MS. UTSUNOMIYA: I believe Mr. Kamal Ben Arnold de Vera on Webex has related South East Asia question. Mr. de Vera, are you there?
MS. UTSUNOMIYA: Okay. We have some audio problems. Let's move on and, if possible, we will come back to you Mr. de Vera.
Next, I would like to read a question we received online. Ms. Heather Scott from AFP is asking about the potential for rising social unrest in Asia. A region where we have already seen a lot of unrest in recent years. Are governments doing enough to head off what could be an explosive situation? And, how long will it take a country like India to reverse the surge in poverty that undermined many years of progress?
MR. OSTRY: Well, thank you for that. And I hope we come back to the question, if possible. But let me take this broader question for -- on poverty and so forth, and social unrest.
Indeed, we've all seen the very disturbing headlines about how this pandemic is likely to push very large numbers of people into extreme poverty, and reverse gains achieved over many years in reducing extreme poverty in the world. And indeed, it is quite likely that many of these additions to the extreme poverty group will be in South Asia. And it is a very disturbing scenario.
There is a part of Heather's question when she asks about how long will it take for this devastating increase in extreme poverty to be unwound? And there is a sense that perhaps once we get back on a growth path in Asia and South Asia, we can assume that the increase in poverty will be reduced or reversed. And to be sure, a pickup in growth will help, but it will not be sufficient to really address the issue of rising extreme poverty. And that is why we have consistently stressed during this pandemic, that countries need to be very proactive in using their scarce fiscal resources to reach those who are in danger of falling into this group of extremely poor.
The time is not -- there cannot be a delay in this and really, this is an urgent problem, and it is a problem that you know, has to be seen against the background of a rising inequality in the Asian region which long predates this pandemic. And the reason that that is important is because you know, there is likely to be some point beyond which further increases in inequality may well undercut, seriously undercut sustainable growth, including by leading to social unrest, as Heather's questions suggested. We have to be humble about exactly what this threshold is but in the regional economic outlook, we have some analysis of this which suggests that a number of countries in the region might have preexisting levels of inequality that would generate some concern.
Let me just finally close by saying that these trends are not the destiny of countries. There is a lot that countries can do and should be doing in targeting their fiscal support to those at the bottom. And taking steps really through social programs to reverse and mitigate these very unwelcomed trends that we have been seeing.
Thank you.
MS. UTSUNOMIYA: Thank you. Staying in South Asia, I want to take a question from Nepal, Mr. Sagar Ghimire, Republica, the Fund has projected 2.5 percent growth in the current Fiscal Year for Nepal after the growth falling flat in 2020. As coronavirus cases are on the rising trend, how severe economic fallout could be? And what recommendations do you have for the Nepali government to manage its finance?
Also, the second quick question, Nepal is one of the remittances receiving countries. How much remittances could be hit due to impacts of coronavirus in international labor markets?
MR. OSTRY: Very good. So, you know, the data on Nepal in our projections are based on the financial yea, the Fiscal Year, and obviously, the pandemic has straggled two fiscal years and the numbers that were in the question really show the impact of the pandemic across these two years. It's worth noting, as the questioner does, that the cases are still rising in Nepal and to that degree, I would say that there are some downside risks associated with the health side.
On the role of policy, it has to as elsewhere, be firmly dedicated to flattening the virus curve, to making sure that the health of Nepalese are protected, and the health risks of the population are contained. And that again, very targeted, proactive approach to redress those who are suffering the most. Those at the bottom are the order of the day.
On remittances, these have been reasonably volatile recently and the future for remittances I think will depend a lot on the source countries including India, Malaysia, and the GCC countries so, I think what we will see for remittances into Nepal will depend a lot on the growth outlook in where the Nepalese are working abroad.
MS. UTSUNOMIYA: One more question from Bangladesh, South Asia. I see Mr. Kamal Sahriar, at Somoy TV. If you are online, please go ahead.
QUESTIONER: Hello? Are you hearing me?
MR. OSTRY: Yes. Please go ahead.
QUESTIONER: We're feeling initially our outlook said that Bangladesh is said to, to working in India in (inaudible) per capita. A global realistic moment we are between 2019 and into under one year, but I want you to know that if Bangladesh wanted to continue in this forecast, what should it have to do with Bangladesh government? And what is the challenges of this country to getting better economics?
