1 00:00:06,050 --> 00:00:08,879 Speaker 1: Hello, this is COI time, a podcast series on markets 2 00:00:08,880 --> 00:00:12,029 Speaker 1: and economies from DBS Group Research. I'm Tebek, chief economist, 3 00:00:12,079 --> 00:00:16,639 Speaker 1: welcoming you to our 152nd episode. Today, we will welcome 4 00:00:16,639 --> 00:00:20,280 Speaker 1: back Krishna Srinivasan, head of the International Monetary Fund's Asia 5 00:00:20,280 --> 00:00:23,920 Speaker 1: Pacific Department. The department known as APD as the acronym, 6 00:00:24,040 --> 00:00:28,959 Speaker 1: does surveillance, technical assistance and program financing across 37 countries 7 00:00:28,959 --> 00:00:31,829 Speaker 1: in Asia. Rita Srinivasan, welcome back. 8 00:00:32,860 --> 00:00:33,569 Speaker 2: Good to be here. 9 00:00:34,740 --> 00:00:37,020 Speaker 1: I saw you very briefly last week in Washington, DC, 10 00:00:37,060 --> 00:00:40,110 Speaker 1: but I hope we can keep you a little longer today. Krishna, 11 00:00:40,900 --> 00:00:43,330 Speaker 1: we're still in April. It hasn't still been a month 12 00:00:43,330 --> 00:00:46,939 Speaker 1: since the reciprocal tariffs were announced. So let's start with that. 13 00:00:47,180 --> 00:00:50,220 Speaker 1: How has Asia absorbed the shock of the April 2 14 00:00:50,220 --> 00:00:52,939 Speaker 1: US tariff announcement, and what has been your advice to 15 00:00:52,939 --> 00:00:54,180 Speaker 1: the countries in your department? 16 00:00:55,220 --> 00:00:58,490 Speaker 2: A great question. Thanks, thanks, Tamur. So, as you may 17 00:00:58,490 --> 00:01:01,290 Speaker 2: have noted, Tamur, we have lowered our forecast for the 18 00:01:01,290 --> 00:01:05,289 Speaker 2: global economy to 3.9% for this year and 4% for 19 00:01:05,290 --> 00:01:09,238 Speaker 2: next year, right? And this reflects divisions across a main 20 00:01:09,239 --> 00:01:13,129 Speaker 2: number of many countries in Asia. Now, just to back 21 00:01:13,129 --> 00:01:15,690 Speaker 2: up a little bit, Tamur, you know, on April 2, 22 00:01:15,769 --> 00:01:17,440 Speaker 2: if you look at the April 2 tariffs, which have 23 00:01:17,440 --> 00:01:19,849 Speaker 2: been announced by the US, those are tariffs at the 24 00:01:19,849 --> 00:01:21,089 Speaker 2: highest rate in a century. 25 00:01:21,989 --> 00:01:24,179 Speaker 2: And why is that so important for Asia? 26 00:01:25,089 --> 00:01:28,569 Speaker 2: Over the past few years since the pandemic, Asia growth 27 00:01:28,569 --> 00:01:30,540 Speaker 2: in Asia has been largely led by, at least an 28 00:01:30,540 --> 00:01:33,610 Speaker 2: emerging Asia has been largely led by exports. If you 29 00:01:33,610 --> 00:01:37,620 Speaker 2: look at the pre-pandemic trend in domestic demand and, and, 30 00:01:37,690 --> 00:01:40,889 Speaker 2: and external demand, you can see that Asia has predominantly focused, 31 00:01:40,989 --> 00:01:46,099 Speaker 2: emerging Asia has focused predominantly on, on external demand-led growth. 32 00:01:46,500 --> 00:01:49,370 Speaker 2: So exports have been a very major factor in Asia's growth. 33 00:01:49,989 --> 00:01:52,459 Speaker 2: And a lot of it has gone to the US. 34 00:01:52,620 --> 00:01:55,529 Speaker 2: So if you take these two factors into account, then, uh, 35 00:01:55,540 --> 00:01:57,819 Speaker 2: you know, with slowing growth in the US, with high 36 00:01:57,819 --> 00:02:00,650 Speaker 2: tariff rates being imposed by the US, Asia has taken 37 00:02:00,650 --> 00:02:03,099 Speaker 2: quite a sharp hit. And this is why we have 38 00:02:03,099 --> 00:02:06,529 Speaker 2: lowered the forecast for, for Asia to 3.9% this year. 39 00:02:06,860 --> 00:02:11,259 Speaker 2: And this time represents, you know, a a downward revision 40 00:02:11,258 --> 00:02:15,139 Speaker 2: over two years of 0.8% points, which is the sharpest 41 00:02:15,139 --> 00:02:18,699 Speaker 2: reduction we have made in uh forecasts for, for Asia 42 00:02:18,699 --> 00:02:19,580 Speaker 2: in a, in a long time. 43 00:02:20,139 --> 00:02:21,940 Speaker 2: And also represents uh 44 00:02:22,570 --> 00:02:25,779 Speaker 2: A cut across most countries, so you, you have a 45 00:02:25,779 --> 00:02:29,138 Speaker 2: lower forecast for most countries in the region. Again, all 46 00:02:29,139 --> 00:02:33,300 Speaker 2: related to the heightened trade tensions, uh, the uncertainty has 47 00:02:33,300 --> 00:02:36,500 Speaker 2: come with that tightening of financial conditions. Now the question 48 00:02:36,500 --> 00:02:39,179 Speaker 2: is how do we see policy response? What are our 49 00:02:39,179 --> 00:02:39,940 Speaker 2: recommendation there? 50 00:02:40,529 --> 00:02:43,529 Speaker 2: Uh, what we are saying is, again, this has to 51 00:02:43,529 --> 00:02:46,210 Speaker 2: be country specific, so that will be tailored in the 52 00:02:46,210 --> 00:02:49,610 Speaker 2: context of our Article 4 consultations. But broadly speaking, we're 53 00:02:49,610 --> 00:02:53,089 Speaker 2: telling countries to allow the exchange to move so that 54 00:02:53,089 --> 00:02:56,049 Speaker 2: it can be a shock absorber. We also feel that 55 00:02:56,050 --> 00:02:59,049 Speaker 2: with inflation at or below targets for most countries in 56 00:02:59,050 --> 00:03:03,449 Speaker 2: the region, let's keep aside some countries like, like Japan, China, 57 00:03:03,529 --> 00:03:06,049 Speaker 2: and Thailand for, for, uh, for, for a minute. 58 00:03:06,490 --> 00:03:10,388 Speaker 2: But broadly speaking, uh, uh, inflation is at or below 59 00:03:10,389 --> 00:03:13,589 Speaker 2: target in most countries, so they have monetary policy space 60 00:03:13,589 --> 00:03:16,309 Speaker 2: which they could use. Where we are saying we are 61 00:03:16,309 --> 00:03:20,029 Speaker 2: much more conservative on fiscal, fiscal policy, where we believe 62 00:03:20,029 --> 00:03:23,429 Speaker 2: that since the pandemic, many Asian countries have spent a lot, 63 00:03:23,508 --> 00:03:26,589 Speaker 2: have used a lot of public resources to address, uh, the, 64 00:03:26,630 --> 00:03:28,630 Speaker 2: the fallout from the pandemic. So now it's the time 65 00:03:28,630 --> 00:03:31,949 Speaker 2: to consolidate, uh, but even there we're saying that given 66 00:03:31,949 --> 00:03:34,070 Speaker 2: the fact that there is a huge uh demand shock 67 00:03:34,070 --> 00:03:35,229 Speaker 2: for many countries in the region. 