Launch of IMF 2017 Asia and Pacific Regional Economic Outlook
2017-05-18 IMI
Mr. Zhang Zhixiang gave a brief introduction to the guests and the agenda. He said regional economic outlook should not be assessed without considering the global context. Overall, the global economy has regained momentum, but how to achieve sustainable and inclusive growth amongst challenges of protectionism, uncertainties in the market and tightening financial conditions still remains to be a question.
Mr. Raphael Lam, Mr. Wei Benhua, and Ms. Jiang Wei gave opening remarks respectively.
Mr. Raphael Lam commented that the global activity is gaining momentum. Advanced economies are going through cyclical recovery in the near term and subdued growth in the medium term. In emerging markets and developing economies (EMDE), activity in stressed economies is bottoming out, and commodity importers are generally projected to maintain high growth rates. In general, the global economy is recovering, whereas the potential for setbacks is high. Forces shaping the outlook of advanced economies are mainly from cyclical rebounds and the expansionary fiscal policy in the U.S. EMDE on the other hand, face challenges such as the rebalancing in China, adjustment of commodity prices and geopolitical uncertainties. The common challenges facing both advanced economies and EMDE are demographic headwinds and weak productivity growth. Lam stressed that risks in Asia-Pacific region are skewed to the downside, considering the threats to global economic integration, US’s macro economic policy mix, financial threats to EMs, weak demand and balance sheet as well as non-economic shocks. Lam suggested that advanced economies provide cyclical support desirable where demand and inflation are weak and adopt credible strategies needed to put debt on a sustainable path. He also suggested that EMs contain financial risks and make structural reforms to boost potential growth.
Mr. Wei Benhua pointed out in his speech that Asia-Pacific region, slowed down in its economy though, still remains to be a champion in growth across the world. The overall outlook is positive, but risks remain, with protectionism arising in the west, and aging population diminishing the growth. He made clear that the credit expansion in China should not be exaggerated; after 2008 crisis, Chinese government has implemented positive measures to contain credit expansion. He also mentioned the Belt and Road Summit Forum held recently in Beijing, pointing out a serious of new policies announced in the forum, including large amounts of capital newly injected to the Belt and Road Initiative which he ascertained would bring driving forces to the countries and regions along the belt and road.
Ms. Jiang Wei gave her acknowledgement to IMF’s role in stabilizing global financial market and IMI’s contribution in academic research. She gave a brief introduction to Guotai Junan’s mission and status, assuring that Guotai Junan looks forward to cooperating with IMF, IMI and other institutions in the future. She also encouraged investors to seize opportunities after the “capital winter”, embracing the pro-growth environment where the Xiong’an new district, the Belt and Road Initiative and supply-side reform are in full swing.
Mr. Ranil Salgado gave a keynote speech of “preparing for chopping waters”. He admitted that Asia-Pacific picked up with positive momentum since mid-2016, China and Japan having a strong near-term outlook in particular. He stated that the favorable factors include China’s economic transition, strong domestic demand in Asia and the modest recovery of commodity prices, but breadth and sustainability of the pickup still remain unclear. The risks, on balance, remain slanted to the downside. Near-term risks include tighter-than-expected global financial conditions, inward-looking policies in major global economies and a bumpier-than-expected transition in China. Mid-term risks include aging population, declining productivity. Having that being said, Asian EMs appear relatively better positioned to deal with external shocks, as is shown from selected vulnerability indicators. Mr. Salgado suggested that, in order to deal with the risks, a three-pronged approach (monetary, fiscal, and structural policies) remains appropriate. Asia should strengthen its macro-prudential framework, enhance exchange rate flexibility, preserve the gains from trade integration and continue multilateral cooperation.
Mr. Minsuk Kim gave his speech with the title of “Demographic Transition in Asia: Risk of Growing Old Before Becoming Rich”. According to his research, Asia is aging fast and many parts of Asia are at risk of growing old before becoming rich. Overall, aging in Asia will subtract 0.1% per year from global growth. The demographic impact on future growth will be significant. Aging could impose a further drag on growth by lowering Total Factor Productivity. There is scope to raise labor force participation, but not enough to offset the baseline growth impact. Demographics affect savings, investment, and consequently current account balance. Old-age dependency rate and aging speed are particularly important determinants of current account norms. Current account balances today will persist over the coming decades, but the marginal impact on global imbalances will be small. He predicted that the demographic trends will put downward pressures on real interest rates over the next decade, but at the same time, domestic demographic trends will matter less in open economies. He suggested that protecting the vulnerable elderly and prolonging strong growth take on a particular urgency. To that end, it requires to adopt monetary and fiscal polies address macro-economic imbalances early on before aging sets in. Besides, it is also important to raise labor force participation of women and elderly, implement active labor market policies, and improve the pension systems.
After tea break, Mr. Ranil Salgado, Mr. Shi Dexin, Mr. Hu Yuwei, Mr. Hua Changchun held a roundtable discussion concerning aging population, globalization, economy and trade.
