{ "title": "Transcript of Press Briefing: Asia and Pacific Department Regional Economic Outlook October 24", "publication": "IMF News, October 24, 2024", "sourceUrl": "https://www.imf.org/en/news/articles/2024/10/24/tr102424-transcript-of-apd-reo", "canonical": "https://www.imf.org/en/news/articles/2024/10/24/tr102424-transcript-of-apd-reo", "overlayPath": "/en/news/articles/2024/10/24/tr102424-transcript-of-apd-reo/index.md", "summary": "In the first half of this year, Asia's economies grew stronger than we had expected. As a result, we have upgraded our regional forecast to 4.6 percent in 2024 and to 4.4 percent in 2025. With this, Asia remains the world's engine of growth.", "publishDate": "2024-10-24", "sections": [ { "heading": "Regional growth outlook", "content": "- Regional forecasts upgraded to 4.6 percent in 2024 and to 4.4 percent in 2025.\n- Asia generates 60 percent of global growth versus about 40 percent share in global GDP.\n- Advanced Asia: domestic demand expected to strengthen as past monetary tightening fades.\n- Emerging markets outside China and India: expected robust and broad based growth." }, { "heading": "Inflation and monetary policy", "content": "- Emerging Asia: disinflation process is essentially complete.\n- Exceptions in advanced Asia: Australia and New Zealand where wage pressures keep services inflation elevated; these pressures are expected to fade \"within the next 12 months or so.\"\n- Core inflation in China fell to 0.1 percent year-on-year in September.\n- Many Asian central banks now have room to cut interest rates earlier in the year as the U.S. Federal Reserve has started its own easing cycle.\n- Bank of Japan: welcome for policy rate increase in July; nominal neutral rate estimates for Japan range from 1 to 2 percent; IMF now expects the policy rate to reach 1.5 percent in 2027." }, { "heading": "China: activity, policy measures, and outlook", "content": "- China growth revised down to 4.8 percent in 2024 (from 5 percent in July WEO update/Article IV consultations).\n- Drivers of downgrade: deceleration since Q1, continued deterioration in the property sector weighing on investment, weakened private consumption amid low consumer confidence.\n- September monetary and financial sector policies were incorporated into the baseline forecast; additional fiscal and housing measures announced subsequently (October) could provide upside potential, especially in 2025 when measures are likely to take effect.\n- Q3 data came out marginally weaker than expected; the forecast reflects measures announced in September.\n- IMF view on policy: central government support to finish pre-sold housing and resolve unviable developers is important in the near term; medium-term consolidation and refocusing on social safety nets and pension reform recommended to rebalance demand and reduce imbalances." }, { "heading": "External environment and trade fragmentation", "content": "- External environment described as tougher; risks now tilted to the downside.\n- Tentative signs global demand could weaken, including from the United States — negative for export-dependent Asia.\n- Evidence of trade flow adjustments: China exports relatively more to emerging markets and less to advanced economies than five years ago; ASEAN economies export more to China and the U.S. as U.S. and Chinese targeted trade is channeled through third countries.\n- IMF assessment: trade fragmentation is costly, slows global growth, and disproportionately harms Asia due to deep integration into global supply chains.\n- Short-run: some third-party Asian economies (e.g., Thailand, Korea, Singapore, Vietnam) have captured targeted export opportunities; long-run: everyone loses from fragmentation as global demand falls." }, { "heading": "Fiscal policy, public debt, and fiscal consolidation", "content": "- Fiscal space varies: many Asian central banks have room to ease, but fiscal space is limited in many countries.\n- Pacific Island countries: public debt increased sharply during the Pandemic; debt ratios almost doubled and have hardly come down since then, raising debt service costs and constraining spending power.\n- IMF recommendation: for some economies with weak private demand, somewhat larger fiscal deficits may be justified in the near term; for most Asian countries, it is time to start budget reconsolidation in earnest to build buffers against downside risks and preserve spending power for long-term challenges (climate change, population aging).\n- Across Asia since the global financial crisis: public debt has been rising; growth-friendly fiscal consolidation is emphasized." }, { "heading": "Structural transformation and long-term growth strategy", "content": "- Asia’s traditional model: shifting labor from agriculture into manufacturing and exporting manufactured goods — described as a spectacular development success.\n- Recent decades: economies shifted more into services; modern services often more productive than manufacturing.\n- Trend expected to continue as income rises and demand for services increases.\n- Digital technology is making some services (business and finance) tradable internationally — presents large growth opportunities if reforms are pursued.\n- Policy priorities: education and training to equip workers with skills for modern services; opening services sectors to trade and investment (services remain relatively closed compared with manufacturing).\n- IMF to publish Regional Economic Outlook on November 1 in Tokyo, with an analytical piece about the future of Asia's growth model." }, { "heading": "Country-specific highlights and projections", "content": "- China\n - 2024 growth forecast: 4.8 percent (revised down from 5 percent).\n - Core inflation: 0.1 percent year-on-year in September.\n - Q3 activity: marginally weaker than expected; additional fiscal/housing measures announced could raise 2025 growth.