68 00:03:36,399 --> 00:03:39,889 Speaker 2: They could use some fiscal support to provide targeted but 69 00:03:39,889 --> 00:03:42,529 Speaker 2: more time-bound support. So in terms of the policy mix, 70 00:03:42,800 --> 00:03:46,479 Speaker 2: exchange rates to move to be flexible, monetary easing, and 71 00:03:46,479 --> 00:03:49,899 Speaker 2: fiscal tight, that would be if I were some again 72 00:03:49,899 --> 00:03:53,470 Speaker 2: depends country to country. So this is a very broad 73 00:03:53,470 --> 00:03:55,080 Speaker 2: presentation of the policy mix. 74 00:03:56,000 --> 00:03:59,199 Speaker 1: Uh, Krishna, I would like your indulgence to go through 75 00:03:59,199 --> 00:04:01,229 Speaker 1: parts of the region, like, you know, South Asia, ASEAN, 76 00:04:01,240 --> 00:04:03,360 Speaker 1: and so on, but before I do that, just with 77 00:04:03,360 --> 00:04:06,759 Speaker 1: respect to the policy recommendations that you mentioned. So typically 78 00:04:06,759 --> 00:04:09,029 Speaker 1: a country when it's hit with the terms of trade shock, 79 00:04:09,119 --> 00:04:11,080 Speaker 1: and adverse one is the exchange rate acts as a 80 00:04:11,080 --> 00:04:12,589 Speaker 1: buffer where the exchange rate weakens. 81 00:04:12,845 --> 00:04:15,945 Speaker 1: To offset some of those things. In this particular case, 82 00:04:15,955 --> 00:04:19,795 Speaker 1: we are talking about your exportable prices going up because 83 00:04:19,795 --> 00:04:22,274 Speaker 1: of tariff, but in most countries we have seen actually 84 00:04:22,274 --> 00:04:25,113 Speaker 1: the exchanges are appreciating against the US dollar, not depreciating 85 00:04:25,113 --> 00:04:26,994 Speaker 1: against the US dollar. So to me that looks almost 86 00:04:26,994 --> 00:04:29,635 Speaker 1: like a double whammy. What's your sense of that? 87 00:04:30,140 --> 00:04:32,239 Speaker 2: I think you're absolutely right in the sense that the 88 00:04:32,238 --> 00:04:35,399 Speaker 2: dollar has weakened. So this is in that in that sense, 89 00:04:35,519 --> 00:04:38,079 Speaker 2: what you have is you have some, uh, you know, 90 00:04:38,160 --> 00:04:40,519 Speaker 2: you get some offset in terms of financial conditions, which 91 00:04:40,519 --> 00:04:42,799 Speaker 2: is not, which is pretty good, but you're right in 92 00:04:42,799 --> 00:04:45,440 Speaker 2: terms of the impact on trade, this is clearly a 93 00:04:45,440 --> 00:04:48,359 Speaker 2: double whammy, you know, you're getting hit by tariffs, demand 94 00:04:48,359 --> 00:04:51,479 Speaker 2: is slumping, and you're getting the exchange rate. 95 00:04:51,559 --> 00:04:53,790 Speaker 2: Which is going the opposite direction. But you know, you 96 00:04:53,790 --> 00:04:56,789 Speaker 2: don't know how much of this exchange configuration will continue 97 00:04:56,790 --> 00:04:59,799 Speaker 2: going forward. Right now we're seeing a dollar weakening. There 98 00:04:59,799 --> 00:05:02,910 Speaker 2: has been a lot of volatility in markets. So broadly 99 00:05:02,910 --> 00:05:05,339 Speaker 2: what we're seeing is allow when the when the exchanges, 100 00:05:05,709 --> 00:05:09,700 Speaker 2: the issue which many countries face in Asia is that 101 00:05:10,230 --> 00:05:12,910 Speaker 2: when the exchange starts depreciating. 102 00:05:13,579 --> 00:05:16,079 Speaker 2: There is some kind of resistance to that in the 103 00:05:16,079 --> 00:05:19,029 Speaker 2: sense that they feel that this is, it could be, 104 00:05:19,119 --> 00:05:22,279 Speaker 2: it could overcorrect, it could overshoot, they got too much voluntary. 105 00:05:22,440 --> 00:05:25,829 Speaker 2: So in that context, we're saying, allow it to, to move. 106 00:05:26,149 --> 00:05:29,760 Speaker 2: And if there's too much volatility, then in some circumstances 107 00:05:29,760 --> 00:05:34,119 Speaker 2: you could use exchange intervention FXI to address that again 108 00:05:34,119 --> 00:05:37,779 Speaker 2: in select circumstances where there are financial frictions and so on. 109 00:05:37,959 --> 00:05:39,510 Speaker 2: So that is where I was getting at the time, 110 00:05:39,519 --> 00:05:42,440 Speaker 2: but I do understand that right now the configuration may 111 00:05:42,440 --> 00:05:43,440 Speaker 2: not be in that direction. 112 00:05:44,630 --> 00:05:48,059 Speaker 1: And just as a general sort of not necessarily related 113 00:05:48,059 --> 00:05:49,619 Speaker 1: to what we're talking about today, but since you brought 114 00:05:49,619 --> 00:05:53,399 Speaker 1: up the pandemic, what has been your department's analysis with 115 00:05:53,399 --> 00:05:56,579 Speaker 1: respect to the usefulness or impact or effectiveness of fiscal 116 00:05:56,579 --> 00:06:00,058 Speaker 1: policy during that those crisis years? Did they do the 117 00:06:00,059 --> 00:06:01,980 Speaker 1: right kind of job? And I'm sorry, I'm not really 118 00:06:01,980 --> 00:06:03,899 Speaker 1: sticking to our topic, but since you brought it up, 119 00:06:03,940 --> 00:06:05,539 Speaker 1: I thought that I'll just ask you that question. 120 00:06:06,529 --> 00:06:09,859 Speaker 2: So, so, uh, in the sense that, you know, the, 121 00:06:10,209 --> 00:06:12,700 Speaker 2: the whole advice at that time, time of our advice was, 122 00:06:12,910 --> 00:06:15,669 Speaker 2: you know, it's important to protect lives and livelihoods, and 123 00:06:15,670 --> 00:06:20,149 Speaker 2: I think countries across Asia, they had different ways of 124 00:06:20,149 --> 00:06:24,269 Speaker 2: doing that. Some spent more, some spent less, some were, 125 00:06:24,470 --> 00:06:29,190 Speaker 2: you know, provided, you know, relief to firms, some provided 126 00:06:29,190 --> 00:06:33,349 Speaker 2: more to, to, to enhance social safety nets. Overall we 127 00:06:33,350 --> 00:06:35,630 Speaker 2: found that was quite effective, but that has 128 00:06:35,690 --> 00:06:38,910 Speaker 2: Not translated into a pickup in domestic demand if that 129 00:06:38,910 --> 00:06:42,109 Speaker 2: was the question. And I think that's where it's important 130 00:06:42,109 --> 00:06:45,279 Speaker 2: to think about what could be the longer term structure 131 00:06:45,279 --> 00:06:47,950 Speaker 2: or long I say longer term, medium term structural reforms 132 00:06:48,190 --> 00:06:52,469 Speaker 2: that would underpin stronger pick up, say, in investment in consumption, 133 00:06:52,549 --> 00:06:55,190 Speaker 2: so on. I could give you examples of where we 134 00:06:55,190 --> 00:06:57,579 Speaker 2: believe we can come to that we talk about individual countries, 135 00:06:57,750 --> 00:07:00,470 Speaker 2: what kind of reforms would be needed to say, uh, to, 136 00:07:00,760 --> 00:07:04,010 Speaker 2: to say boost investment in certain countries like, say for 137 00:07:04,010 --> 00:07:04,789 Speaker 2: example in India. 