Speech

Remarks by IMF’s Deputy Managing Director Kenji Okamura at a Regional Economic Outlook Event

May 19, 2022

As prepared for delivery.

Distinguished guests, Ladies and Gentlemen, and Fellow JISPA scholars,

Welcome, and thank you.  It is a great pleasure to have this event in Tokyo face-to-face for the first time since early 2020. Personally, I feel particularly happy, because this is my first opportunity to come back to Tokyo as a Deputy Managing Director of the IMF. 

Today, we will share the IMF’s view on the global and regional economic outlook for the Asia-Pacific.

We know that the past two years have been challenging.  And while countries are beginning to recover, it’s important to remember: the pandemic is not over yet.  Now, the war in Ukraine – a humanitarian tragedy with economic consequences – has compounded the challenge. Today, we face pandemic and war: a crisis on top of a crisis.

In the region, the war in Ukraine is affecting growth in two main ways: higher commodity prices and the effects of slower growth in Europe.

Throughout Asia, consumers are feeling pains from higher food and energy prices. Exporters face weaker demand from their European trading partners. Strained supply chains make getting goods to market slower and more expensive.

All of this adds to global inflationary pressures. In the US and Europe, prices are now rising at the fastest rates in a generation. A decade of unconventional monetary accommodation is now being withdrawn faster than was previously expected. There is a risk that drifting inflation expectations could require an even more forceful tightening. The implications for global markets are being carefully considered around the world, including at the IMF. We must be mindful of the spillover risks, particularly for the most vulnerable economies.

This being said, it is important to note that, here in Asia, we saw much lower inflation in 2021 than elsewhere. For example, food prices in emerging and developing Asia grew by less than 2 percent last year. This compares favorably with over 9 percent in peer countries in Africa, Europe, and Latin America. In many of the region’s economies, inflation remains below central bank targets.

As we will discuss later in the presentation, the combination of pandemic, war, and tighter global financial conditions will make 2022 another challenging year for Asia’s policymakers. Difficult choices lie ahead. Support growth through more stimulus? Or withdraw that support to stabilize debt and inflation?  The tradeoffs will be different depending on country circumstances.  This requires calibrated policies and clear communication.

We at the Fund remain firmly committed to supporting our member countries in the region as they tackle these challenges.

With this, I would like now to hand over the floor to my colleagues, Jay and Ranil. Thank you.