\n- India\n - India seen as the strongest growing major emerging market economy.\n - Last year: 8 percent growth.\n - Current fiscal year: projected 7 percent.\n - Forecast trajectory: 7 percent this year then 6.5 percent (return to potential in coming years).\n - IMF notes scope for higher potential with structural reforms (labor, fiscal, education/skilling, infrastructure).\n- Japan\n - Neutral rate estimates: 1 to 2 percent.\n - Policy rate expected to reach 1.5 percent in 2027.\n - Authorities remain committed to a flexible exchange rate regime; yen has experienced depreciation and appreciation with carry-trade dynamics amplifying moves.\n- Korea\n - 2024 forecast: 2.5 percent.\n - 2025 forecast: 2 percent (growth slowing toward potential).\n - Domestic demand weaker historically due to erosion of purchasing power and high private debt burdens; expected to strengthen as Bank of Korea eases and inflation declines.\n - Highly exposed to U.S.–China trade tensions; further escalation is a major downside risk.\n- Indonesia\n - 2024 projection: 5 percent.\n - 2025 projection: 5.1 percent.\n - Key risks: trade fragmentation, commodity market channels, shifts in monetary expectations and financial volatility.\n- Bangladesh\n - FY25 growth projection revised to 4.5 percent from April projection of 6.6 percent.\n - Reasons: recent slowdown, persistent high inflation; program discussions ongoing regarding next review and financing.\n- Sri Lanka\n - IMF-supported program length: 48 months.\n - Debt restructuring: agreements reached with official creditors and agreement in principle with private creditors; formal agreements with all creditors remain next steps.\n - IMF engagement continues with new government; authorities expressed unanimous consensus to safeguard program gains. Macro-linked bonds discussed as creditor-country negotiation instruments; IMF focuses on consistency with program debt targets and comparability of treatment.\n- Pacific Island countries\n - Public debt increased sharply during the Pandemic; in most countries it has now stabilized or is falling relative to economy size.\n - Risk classification: seven out of 12 countries considered at high risk of debt distress; about 5 at moderate risk.\n - IMF advice: access concessional financing or grants to address climate and long-term needs while avoiding excessive debt burdens.\n- ASEAN and Southeast Asia\n - Some ASEAN economies captured export market share from U.S.–China targeted trade; nonetheless, net effect of fragmentation is negative.\n - Policy recommendations: strengthen multilateral trading system, pursue regional trade integration (especially services), implement horizontal structural reforms (education/upskilling), and maintain macro stability with flexible exchange rates as buffers." }, { "heading": "Policy recommendations (from briefing)", "content": "- Monetary policy\n - As inflation falls, many Asian central banks have room to ease; some may have held back for fear of currency pressure but Fed easing reduces that constraint.\n - Any further BOJ tightening should proceed gradually given balanced inflation risks.\n- Fiscal policy\n - Near-term: targeted, temporary fiscal support in countries with weak private demand may be warranted.\n - Medium-term: begin budget reconsolidation in earnest to build buffers and preserve spending power for long-term priorities (climate, aging).\n - For Pacific islands and countries with high debt, prioritize concessional financing/grants for climate-related and long-term investments.\n- Structural reforms\n - Invest in education and training to equip workers for modern services and digital tradability.\n - Open services sectors to trade and investment to capture global services market opportunities.\n - Implement labor market and fiscal reforms to raise potential growth (noted specifically for India)." }, { "heading": "Q&A summary: risks, data, and program implementation", "content": "- External risks emphasized: further U.S.–China trade tensions and trade fragmentation, weaker global demand (including U.S.), and commodity/market channels for some countries.\n- Data signals referenced: China Q3 weaker than expected; China core inflation at 0.1 percent in September.\n- Program and country-specific operational notes:\n - Nepal: ECF arrangement started in 2022; four reviews completed; fifth review discussions underway after change in government; quantitative performance criteria strong; discussions on structural benchmarks ongoing.\n - Sri Lanka: IMF conducted high-level engagement with new government; third review expected soon; creditor agreements largely advanced but formalization pending; IMF will assess program details in discussions.\n - Bangladesh: mission led by mission chief conducted review; growth lower than prior forecast; discussions on financing and next review ongoing.\n- IMF stance on restructuring instruments: IMF does not dictate specific instruments (e.g., macro-linked bonds) but assesses consistency with program debt targets and comparability of treatment across creditors.\n\nTranscript of Press Briefing: Asia and Pacific Department Regional Economic Outlook October 24\n\n---\n\n\n References\n\n- October 2024 Regional Economic Outlook for Asia and Pacific\n- PRESS CENTER\n- Regional Economic Outlook for the Asia Pacific Department\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/10/24/tr102424-transcript-of-apd-reo" } ], "bullets": [ "[Markdown version](/en/news/articles/2024/10/24/tr102424-transcript-of-apd-reo/index.md)", "[Structured JSON version](/en/news/articles/2024/10/24/tr102424-transcript-of-apd-reo/index.json)", "[Bundle manifest](/en/news/articles/2024/10/24/tr102424-transcript-of-apd-reo/bundle-manifest.json)", "Published: October 24, 2024", "Regional forecasts upgraded to 4.6 percent in 2024 and to 4.4 percent in 2025.", "Asia generates 60 percent of global growth versus about 40 percent share in global GDP.", "Advanced Asia: domestic demand expected to strengthen as past monetary tightening fades.", "Emerging markets outside China and India: expected robust and broad based growth.", "Emerging Asia: disinflation process is essentially complete.", "Exceptions in advanced Asia: Australia and New Zealand where wage pressures keep services inflation elevated; these pressures are expected to fade \"within the next 12 months or so.