138 00:07:05,190 --> 00:07:07,859 Speaker 2: So we can come to that, but broadly speaking, they 139 00:07:07,859 --> 00:07:10,380 Speaker 2: were able to protect lives and livelihoods, but that is 140 00:07:10,380 --> 00:07:14,339 Speaker 2: not translated into a durable pickup in domestic demand. That's 141 00:07:14,339 --> 00:07:16,980 Speaker 2: why if you look at the pre-pandemic trend of domestic 142 00:07:16,980 --> 00:07:19,410 Speaker 2: demand and where you are, there's quite a big wedge there. 143 00:07:19,779 --> 00:07:22,339 Speaker 1: Yes, that's exactly the quantity versus quality angle that I 144 00:07:22,339 --> 00:07:25,250 Speaker 1: was coming in. Very good. Krishna, so let's talk about 145 00:07:25,250 --> 00:07:28,470 Speaker 1: the outlook, given that, you know, you just published a 146 00:07:28,470 --> 00:07:31,579 Speaker 1: wholesale revision of the outlook for the region. So let's 147 00:07:31,579 --> 00:07:32,649 Speaker 1: start with South Asia. 148 00:07:33,260 --> 00:07:33,540 Speaker 2: Sure. 149 00:07:34,019 --> 00:07:37,029 Speaker 2: So for if I had to talk about uh uh Asia, 150 00:07:37,040 --> 00:07:39,980 Speaker 2: let's start with, uh, let's start with India. So for India, 151 00:07:40,190 --> 00:07:43,989 Speaker 2: we have, you want South Asia, right? Uh, yeah. So 152 00:07:43,989 --> 00:07:46,429 Speaker 2: for India we have lowered our growth forecast for this 153 00:07:46,429 --> 00:07:50,589 Speaker 2: year to 6.2% and for next year to 6.3%. That's 154 00:07:50,589 --> 00:07:55,059 Speaker 2: a cumulative reduction of 0.5% points since our October forecast. 155 00:07:55,390 --> 00:07:57,549 Speaker 2: Now compared to other countries in the region. 156 00:07:58,109 --> 00:08:02,230 Speaker 2: Uh, forecast downward revisions of forecast for India are smaller, 157 00:08:02,390 --> 00:08:04,790 Speaker 2: and that's partly, and you know, the reason that India 158 00:08:04,790 --> 00:08:07,630 Speaker 2: is much less open and so it's affected that much 159 00:08:07,630 --> 00:08:12,549 Speaker 2: less by these trade, trade tensions. Now with within India, 160 00:08:12,589 --> 00:08:14,630 Speaker 2: what we did see is in the second half of 161 00:08:14,630 --> 00:08:16,269 Speaker 2: last year there was 162 00:08:17,029 --> 00:08:20,470 Speaker 2: Some slowdown in in capital spending offset to a little 163 00:08:20,470 --> 00:08:23,350 Speaker 2: bit by, you know, the cap in rural consumption. So 164 00:08:23,350 --> 00:08:27,059 Speaker 2: even though we're predicting, uh, projecting a forecast of 6.2% 165 00:08:27,059 --> 00:08:31,750 Speaker 2: and 6.3%, 1 area of worry is private investment. Now 166 00:08:31,750 --> 00:08:34,429 Speaker 2: private investment, going back to the point you talked about, uh. 167 00:08:35,159 --> 00:08:37,510 Speaker 2: Uh, private investment in India, if you compare to the 168 00:08:37,510 --> 00:08:40,468 Speaker 2: share of GDP, it's, it does, it does compare favorably 169 00:08:40,469 --> 00:08:43,549 Speaker 2: with some of the emerging market economies. But, uh, the 170 00:08:43,549 --> 00:08:47,189 Speaker 2: aspects of private investment which you're worried about is an 171 00:08:47,190 --> 00:08:52,500 Speaker 2: investment in in man and machinery and equipment that's been pretty, uh, sluggish. 172 00:08:52,830 --> 00:08:54,460 Speaker 2: There's been some pick up in real estate which kind 173 00:08:54,460 --> 00:08:58,549 Speaker 2: of provides that, uh, you know, overall picture of investment 174 00:08:58,549 --> 00:09:03,070 Speaker 2: not being that anemic, but investment is weak, private investment 175 00:09:03,070 --> 00:09:04,809 Speaker 2: is weak. It could be much stronger. 176 00:09:05,429 --> 00:09:07,719 Speaker 2: And the point we're making is that, uh, you know, 177 00:09:07,969 --> 00:09:12,669 Speaker 2: that's an area where reforms are very important, critical, a very, uh, critical, 178 00:09:12,679 --> 00:09:16,479 Speaker 2: for instance, the trade liberalization, which is ongoing, uh, that, 179 00:09:16,559 --> 00:09:19,880 Speaker 2: that's important. Uh, I think it's important to uh continue 180 00:09:19,880 --> 00:09:20,760 Speaker 2: with the infrastructure. 181 00:09:20,864 --> 00:09:24,965 Speaker 2: Push and also important to address, you know, labor market reform. 182 00:09:25,135 --> 00:09:27,655 Speaker 2: These are aspects if you want to compete as part 183 00:09:27,655 --> 00:09:30,335 Speaker 2: of China +1 or China plus 5, India needs to 184 00:09:30,335 --> 00:09:32,974 Speaker 2: be able to scale up and pick up investment. So 185 00:09:32,974 --> 00:09:34,983 Speaker 2: those are things where I think private investment is weak, 186 00:09:35,005 --> 00:09:38,244 Speaker 2: it needs to pick up in India. Going beyond India, 187 00:09:39,015 --> 00:09:42,775 Speaker 2: if you look at Bangladesh, we have again lowered our forecast. 188 00:09:42,854 --> 00:09:47,094 Speaker 2: It's been down, we are now at 3.8% from 4.5% 189 00:09:47,094 --> 00:09:47,775 Speaker 2: we had earlier. 190 00:09:48,119 --> 00:09:51,210 Speaker 2: And that's partly driven by the larger than expected output 191 00:09:51,210 --> 00:09:55,330 Speaker 2: losses during the period of public, uh, uh, you know, uprising, uh, 192 00:09:55,369 --> 00:09:58,479 Speaker 2: the impact of major flooding, which was clearly a factor, 193 00:09:58,690 --> 00:10:02,289 Speaker 2: and tighter macro policy mix. Now there are, there are 194 00:10:02,289 --> 00:10:05,210 Speaker 2: strains in the financial sector which are also contributing to 195 00:10:05,210 --> 00:10:09,609 Speaker 2: the slowdown in growth in, in, in Bangladesh, and as 196 00:10:09,609 --> 00:10:12,799 Speaker 2: part of the fund supported program there, we have, uh, 197 00:10:13,010 --> 00:10:14,210 Speaker 2: you know, we have uh. 198 00:10:15,049 --> 00:10:17,299 Speaker 2: Talked about exchange and reform, making exchange a lot more 199 00:10:17,299 --> 00:10:20,359 Speaker 2: flexible so that you get uh a, a, a big 200 00:10:20,359 --> 00:10:22,640 Speaker 2: improvement in the balance of payments. We talked about the 201 00:10:22,640 --> 00:10:26,449 Speaker 2: fiscal getting stronger, uh, and, and finally there, there are 202 00:10:26,450 --> 00:10:28,199 Speaker 2: issues in the financial sector which need to be addressed. 203 00:10:28,330 --> 00:10:30,450 Speaker 2: So that is, you know, growth is. 204 00:10:30,590 --> 00:10:35,979 Speaker 2: Inflation is coming down, but, but, uh, again, Bangladesh has 205 00:10:35,979 --> 00:10:39,770 Speaker 2: a huge garment sector which is which is affected by 206 00:10:39,770 --> 00:10:42,739 Speaker 2: the tariffs. And so how that gets resolved will have 207 00:10:42,739 --> 00:10:46,250 Speaker 2: a bearing on growth prospects for Bangladesh going forward. 