MS. UTSUNOMIYA: So, if I understood you, sorry, the sound is very faint. If I heard you correctly, your question is if Bangladesh wants to keep the GDP progress, what should the government have to do? And what challenges for this country for getting a better economy?
QUESTIONER: Yeah, yeah, good, that was my question.
MS. UTSUNOMIYA: Okay, thank you.
MR. OSTRY: So, thank you, for that question. I would say that the advice for Bangladesh is fairly similar to the advice we give you know, to many developing countries, which is first and foremost to contend with the pandemic and make sure that the containment efforts are yielding the desired results. Protect the most vulnerable and use a scarce fiscal resources to target those most affected by the pandemic.
Beyond the short term, sustained increases in per capita incomes, to which you referred at the beginning, will need to be underpinned by supply-side policies including policies to make the economy more efficient through a favorable business climate, through further opening to trade and direct investment. The kinds of policies that we believe are ones that portend a you know, a sustained increase in the efficiency and productivity of the economy for the medium term.
MS. UTSUNOMIYA: Okay, let me turn to the Pacific. We have received a question from Mr. Anish Chand, Fiji Times.
The question is how is Fiji showing signs of a recovery? In which areas, and at what speed? Do you agree with the view that Fiji's reliance on tourism has been the sole factor that COVID-19 has hugely impacted in its economy?
MR. OSTRY: Thank you for that question. So, Fiji is one of the countries that has been hit hardest, in the Asia-Pacific Region, by the pandemic, and it's -- and the fallout from the pandemic. That is not because of, you know, large numbers of cases and an out of control virus in Fiji, itself. It is, really, because of the dependence of Fiji's economy, like so many Pacific Islands and some of the ASEAN countries, on tourism, which has basically ground to a halt, since March, and, indeed, tourism is a marker, I think, in the Asia-Pacific Region, that significantly affects the Pacific Islands and some of the ASEAN countries, and really is hitting their economies very hard.
If we are honest, we do not know, precisely, when and how tourism will recover, but we have assumed that there will be some recovery in tourism, next year.
The other thing that has affected Fiji, specifically, are its other exports, non-tourist exports, and, there, the slowing of the global economy and demand for those products, I think, is having a further negative impact on Fiji, as on others, and we would expect a recovery in those -- in the demand for those products, like sugar and others, to follow the path that the global economy, as a whole, follows. But the Pacific Islands, as a group, speaking not just of Fiji but more broadly, face very steep challenges, going forward. They have a record of rather lower chronic -- chronically low -- lower growth than many emerging and developing countries, and it is likely -- and this likely reflects their lack of diversification, their limited capacity, their remoteness, and so forth, but it has an implication for the speed with which they are likely to recover, following the pandemic, and our sense is that it may be a longer ascent, for these countries, than we might see in other places, and this is something, obviously, that the Fund is very much engaged in, with the Authorities, especially given the financial challenges that it may pose, in terms of the balance sheets of corporates and the public sector.
MS. UTSUNOMIYA: Okay. We are almost running out of time. I want to go back to Mr. de Vera, if you are online, and then, if I may, have Ms. Weier Ge after Mr. de Vera. Mr. de Vera, are you there?
QUESTIONER: I believe -- yes, good evening, I am here, from Manila. I have this question: in the Philippines, India, and Indonesia, which are still struggling with elevated COVID-19 cases, but, of course, they wanted to get over their pandemic-induced economic slump. By this time, should their response tilt more towards health, or containing the virus once and for all, or economic recovery, to preserve jobs and to prevent more people from sliding back, poverty? As the report noted, these three countries gradually eased lockdowns to prevent bigger economic losses, despite the containment of COVID-19, but then the prevailing high number of infections continued to -- back business and consumer confidence, in general. Now, they often say that it should be a balancing act, you know, health and the economy, but, in reality, is it really doable? Thank you.
MS. UTSUNOMIYA: Thank you. And, Ms. Gu, you have a supply chain question? Go ahead, please.
