/index.json", "bundleManifest": "/en/news/articles/2024/04/18/tr041824-apd-press-briefing/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T02:54:49.142Z" }