208 00:10:48,210 --> 00:10:51,390 Speaker 1: Uh, if I may ask two follow-up questions quickly, so 209 00:10:51,390 --> 00:10:55,219 Speaker 1: you mentioned trade liberalization pace having picked up in India. Uh, 210 00:10:55,309 --> 00:10:56,589 Speaker 1: could you elaborate on that? 211 00:10:57,590 --> 00:11:00,070 Speaker 2: So, so there has been, I mean, as part of, 212 00:11:00,109 --> 00:11:01,909 Speaker 2: as part of the, as part of the budget last year, 213 00:11:01,950 --> 00:11:04,590 Speaker 2: there was some, uh, you know, uh, improvements there, there 214 00:11:04,590 --> 00:11:07,069 Speaker 2: were some announcements there which went in the right direction. 215 00:11:07,609 --> 00:11:10,049 Speaker 2: Uh, but that said, this is an area where we 216 00:11:10,049 --> 00:11:12,530 Speaker 2: have been talking about for a long time that India 217 00:11:12,530 --> 00:11:17,450 Speaker 2: has imposed a lot of tariffs and non-tariff barriers. To 218 00:11:17,450 --> 00:11:20,400 Speaker 2: give you an example of a non-tariff barrier which was imposed, 219 00:11:20,849 --> 00:11:25,119 Speaker 2: which we think has been quite inimical for exports in India, 220 00:11:25,369 --> 00:11:29,150 Speaker 2: the whole quality control orders, which was the NTB which 221 00:11:29,150 --> 00:11:31,250 Speaker 2: was imposed. So the point I was trying to make 222 00:11:31,250 --> 00:11:33,739 Speaker 2: is that there has been some announcements which are heading 223 00:11:33,739 --> 00:11:35,890 Speaker 2: in that direction, but much more needs to be done. 224 00:11:36,460 --> 00:11:40,179 Speaker 2: So a combination of greater trade liberation, uh, an improvement 225 00:11:40,179 --> 00:11:42,489 Speaker 2: in the labor code so that that can scale up, 226 00:11:42,700 --> 00:11:46,218 Speaker 2: and the infrastructure push is very important along with scaling 227 00:11:46,219 --> 00:11:49,380 Speaker 2: the labor to have the manufacturing and services like growth 228 00:11:49,380 --> 00:11:52,500 Speaker 2: which could, you know, further boost growth in India. 229 00:11:53,099 --> 00:11:55,659 Speaker 2: And support job creation, you know, you're going to add 230 00:11:55,659 --> 00:11:58,348 Speaker 2: 8 to 9 million people uh uh to the pop 231 00:11:58,349 --> 00:12:00,709 Speaker 2: to the labor force every year. So you need to 232 00:12:00,710 --> 00:12:06,390 Speaker 2: address both impediments to investment in manufacturing and in services 233 00:12:06,390 --> 00:12:08,669 Speaker 2: where they've done well, and they has done well but 234 00:12:08,669 --> 00:12:11,069 Speaker 2: need to continue uh intensify that effort. 235 00:12:11,979 --> 00:12:14,250 Speaker 1: And the second follower of Krishna was in the context 236 00:12:14,250 --> 00:12:16,460 Speaker 1: of Bangladesh, but I think it applies to India as well. 237 00:12:17,169 --> 00:12:20,440 Speaker 1: I talked about earlier tariffs being a terms of trade shock, 238 00:12:20,450 --> 00:12:22,640 Speaker 1: but also we're seeing a very favorable terms of trade 239 00:12:22,640 --> 00:12:25,150 Speaker 1: development with respect to energy prices. So do you think 240 00:12:25,150 --> 00:12:28,130 Speaker 1: just the energy price this inflation alone could open up 241 00:12:28,130 --> 00:12:30,530 Speaker 1: room for a rate cut in many parts of Asia? 242 00:12:31,619 --> 00:12:33,950 Speaker 2: I, I think, I think if I, if I were 243 00:12:33,950 --> 00:12:36,750 Speaker 2: to just focus on India, you know, in inflation has 244 00:12:36,750 --> 00:12:38,950 Speaker 2: come down to a target, it's, it's heading in the 245 00:12:38,950 --> 00:12:42,380 Speaker 2: right direction. You're getting the benefit from lower energy prices. 246 00:12:42,390 --> 00:12:45,419 Speaker 2: These are high, these are import in oil importing countries, 247 00:12:45,710 --> 00:12:48,789 Speaker 2: create space for them to do monetary easing. So I 248 00:12:48,789 --> 00:12:51,799 Speaker 2: definitely feel that space has opened up. In the case 249 00:12:51,799 --> 00:12:54,549 Speaker 2: of Bangladesh, I would say Tamil inflation is still on 250 00:12:54,549 --> 00:12:56,869 Speaker 2: the higher side, so they need to continue with that 251 00:12:56,869 --> 00:12:58,510 Speaker 2: tightening and um. 252 00:12:58,859 --> 00:13:01,880 Speaker 2: Uh, you know, one would expect that with the, with the, 253 00:13:01,940 --> 00:13:04,339 Speaker 2: with oil prices coming down, that should help. But in 254 00:13:04,340 --> 00:13:06,450 Speaker 2: Bangladesh compared to India is slightly different, 255 00:13:07,020 --> 00:13:10,059 Speaker 1: right? And if we may touch on one of the 256 00:13:10,059 --> 00:13:12,780 Speaker 1: successful program cases in your, uh, department in Sri Lanka. 257 00:13:13,630 --> 00:13:16,260 Speaker 2: Yeah, so Sri Lanka, the, it's coming, uh, the, the 258 00:13:16,260 --> 00:13:18,659 Speaker 2: program is coming along well. You know, growth has picked 259 00:13:18,659 --> 00:13:21,200 Speaker 2: up much more than we had forecast earlier. Inflation has 260 00:13:21,200 --> 00:13:24,449 Speaker 2: come down quite, quite strongly, and the reforms are continuing. 261 00:13:24,539 --> 00:13:27,929 Speaker 2: You know, there has been a change in in the administration, 262 00:13:28,179 --> 00:13:31,619 Speaker 2: but there's more continuity there. And there are some areas. 263 00:13:31,724 --> 00:13:36,005 Speaker 2: Where we are concerned where um more action is needed, 264 00:13:36,044 --> 00:13:39,364 Speaker 2: which is on, you know, uh, recovery in uh pricing 265 00:13:39,364 --> 00:13:42,684 Speaker 2: of electricity, you know, cost-based pricing, I think that's important. 266 00:13:42,765 --> 00:13:46,005 Speaker 2: That's one area where, uh, you know, more work is 267 00:13:46,005 --> 00:13:49,604 Speaker 2: needed and also on fiscal. But overall speaking, uh. 268 00:13:50,380 --> 00:13:52,919 Speaker 2: I don't have the forecast number in front of me 269 00:13:52,919 --> 00:13:56,440 Speaker 2: that was finalized after the view was published, but my 270 00:13:56,440 --> 00:13:59,239 Speaker 2: sense is that this is uh the growth is still 271 00:13:59,239 --> 00:14:02,239 Speaker 2: holding up. Again, Sri Lanka, don't forget that Sri Lanka 272 00:14:02,239 --> 00:14:05,919 Speaker 2: also is affected by tariffs, huge increase in tariffs, and 273 00:14:05,919 --> 00:14:08,719 Speaker 2: they have a, a textile garment sector which is affected 274 00:14:08,719 --> 00:14:12,079 Speaker 2: by that. But my, my hope is that, um, you know, 275 00:14:12,200 --> 00:14:14,119 Speaker 2: they could work out an arrangement with the US and 276 00:14:14,119 --> 00:14:16,000 Speaker 2: that should help address that problem. 