QUESTIONER: Thank you. Yes, just to follow up on the global and regional supply chains, as you mentioned about China's economic rebound, we all know that China's economy grew 0.7 percent, from a year ago, in the first three quarters. In the meantime, Europe and the U.S. are still dealing with this potential second wave. So, I'm just wondering how the pandemic is or will reshape the global and regional supply chains, and, also, how the weakness in the Dollars, or even there is discussion about a Dollar crash, in the year of 2021, will it impact the regional economy? Thank you.
MR. OSTRY: Okay. Shall I?
MS. UTSUNOMIYA: Yes.
MR. OSTRY: So, let me go back to the question about countries that are -- still have not flattened the virus curve, well, that are still struggling with a health crisis that is not fully under control, and whether there's really a tradeoff between an economic recovery and dealing with the health crisis. To be sure, different countries will approach this differently, and we've seen a variety of different approaches across the Asia-Pacific Region, but I would conclude that there is no solid firm foundation for economic recovery, in the midst of an uncontrolled pandemic. So, it is a prerequisite for a firm economic recovery, that the virus curve be flattened, and even early successes in this respect need -- there needs to be ongoing vigilance because, as we know, this is a marathon and not a sprint, and the virus rears its ugly head from time to time, when we do not expect it, and health policy needs to be very vigilant and proactive.
On the question on the reconfiguration of supply chains, what I wanted to say, and let me clarify it further, is simply that this is a time of maximum uncertainty. In such a time, you know, investors who need to make decisions about where to locate production are -- people are holding back, and that is why private investment is so weak, and until a lot of this uncertainty is resolved, and that includes not just the pandemic, but very fundamental areas to do with trade, geopolitics, technology, all of these things, we have a lot of uncertainty in those areas, we know that the global economy and Asia, specifically, will benefit to -- from multilaterally-based solutions, rules-based solutions, that are owned by all the key players in the world, and we are not there yet. We need to get there because getting there, getting to those multilateral rules-based solutions, owned by all, is really a prerequisite for getting over this extreme uncertainty that is holding back investment and productive sustained prosperity.
MS. UTSUNOMIYA: Okay. This will conclude our press briefing today. I'm so sorry that we could not take all your questions. I trust all of you have access to the Regional Economic Outlook, on the IMF website. Jonathan's blog is posted there, too. So, please, take a look. The transcript of this briefing and the video recording will be made available shortly. Again, thank you very much for joining us today. Stay safe and see you next time.
MS. UTSUNOMIYA: Okay. We have some audio problems. Let's move on and, if possible, we will come back to you Mr. de Vera.
Next, I would like to read a question we received online. Ms. Heather Scott from AFP is asking about the potential for rising social unrest in Asia. A region where we have already seen a lot of unrest in recent years. Are governments doing enough to head off what could be an explosive situation? And, how long will it take a country like India to reverse the surge in poverty that undermined many years of progress?
MR. OSTRY: Well, thank you for that. And I hope we come back to the question, if possible. But let me take this broader question for -- on poverty and so forth, and social unrest.
Indeed, we've all seen the very disturbing headlines about how this pandemic is likely to push very large numbers of people into extreme poverty, and reverse gains achieved over many years in reducing extreme poverty in the world. And indeed, it is quite likely that many of these additions to the extreme poverty group will be in South Asia. And it is a very disturbing scenario.
There is a part of Heather's question when she asks about how long will it take for this devastating increase in extreme poverty to be unwound? And there is a sense that perhaps once we get back on a growth path in Asia and South Asia, we can assume that the increase in poverty will be reduced or reversed. And to be sure, a pickup in growth will help, but it will not be sufficient to really address the issue of rising extreme poverty. And that is why we have consistently stressed during this pandemic, that countries need to be very proactive in using their scarce fiscal resources to reach those who are in danger of falling into this group of extremely poor.
The time is not -- there cannot be a delay in this and really, this is an urgent problem, and it is a problem that you know, has to be seen against the background of a rising inequality in the Asian region which long predates this pandemic. And the reason that that is important is because you know, there is likely to be some point beyond which further increases in inequality may well undercut, seriously undercut sustainable growth, including by leading to social unrest, as Heather's questions suggested. We have to be humble about exactly what this threshold is but in the regional economic outlook, we have some analysis of this which suggests that a number of countries in the region might have preexisting levels of inequality that would generate some concern.
Let me just finally close by saying that these trends are not the destiny of countries. There is a lot that countries can do and should be doing in targeting their fiscal support to those at the bottom. And taking steps really through social programs to reverse and mitigate these very unwelcomed trends that we have been seeing.