\"", "Core inflation in China fell to 0.1 percent year-on-year in September.", "Many Asian central banks now have room to cut interest rates earlier in the year as the U.S. Federal Reserve has started its own easing cycle.", "Bank of Japan: welcome for policy rate increase in July; nominal neutral rate estimates for Japan range from 1 to 2 percent; IMF now expects the policy rate to reach 1.5 percent in 2027.", "China growth revised down to 4.8 percent in 2024 (from 5 percent in July WEO update/Article IV consultations).", "Drivers of downgrade: deceleration since Q1, continued deterioration in the property sector weighing on investment, weakened private consumption amid low consumer confidence.", "September monetary and financial sector policies were incorporated into the baseline forecast; additional fiscal and housing measures announced subsequently (October) could provide upside potential, especially in 2025 when measures are likely to take effect.", "Q3 data came out marginally weaker than expected; the forecast reflects measures announced in September.", "IMF view on policy: central government support to finish pre-sold housing and resolve unviable developers is important in the near term; medium-term consolidation and refocusing on social safety nets and pension reform recommended to rebalance demand and reduce imbalances.", "External environment described as tougher; risks now tilted to the downside.", "Tentative signs global demand could weaken, including from the United States — negative for export-dependent Asia.", "Evidence of trade flow adjustments: China exports relatively more to emerging markets and less to advanced economies than five years ago; ASEAN economies export more to China and the U.S. as U.S. and Chinese targeted trade is channeled through third countries.", "IMF assessment: trade fragmentation is costly, slows global growth, and disproportionately harms Asia due to deep integration into global supply chains.", "Short-run: some third-party Asian economies (e.g., Thailand, Korea, Singapore, Vietnam) have captured targeted export opportunities; long-run: everyone loses from fragmentation as global demand falls.", "Fiscal space varies: many Asian central banks have room to ease, but fiscal space is limited in many countries.", "Pacific Island countries: public debt increased sharply during the Pandemic; debt ratios almost doubled and have hardly come down since then, raising debt service costs and constraining spending power.", "IMF recommendation: for some economies with weak private demand, somewhat larger fiscal deficits may be justified in the near term; for most Asian countries, it is time to start budget reconsolidation in earnest to build buffers against downside risks and preserve spending power for long-term challenges (climate change, population aging).", "Across Asia since the global financial crisis: public debt has been rising; growth-friendly fiscal consolidation is emphasized.", "Asia’s traditional model: shifting labor from agriculture into manufacturing and exporting manufactured goods — described as a spectacular development success.", "Recent decades: economies shifted more into services; modern services often more productive than manufacturing.", "Trend expected to continue as income rises and demand for services increases.", "Digital technology is making some services (business and finance) tradable internationally — presents large growth opportunities if reforms are pursued.", "Policy priorities: education and training to equip workers with skills for modern services; opening services sectors to trade and investment (services remain relatively closed compared with manufacturing).", "IMF to publish Regional Economic Outlook on November 1 in Tokyo, with an analytical piece about the future of Asia's growth model.", "China", "India", "Japan", "Korea", "Indonesia", "Bangladesh", "Sri Lanka", "Pacific Island countries", "ASEAN and Southeast Asia", "Monetary policy", "Fiscal policy", "Structural reforms", "External risks emphasized: further U.S.–China trade tensions and trade fragmentation, weaker global demand (including U.S.), and commodity/market channels for some countries.", "Data signals referenced: China Q3 weaker than expected; China core inflation at 0.1 percent in September.", "Program and country-specific operational notes:", "IMF stance on restructuring instruments: IMF does not dictate specific instruments (e.g., macro-linked bonds) but assesses consistency with program debt targets and comparability of treatment across creditors.", "[October 2024 Regional Economic Outlook for Asia and Pacific](https://www.imf.org/en/publications/reo/apac/issues/2024/10/31/regional-economic-outlook-for-asia-and-pacific-october-2024)", "[PRESS CENTER](http://presscenter.imf.org/)", "[Regional Economic Outlook for the Asia Pacific Department](https://www.imf.org/en/Publications/REO/APAC/Issues/2024/10/31/regional-economic-outlook-for-asia-and-pacific-october-2024)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2024/10/24/tr102424-transcript-of-apd-reo/index.md", "json": "/en/news/articles/2024/10/24/tr102424-transcript-of-apd-reo/index.json", "bundleManifest": "/en/news/articles/2024/10/24/tr102424-transcript-of-apd-reo/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T03:23:21.422Z" }