277 00:14:17,099 --> 00:14:19,219 Speaker 1: Krishna, in the interest of time, I'm not going to 278 00:14:19,219 --> 00:14:21,820 Speaker 1: force you to go every single country. We'll be discussing 279 00:14:21,820 --> 00:14:23,299 Speaker 1: this for a while. So let me try to make 280 00:14:23,299 --> 00:14:26,179 Speaker 1: your life a little easier. Uh, let's talk about ASEAN 281 00:14:26,179 --> 00:14:29,059 Speaker 1: as a whole and maybe with some focus on Vietnam 282 00:14:29,059 --> 00:14:30,780 Speaker 1: because we seem to be the most vulnerable right now 283 00:14:30,780 --> 00:14:31,859 Speaker 1: in the tariff scenario. 284 00:14:32,799 --> 00:14:37,489 Speaker 2: So thanks, on ASEANN again, we have lowered growth to 4.1% 285 00:14:37,489 --> 00:14:41,710 Speaker 2: uh uh this year and 3.9% next year, uh, cumulative 286 00:14:41,710 --> 00:14:45,619 Speaker 2: reduction of 1.3% points. With ASEAN time, there are some 287 00:14:45,619 --> 00:14:48,500 Speaker 2: countries where we vis the growth forecast quite sharply. 288 00:14:49,010 --> 00:14:55,919 Speaker 2: Cambodia accumulated reduction of 4.6% points. Vietnam 2.9%, almost 3% points. 289 00:14:56,250 --> 00:14:59,030 Speaker 2: And why is that? Both these countries, both Vietnam and, 290 00:14:59,140 --> 00:15:02,289 Speaker 2: and Cambodia, their exposure to the US in terms of 291 00:15:02,289 --> 00:15:04,250 Speaker 2: exports going there as a share of total exports is 292 00:15:04,250 --> 00:15:05,570 Speaker 2: very large. I think in the. 293 00:15:05,734 --> 00:15:09,094 Speaker 2: of Cambodia is 40%. Almost in the case of Vietnam 294 00:15:09,094 --> 00:15:12,005 Speaker 2: it's almost 30%, and the tariff rate is also very high. 295 00:15:12,054 --> 00:15:14,114 Speaker 2: I think in the case of Cambodia, it's a 49% 296 00:15:14,114 --> 00:15:18,945 Speaker 2: tariff rate. In the case of Vietnam it's about 46%, 46%. 297 00:15:19,015 --> 00:15:22,375 Speaker 2: So these countries have been affected quite, quite, uh. 298 00:15:23,309 --> 00:15:27,429 Speaker 2: Quite a lot. And going beyond that, we have, you know, Vietnam, Cambodia, 299 00:15:27,469 --> 00:15:30,390 Speaker 2: we also have Thailand, which exports 20% to the US. 300 00:15:30,429 --> 00:15:32,789 Speaker 2: So there are countries in ASEAN. So ASEAN is a 301 00:15:32,789 --> 00:15:35,429 Speaker 2: group is, is affected a lot more and within ASEAN, 302 00:15:35,469 --> 00:15:39,630 Speaker 2: the smaller countries are, are having been hit particularly hard. Uh, 303 00:15:39,710 --> 00:15:41,750 Speaker 2: and so that's, that's, that's clearly worrisome. 304 00:15:43,250 --> 00:15:47,330 Speaker 1: Would you see that any sort of scope for ASEAN 305 00:15:47,330 --> 00:15:51,919 Speaker 1: to negotiate or discuss or vocalize their perspective as a region, 306 00:15:52,130 --> 00:15:54,770 Speaker 1: or do you see these countries sort of approaching the 307 00:15:54,770 --> 00:15:56,119 Speaker 1: US on a bilateral basis? 308 00:15:56,950 --> 00:15:59,349 Speaker 2: Uh, my sense is both is happening. I think they 309 00:15:59,349 --> 00:16:02,349 Speaker 2: want to provide, they want to also have a unified 310 00:16:02,349 --> 00:16:05,369 Speaker 2: approach to negotiating with, with the US at the same time, 311 00:16:05,390 --> 00:16:08,390 Speaker 2: they're also talking to them on the bilateral basis. And 312 00:16:08,390 --> 00:16:11,630 Speaker 2: I think, um, you know, this is particularly important for 313 00:16:11,630 --> 00:16:13,510 Speaker 2: countries which have been hit particularly. 314 00:16:14,284 --> 00:16:16,784 Speaker 2: So I, I see, I mean, are, we are not, 315 00:16:16,885 --> 00:16:18,804 Speaker 2: we are not, uh, you know, involved in terms of 316 00:16:18,804 --> 00:16:21,525 Speaker 2: how countries engage with the US and it's all up 317 00:16:21,525 --> 00:16:24,984 Speaker 2: to them, but we are asking countries to engage with, uh, 318 00:16:25,005 --> 00:16:28,325 Speaker 2: in a very constructive, productive manner so that the trade 319 00:16:28,325 --> 00:16:30,325 Speaker 2: environment becomes stable, clear and predictable. 320 00:16:30,679 --> 00:16:33,880 Speaker 2: And whether it leads to greater integration within the ASEAN. 321 00:16:33,890 --> 00:16:35,919 Speaker 2: That's the other thing we're talking about time we're saying 322 00:16:35,919 --> 00:16:39,669 Speaker 2: that within the ASEAN, the intra-regional trade is only 20%. 323 00:16:39,840 --> 00:16:43,000 Speaker 2: So there's room for greater integration within the ASEAN that 324 00:16:43,000 --> 00:16:45,609 Speaker 2: could provide, that could be a source of support for growth. 325 00:16:45,840 --> 00:16:49,000 Speaker 2: And also you can think of a cross regional, uh, uh, 326 00:16:49,119 --> 00:16:52,380 Speaker 2: you know, agreements say between ASEANN and EU which will 327 00:16:52,380 --> 00:16:55,840 Speaker 2: all help, uh, you know, boost growth on a more 328 00:16:55,840 --> 00:16:56,710 Speaker 2: basis going forward. 329 00:16:57,859 --> 00:17:01,270 Speaker 1: OK, let's talk about the big one, China. 330 00:17:02,340 --> 00:17:06,560 Speaker 2: Yes. So China, we have revised growth forecasts to 4% 331 00:17:06,560 --> 00:17:10,079 Speaker 2: this year and 4% next year, and that compared to 332 00:17:10,079 --> 00:17:16,020 Speaker 2: our October World Economic Outlook is 0.6% points of GDP. Now, 333 00:17:16,040 --> 00:17:19,448 Speaker 2: China is clearly affected, as you know, uh, Tamil, that 334 00:17:19,449 --> 00:17:22,439 Speaker 2: in the, in the World Economic Outlook, we provided a 335 00:17:22,439 --> 00:17:24,479 Speaker 2: reference scenario, which is the basis for all the numbers 336 00:17:24,479 --> 00:17:25,040 Speaker 2: I'm quoting. 337 00:17:25,540 --> 00:17:28,010 Speaker 2: But we also did a top down scenario where we, 338 00:17:28,119 --> 00:17:33,040 Speaker 2: we assume if the tariff pause is made permanent, what happens. 339 00:17:33,319 --> 00:17:35,599 Speaker 2: There we see the impact of global growth not being 340 00:17:35,599 --> 00:17:38,829 Speaker 2: very different, but the tension between the US and China 341 00:17:38,829 --> 00:17:42,449 Speaker 2: are pretty significant and then China gets hit even harder. 342 00:17:42,599 --> 00:17:46,109 Speaker 2: So for China, we have revis grow to 4% both years, 343 00:17:46,319 --> 00:17:49,660 Speaker 2: but risks to the uh to the outlook are significantly 344 00:17:49,660 --> 00:17:50,359 Speaker 2: the downside. 345 00:17:51,040 --> 00:17:54,849 Speaker 2: And that's both external and domestic. Now, what we've talked 346 00:17:54,849 --> 00:17:57,410 Speaker 2: about in the case of China is that it's now 347 00:17:57,410 --> 00:18:01,339 Speaker 2: even more urgent to rebalance the economy towards greater consumption 348 00:18:01,339 --> 00:18:02,849 Speaker 2: consumption led to recovery. 