Thank you.
MS. UTSUNOMIYA: Thank you. Staying in South Asia, I want to take a question from Nepal, Mr. Sagar Ghimire, Republica, the Fund has projected 2.5 percent growth in the current Fiscal Year for Nepal after the growth falling flat in 2020. As coronavirus cases are on the rising trend, how severe economic fallout could be? And what recommendations do you have for the Nepali government to manage its finance?
Also, the second quick question, Nepal is one of the remittances receiving countries. How much remittances could be hit due to impacts of coronavirus in international labor markets?
MR. OSTRY: Very good. So, you know, the data on Nepal in our projections are based on the financial yea, the Fiscal Year, and obviously, the pandemic has straggled two fiscal years and the numbers that were in the question really show the impact of the pandemic across these two years. It's worth noting, as the questioner does, that the cases are still rising in Nepal and to that degree, I would say that there are some downside risks associated with the health side.
On the role of policy, it has to as elsewhere, be firmly dedicated to flattening the virus curve, to making sure that the health of Nepalese are protected, and the health risks of the population are contained. And that again, very targeted, proactive approach to redress those who are suffering the most. Those at the bottom are the order of the day.
On remittances, these have been reasonably volatile recently and the future for remittances I think will depend a lot on the source countries including India, Malaysia, and the GCC countries so, I think what we will see for remittances into Nepal will depend a lot on the growth outlook in where the Nepalese are working abroad.
MS. UTSUNOMIYA: One more question from Bangladesh, South Asia. I see Mr. Kamal Sahriar, at Somoy TV. If you are online, please go ahead.
QUESTIONER: Hello? Are you hearing me?
MR. OSTRY: Yes. Please go ahead.
QUESTIONER: We're feeling initially our outlook said that Bangladesh is said to, to working in India in (inaudible) per capita. A global realistic moment we are between 2019 and into under one year, but I want you to know that if Bangladesh wanted to continue in this forecast, what should it have to do with Bangladesh government? And what is the challenges of this country to getting better economics?
MS. UTSUNOMIYA: So, if I understood you, sorry, the sound is very faint. If I heard you correctly, your question is if Bangladesh wants to keep the GDP progress, what should the government have to do? And what challenges for this country for getting a better economy?
QUESTIONER: Yeah, yeah, good, that was my question.
MS. UTSUNOMIYA: Okay, thank you.
MR. OSTRY: So, thank you, for that question. I would say that the advice for Bangladesh is fairly similar to the advice we give you know, to many developing countries, which is first and foremost to contend with the pandemic and make sure that the containment efforts are yielding the desired results. Protect the most vulnerable and use a scarce fiscal resources to target those most affected by the pandemic.
Beyond the short term, sustained increases in per capita incomes, to which you referred at the beginning, will need to be underpinned by supply-side policies including policies to make the economy more efficient through a favorable business climate, through further opening to trade and direct investment. The kinds of policies that we believe are ones that portend a you know, a sustained increase in the efficiency and productivity of the economy for the medium term.
MS. UTSUNOMIYA: Okay, let me turn to the Pacific. We have received a question from Mr. Anish Chand, Fiji Times.
The question is how is Fiji showing signs of a recovery? In which areas, and at what speed? Do you agree with the view that Fiji's reliance on tourism has been the sole factor that COVID-19 has hugely impacted in its economy?
MR. OSTRY: Thank you for that question. So, Fiji is one of the countries that has been hit hardest, in the Asia-Pacific Region, by the pandemic, and it's -- and the fallout from the pandemic. That is not because of, you know, large numbers of cases and an out of control virus in Fiji, itself. It is, really, because of the dependence of Fiji's economy, like so many Pacific Islands and some of the ASEAN countries, on tourism, which has basically ground to a halt, since March, and, indeed, tourism is a marker, I think, in the Asia-Pacific Region, that significantly affects the Pacific Islands and some of the ASEAN countries, and really is hitting their economies very hard.
If we are honest, we do not know, precisely, when and how tourism will recover, but we have assumed that there will be some recovery in tourism, next year.