349 00:18:03,280 --> 00:18:06,800 Speaker 2: And there we do, uh, we do, uh, hear greater 350 00:18:06,800 --> 00:18:10,760 Speaker 2: impetus or greater emphasis being placed on that aspect, trying 351 00:18:10,760 --> 00:18:13,869 Speaker 2: to address the housing sector in a more comprehensive way. 352 00:18:14,079 --> 00:18:17,599 Speaker 2: That's one part of helping boost domestic demand because, you know, 353 00:18:17,719 --> 00:18:20,420 Speaker 2: consumer confidence has really plummeted since the beginning of the, 354 00:18:20,479 --> 00:18:22,989 Speaker 2: of the housing crisis. So you need to address that, 355 00:18:23,119 --> 00:18:25,839 Speaker 2: which will be, which will provide support to consumption and 356 00:18:25,839 --> 00:18:29,639 Speaker 2: we also talked about improving social safety nets again, uh. 357 00:18:30,599 --> 00:18:32,949 Speaker 2: And these are not new policy recommendations. We've been making 358 00:18:32,949 --> 00:18:34,948 Speaker 2: this for some time, but we feel that this is 359 00:18:34,949 --> 00:18:37,109 Speaker 2: a time when, you know, things could actually pick up 360 00:18:37,109 --> 00:18:40,149 Speaker 2: in that direction. There has been some improvement in the 361 00:18:40,150 --> 00:18:43,069 Speaker 2: way they have done pension reform and some increase in 362 00:18:43,069 --> 00:18:45,949 Speaker 2: rural pension, but again, very small. So they've taken lots 363 00:18:45,949 --> 00:18:49,189 Speaker 2: of actions in the right direction, these trade-in programs they 364 00:18:49,189 --> 00:18:53,229 Speaker 2: have for uh beefing up uh durable, uh, uh, you know, 365 00:18:53,750 --> 00:18:57,739 Speaker 2: purchase of durable goods, right, step, steps in the right direction, 366 00:18:57,910 --> 00:18:59,069 Speaker 2: but a lot more needs to be done. 367 00:19:00,069 --> 00:19:00,500 Speaker 1: Sure. 368 00:19:00,900 --> 00:19:06,109 Speaker 1: Krishna, when I look at average tariff on imports, China 369 00:19:06,109 --> 00:19:08,819 Speaker 1: looks pretty good. I mean, I think it's less than 3%, 370 00:19:08,910 --> 00:19:10,389 Speaker 1: but I think we all know that there are a 371 00:19:10,390 --> 00:19:14,459 Speaker 1: lot of non-tariff barriers which restrict market access into China. 372 00:19:14,719 --> 00:19:17,630 Speaker 1: Do you think that these episodes that we're going through 373 00:19:17,630 --> 00:19:21,270 Speaker 1: right now would nudge China into opening up its markets 374 00:19:21,270 --> 00:19:25,030 Speaker 1: and allow, for example, ASEAN or South Asia to grow 375 00:19:25,030 --> 00:19:28,069 Speaker 1: through trade precisely when maybe trading through the US may 376 00:19:28,069 --> 00:19:28,829 Speaker 1: not be that easy? 377 00:19:30,020 --> 00:19:31,859 Speaker 2: So what we are seeing, uh, if, if I were 378 00:19:31,859 --> 00:19:34,380 Speaker 2: to flip that, what we're seeing right now or is 379 00:19:34,380 --> 00:19:38,020 Speaker 2: that a lot of Chinese goods are flooding ASEAN markets. 380 00:19:38,400 --> 00:19:41,209 Speaker 2: So the ASEAN countries are, you know, facing, you can 381 00:19:41,209 --> 00:19:44,719 Speaker 2: call it triple whammy, you know, getting hit by US tariffs, 382 00:19:44,839 --> 00:19:48,199 Speaker 2: slowing external demand, and they face competition from Chinese goods. 383 00:19:48,280 --> 00:19:50,520 Speaker 2: So one could think in terms of, uh, you know, 384 00:19:50,680 --> 00:19:55,800 Speaker 2: greater integration within Asia that would allow, you know, you know, 385 00:19:55,849 --> 00:19:58,849 Speaker 2: flow of goods both ways. And, you know, the question 386 00:19:58,849 --> 00:20:01,150 Speaker 2: of course is how competitive they are. I mean, China, 387 00:20:01,160 --> 00:20:01,800 Speaker 2: Chinese goods are clearly. 388 00:20:01,890 --> 00:20:04,718 Speaker 2: Very competitive compared to some of the ASEAN countries. So 389 00:20:04,719 --> 00:20:07,150 Speaker 2: the question is in the context of greater regional integration 390 00:20:07,359 --> 00:20:10,639 Speaker 2: and structural reforms, uh, you know, would, would that, would 391 00:20:10,640 --> 00:20:13,880 Speaker 2: that allow both way trade, I mean, two-way trade and 392 00:20:13,880 --> 00:20:17,238 Speaker 2: help the ASEAN, uh, you know, economies. One point I 393 00:20:17,239 --> 00:20:21,000 Speaker 2: want to also mention is that we see the risks 394 00:20:21,000 --> 00:20:24,000 Speaker 2: of deflation rising in, in China much more than we 395 00:20:24,000 --> 00:20:27,000 Speaker 2: say saw 6 months ago. That also has a bearing 396 00:20:27,000 --> 00:20:28,959 Speaker 2: bearing in terms of spillovers to the region. 397 00:20:29,530 --> 00:20:32,260 Speaker 2: Because lower export prices, so they are able to compete very, 398 00:20:32,359 --> 00:20:36,430 Speaker 2: very well with the ASEAN uh goods, uh, domestically produced 399 00:20:36,430 --> 00:20:39,069 Speaker 2: ASEAN goods. So that's the other slower part of the 400 00:20:39,069 --> 00:20:39,709 Speaker 2: China story. 401 00:20:40,449 --> 00:20:42,520 Speaker 1: OK, since you brought up deflation, it kind of leads 402 00:20:42,520 --> 00:20:44,920 Speaker 1: me to my next obvious question. Krishna, you and I 403 00:20:44,920 --> 00:20:46,560 Speaker 1: were actually supposed to have this podcast a couple of 404 00:20:46,560 --> 00:20:48,640 Speaker 1: months ago and that time, I was going to actually 405 00:20:48,640 --> 00:20:50,000 Speaker 1: make a very big deal about this because I think 406 00:20:50,000 --> 00:20:52,589 Speaker 1: you've published some research on this and the question of, 407 00:20:52,599 --> 00:20:55,709 Speaker 1: you know, is China heading toward a Japan-like dynamic, given 408 00:20:55,709 --> 00:21:00,729 Speaker 1: its aging and property market distress related development. So if 409 00:21:00,729 --> 00:21:02,270 Speaker 1: you could give us a little sense there. 410 00:21:02,479 --> 00:21:03,349 Speaker 2: So, so, so my 411 00:21:03,400 --> 00:21:07,060 Speaker 2: I think time is there are some parallels between China 412 00:21:07,060 --> 00:21:11,849 Speaker 2: and 1990s Japan. Now both countries experienced significant property market 413 00:21:11,849 --> 00:21:16,829 Speaker 2: corrections following unsustainable debt fuel booms. China is also confronting 414 00:21:16,829 --> 00:21:20,819 Speaker 2: an aging population, much like Japan has over the past decades, right? 415 00:21:21,030 --> 00:21:23,780 Speaker 2: So there are, there are commonalities, no question about that, 416 00:21:23,910 --> 00:21:26,229 Speaker 2: but also important differences. Let me highlight that. 417 00:21:26,719 --> 00:21:33,780 Speaker 2: Uh, for instance, Japan experienced a widespread credit crunch and systemic, uh, uh, deleveraging, 418 00:21:34,060 --> 00:21:37,939 Speaker 2: which was driven by collapsing asset prices, which contributed to 419 00:21:37,939 --> 00:21:39,020 Speaker 2: entrenched deflation. 420 00:21:39,670 --> 00:21:42,969 Speaker 2: The difference in China is that balance sheet just so 421 00:21:42,969 --> 00:21:48,079 Speaker 2: far has been more localized, mainly affecting troubled property developers 422 00:21:48,250 --> 00:21:50,679 Speaker 2: and local governments. I mean, this is not to say 423 00:21:50,680 --> 00:21:53,089 Speaker 2: that this cannot spread, but I'm saying right now it's 424 00:21:53,089 --> 00:21:56,859 Speaker 2: more localized, and the financial system has also remained resilient 425 00:21:57,609 --> 00:22:00,369 Speaker 2: through the property market correction, though it has weighed on 426 00:22:00,369 --> 00:22:01,609 Speaker 2: local government finances. 427 00:22:02,280 --> 00:22:05,890 Speaker 2: It has dampened consumer confidence and contributed deflationary pressures, but 428 00:22:05,890 --> 00:22:09,219 Speaker 2: so far, what we've seen is the stress is more localized. 429 00:22:09,569 --> 00:22:10,409 Speaker 2: Having said that, 430 00:22:10,859 --> 00:22:14,239 Speaker 2: Uh, I would say the risks of broader deleveraging and 431 00:22:14,239 --> 00:22:16,280 Speaker 2: uh what I what I would call a balance sheet 432 00:22:16,280 --> 00:22:19,718 Speaker 2: recession in China remain, and you could, one could argue 433 00:22:19,719 --> 00:22:23,589 Speaker 2: that those, those risks have actually intensified over the past 434 00:22:23,589 --> 00:22:27,349 Speaker 2: few months. And you know, in particular, if you expect 435 00:22:27,349 --> 00:22:29,939 Speaker 2: a weaker than expected domestic demand than what you're talking 436 00:22:29,939 --> 00:22:33,790 Speaker 2: about right now, uh, amid high corporate and sovereign debt, 437 00:22:33,920 --> 00:22:37,719 Speaker 2: you could see these macro financial loops spreading and, and 438 00:22:37,719 --> 00:22:40,520 Speaker 2: that could be, you know, that could be a significant problem. 439 00:22:40,949 --> 00:22:44,000 Speaker 2: But at this point, it's more localized. Risks, of course, 440 00:22:44,050 --> 00:22:46,770 Speaker 2: have risen. So that's what I would say. And in 441 00:22:46,770 --> 00:22:49,839 Speaker 2: that context, I think our policy recommendation in terms of 442 00:22:50,050 --> 00:22:52,609 Speaker 2: boosting domestic demand becomes hypercritical. 443 00:22:53,750 --> 00:22:53,869 Speaker 2: Right, so if I'm, yeah, go ahead. 444 00:22:56,939 --> 00:22:57,530 Speaker 2: No, no, please. 445 00:22:57,819 --> 00:22:59,659 Speaker 1: I was just gonna say that if I may share 446 00:22:59,660 --> 00:23:01,899 Speaker 1: one perspective that I have sort of developed over the 447 00:23:01,900 --> 00:23:06,569 Speaker 1: years is that the Japan boom and bust cycle uh 448 00:23:06,569 --> 00:23:09,579 Speaker 1: somewhat coincided with a bit of a sunset of Japan's 449 00:23:09,579 --> 00:23:13,250 Speaker 1: industrial prowess that in the 80s, Sonys of the world were, 450 00:23:13,329 --> 00:23:16,219 Speaker 1: you know, capturing the mind of the global imagination in 451 00:23:16,219 --> 00:23:18,659 Speaker 1: terms of bringing cutting edge electronics. It seems like by 452 00:23:18,660 --> 00:23:22,000 Speaker 1: the 90s and 2000s, when the smartphone revolution came, Japan 453 00:23:22,000 --> 00:23:23,060 Speaker 1: sort of lost its way. 454 00:23:23,459 --> 00:23:25,680 Speaker 1: I feel that China is not quite in that direction. 455 00:23:25,760 --> 00:23:29,719 Speaker 1: They're actually improving in terms of creating more uh sort 456 00:23:29,719 --> 00:23:31,959 Speaker 1: of more higher value added products and going up the 457 00:23:31,959 --> 00:23:35,550 Speaker 1: tech spectrum and having more success on research and development. 458 00:23:35,719 --> 00:23:36,958 Speaker 1: And given that, you know, at the end of the day, 459 00:23:37,000 --> 00:23:39,948 Speaker 1: innovation is sort of the elixir of total factor productivity, 460 00:23:40,160 --> 00:23:42,119 Speaker 1: I feel that at least from that angle with all 461 00:23:42,119 --> 00:23:45,270 Speaker 1: the macro points that you made, taking them 100% on board, 462 00:23:45,280 --> 00:23:47,079 Speaker 1: but just from that angle, I feel a little more 463 00:23:47,079 --> 00:23:49,599 Speaker 1: optimistic about China today than Japan was at that time. 464 00:23:50,250 --> 00:23:52,589 Speaker 2: I, I would agree with you. I said that the innovation, 465 00:23:52,630 --> 00:23:56,030 Speaker 2: the amount of innovation you see, whether it's EVs, whether 466 00:23:56,030 --> 00:23:58,790 Speaker 2: you in battery technology, all high tech, I think they 467 00:23:58,790 --> 00:24:02,468 Speaker 2: have definitely moved up there, and that is continuing. You know, 468 00:24:02,510 --> 00:24:05,938 Speaker 2: this is not to say that uh firms aren't, um, 469 00:24:06,030 --> 00:24:06,390 Speaker 2: you know, you. 470 00:24:06,444 --> 00:24:10,074 Speaker 2: Have created destruction in China too. So every uh BYD 471 00:24:10,074 --> 00:24:13,755 Speaker 2: you hear, there are, there are uh uh these EV 472 00:24:13,755 --> 00:24:16,625 Speaker 2: companies which are closing down. So there is competition happening 473 00:24:16,834 --> 00:24:19,354 Speaker 2: and there is technology and they have moved up, you know, and, 474 00:24:19,395 --> 00:24:21,435 Speaker 2: and so clearly I agree with you. I would not 475 00:24:21,435 --> 00:24:22,474 Speaker 2: disagree with you there at all. 476 00:24:22,969 --> 00:24:25,890 Speaker 2: What I'm saying is from a macro perspective, you want 477 00:24:25,890 --> 00:24:29,930 Speaker 2: to avoid the deflation risk and that's where it's important 478 00:24:29,930 --> 00:24:32,280 Speaker 2: to think in terms of what could be the policies 479 00:24:32,280 --> 00:24:35,810 Speaker 2: which will go in that direction. And we've been very 480 00:24:35,810 --> 00:24:38,560 Speaker 2: clear about how much you need to spend on property, 481 00:24:38,770 --> 00:24:41,380 Speaker 2: what they need to do on the, on the, on the, 482 00:24:42,020 --> 00:24:44,329 Speaker 2: on building social safety nets, and what they need to 483 00:24:44,329 --> 00:24:47,829 Speaker 2: do to address productivity and so on. So those things, 484 00:24:47,849 --> 00:24:48,599 Speaker 2: if they do. 485 00:24:48,900 --> 00:24:51,900 Speaker 2: Uh, again, you know, we've