The other thing that has affected Fiji, specifically, are its other exports, non-tourist exports, and, there, the slowing of the global economy and demand for those products, I think, is having a further negative impact on Fiji, as on others, and we would expect a recovery in those -- in the demand for those products, like sugar and others, to follow the path that the global economy, as a whole, follows. But the Pacific Islands, as a group, speaking not just of Fiji but more broadly, face very steep challenges, going forward. They have a record of rather lower chronic -- chronically low -- lower growth than many emerging and developing countries, and it is likely -- and this likely reflects their lack of diversification, their limited capacity, their remoteness, and so forth, but it has an implication for the speed with which they are likely to recover, following the pandemic, and our sense is that it may be a longer ascent, for these countries, than we might see in other places, and this is something, obviously, that the Fund is very much engaged in, with the Authorities, especially given the financial challenges that it may pose, in terms of the balance sheets of corporates and the public sector.
MS. UTSUNOMIYA: Okay. We are almost running out of time. I want to go back to Mr. de Vera, if you are online, and then, if I may, have Ms. Weier Ge after Mr. de Vera. Mr. de Vera, are you there?
QUESTIONER: I believe -- yes, good evening, I am here, from Manila. I have this question: in the Philippines, India, and Indonesia, which are still struggling with elevated COVID-19 cases, but, of course, they wanted to get over their pandemic-induced economic slump. By this time, should their response tilt more towards health, or containing the virus once and for all, or economic recovery, to preserve jobs and to prevent more people from sliding back, poverty? As the report noted, these three countries gradually eased lockdowns to prevent bigger economic losses, despite the containment of COVID-19, but then the prevailing high number of infections continued to -- back business and consumer confidence, in general. Now, they often say that it should be a balancing act, you know, health and the economy, but, in reality, is it really doable? Thank you.
MS. UTSUNOMIYA: Thank you. And, Ms. Gu, you have a supply chain question? Go ahead, please.
QUESTIONER: Thank you. Yes, just to follow up on the global and regional supply chains, as you mentioned about China's economic rebound, we all know that China's economy grew 0.7 percent, from a year ago, in the first three quarters. In the meantime, Europe and the U.S. are still dealing with this potential second wave. So, I'm just wondering how the pandemic is or will reshape the global and regional supply chains, and, also, how the weakness in the Dollars, or even there is discussion about a Dollar crash, in the year of 2021, will it impact the regional economy? Thank you.
MR. OSTRY: Okay. Shall I?
MS. UTSUNOMIYA: Yes.
MR. OSTRY: So, let me go back to the question about countries that are -- still have not flattened the virus curve, well, that are still struggling with a health crisis that is not fully under control, and whether there's really a tradeoff between an economic recovery and dealing with the health crisis. To be sure, different countries will approach this differently, and we've seen a variety of different approaches across the Asia-Pacific Region, but I would conclude that there is no solid firm foundation for economic recovery, in the midst of an uncontrolled pandemic. So, it is a prerequisite for a firm economic recovery, that the virus curve be flattened, and even early successes in this respect need -- there needs to be ongoing vigilance because, as we know, this is a marathon and not a sprint, and the virus rears its ugly head from time to time, when we do not expect it, and health policy needs to be very vigilant and proactive.
On the question on the reconfiguration of supply chains, what I wanted to say, and let me clarify it further, is simply that this is a time of maximum uncertainty. In such a time, you know, investors who need to make decisions about where to locate production are -- people are holding back, and that is why private investment is so weak, and until a lot of this uncertainty is resolved, and that includes not just the pandemic, but very fundamental areas to do with trade, geopolitics, technology, all of these things, we have a lot of uncertainty in those areas, we know that the global economy and Asia, specifically, will benefit to -- from multilaterally-based solutions, rules-based solutions, that are owned by all the key players in the world, and we are not there yet. We need to get there because getting there, getting to those multilateral rules-based solutions, owned by all, is really a prerequisite for getting over this extreme uncertainty that is holding back investment and productive sustained prosperity.
MS. UTSUNOMIYA: Okay. This will conclude our press briefing today. I'm so sorry that we could not take all your questions. I trust all of you have access to the Regional Economic Outlook, on the IMF website. Jonathan's blog is posted there, too. So, please, take a look. The transcript of this briefing and the video recording will be made available shortly. Again, thank you very much for joining us today. Stay safe and see you next time.
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