said, uh, our, our, our 486 00:24:51,900 --> 00:24:56,179 Speaker 2: medium term forecast for China is 3.5% point at 3.5% 487 00:24:56,180 --> 00:24:59,489 Speaker 2: by 2029. If they do all the reforms you're talking about, 488 00:24:59,619 --> 00:25:02,459 Speaker 2: you could get about a percentage point higher growth in 489 00:25:02,459 --> 00:25:03,859 Speaker 2: China over the medium term. 490 00:25:04,660 --> 00:25:06,920 Speaker 1: Uh, they would, they would welcome that very much given 491 00:25:06,920 --> 00:25:10,839 Speaker 1: all the headwinds they're facing. Krishna, let's move to North Asia, 492 00:25:10,959 --> 00:25:13,640 Speaker 1: which is of course a very critical part of the 493 00:25:13,640 --> 00:25:16,119 Speaker 1: global high-end electronic supply chain and of course in a 494 00:25:16,119 --> 00:25:22,670 Speaker 1: bunch of countries that are very aligned with the US, uh, Korea, Taiwan, uh, Japan, 495 00:25:22,729 --> 00:25:24,359 Speaker 1: and so on, so some views there. 496 00:25:25,579 --> 00:25:28,069 Speaker 2: So on Korea, again, you may, you will have noticed 497 00:25:28,069 --> 00:25:32,280 Speaker 2: that we have revised our numbers quite significantly. It's a 2% 498 00:25:32,729 --> 00:25:36,359 Speaker 2: accumulated 2% point mark down. Uh, we are at 1% 499 00:25:36,359 --> 00:25:38,869 Speaker 2: this year and uh 1.4% next year. 500 00:25:39,189 --> 00:25:42,500 Speaker 2: And in some sense, this we made our projections before 501 00:25:42,500 --> 00:25:46,260 Speaker 2: the Q1 came out, and the Q1 was quite, was quite, 502 00:25:46,459 --> 00:25:49,199 Speaker 2: was was very weak compared to Mark. And here we 503 00:25:49,199 --> 00:25:53,339 Speaker 2: feel that and Korea is being hit by two forces. One, 504 00:25:53,459 --> 00:25:57,469 Speaker 2: of course, the external demand, you know, the whole trade tensions, 505 00:25:57,540 --> 00:26:00,939 Speaker 2: the trade uncertainty, all that is there. And given the 506 00:26:00,939 --> 00:26:02,619 Speaker 2: fact that they're very integrated and 507 00:26:02,670 --> 00:26:05,429 Speaker 2: In global supply chains and, and they are, they are 508 00:26:05,430 --> 00:26:08,500 Speaker 2: equally risk at both to the US slowing down and 509 00:26:08,500 --> 00:26:10,938 Speaker 2: China slowing down. They're highly integrated with China too. So 510 00:26:10,939 --> 00:26:14,639 Speaker 2: they're getting hit on the external demand, but also domestic uncertainty, uh, 511 00:26:14,780 --> 00:26:17,738 Speaker 2: you know, from the, from the politics which has contributed 512 00:26:17,739 --> 00:26:20,140 Speaker 2: to the confidence coming down and so on and so forth. 513 00:26:20,229 --> 00:26:23,540 Speaker 2: So Korea gets hit quite sharply. Uh, they do have 514 00:26:23,540 --> 00:26:27,020 Speaker 2: fiscal space to provide support to the economy. They do 515 00:26:27,020 --> 00:26:29,619 Speaker 2: have monetary space. So in some sense. 516 00:26:30,500 --> 00:26:34,270 Speaker 2: Growth markdowns, uh, downside risks are there, but they have 517 00:26:34,270 --> 00:26:36,939 Speaker 2: a policy space to support uh the economy. 518 00:26:37,260 --> 00:26:39,130 Speaker 2: Uh, what's the other country you mentioned, um, 519 00:26:39,540 --> 00:26:40,060 Speaker 1: Japan and 520 00:26:40,060 --> 00:26:41,219 Speaker 1: Taiwan. Yeah, so, so 521 00:26:41,219 --> 00:26:44,780 Speaker 2: Japan too, you know, Japan, it, it's in some sense 522 00:26:44,780 --> 00:26:49,698 Speaker 2: we have growth at 0.6% for next year, which is 523 00:26:49,699 --> 00:26:55,300 Speaker 2: a pick up from 0.1% in 2024 and 0.6% next year. 524 00:26:55,459 --> 00:26:58,180 Speaker 2: So Japan, we have marked down a forecast, but it 525 00:26:58,180 --> 00:27:01,329 Speaker 2: is the growth is better than what we saw in 2024, 526 00:27:01,579 --> 00:27:03,579 Speaker 2: and they are converging to a new equilibrium where we. 527 00:27:03,685 --> 00:27:07,494 Speaker 2: expect inflation to converge to the 2% target by 2027, 528 00:27:07,744 --> 00:27:10,584 Speaker 2: so they are in the inflation phase and it's coming 529 00:27:10,584 --> 00:27:13,544 Speaker 2: along well. We talked about how monetary policy needs to 530 00:27:13,545 --> 00:27:16,665 Speaker 2: be data dependent, and we've pushed out how many hikes 531 00:27:16,665 --> 00:27:19,254 Speaker 2: they have this year, which we had only had more 532 00:27:19,255 --> 00:27:21,685 Speaker 2: and now we've pushed it out to one way at 533 00:27:21,685 --> 00:27:23,714 Speaker 2: the end of the end of the year. So those 534 00:27:23,714 --> 00:27:26,744 Speaker 2: in a nutshell are, I think my, my sense is 535 00:27:26,744 --> 00:27:29,905 Speaker 2: Japan and Korea are also two countries along with India. 536 00:27:30,709 --> 00:27:34,319 Speaker 2: Making more progress in reaching uh some kind of agreement 537 00:27:34,319 --> 00:27:36,770 Speaker 2: with the US in terms of the frameworks and so on. 538 00:27:36,930 --> 00:27:39,050 Speaker 2: So I think I'm, I'm, I'm optimistic on that front, 539 00:27:39,250 --> 00:27:42,579 Speaker 2: but yes, growth slowdown in Korea is, is, is very, 540 00:27:42,689 --> 00:27:44,089 Speaker 2: it's quite substantive for us. 541 00:27:45,040 --> 00:27:48,448 Speaker 1: Um, would you, uh, think that, you know, I mean, 542 00:27:48,609 --> 00:27:51,879 Speaker 1: of course, you know, generally speaking, debt deflation is unwelcome. 543 00:27:52,209 --> 00:27:54,439 Speaker 1: We want the countries to, you know, avoid the risk 544 00:27:54,439 --> 00:27:56,329 Speaker 1: of zero bound, which seems like, you know, Japan has 545 00:27:56,329 --> 00:27:58,930 Speaker 1: managed to do that. But now going forward, it'll still 546 00:27:58,930 --> 00:28:01,089 Speaker 1: be very important to keep real interest rates very low 547 00:28:01,089 --> 00:28:03,729 Speaker 1: given the huge burden of debt they have, right? And 548 00:28:03,729 --> 00:28:05,089 Speaker 1: how does one manage that? 549 00:28:05,709 --> 00:28:07,660 Speaker 2: So it is, I mean, for even now with the, 550 00:28:07,719 --> 00:28:10,760 Speaker 2: the type that with some normalization you've seen, it is 551 00:28:10,760 --> 00:28:12,520 Speaker 2: on the lower side. It's pretty the monetary policy is 552 00:28:12,520 --> 00:28:15,359 Speaker 2: pretty accommodating and so in that sense, they are managing that. 553 00:28:15,479 --> 00:28:18,569 Speaker 2: I think my, my big concern for in Japan is 554 00:28:18,839 --> 00:28:23,069 Speaker 2: with monetary policy normalization and longer term interest is going up, 555 00:28:23,479 --> 00:28:24,409 Speaker 2: what do they do with the fiscal? 556 00:28:24,890 --> 00:28:26,900 Speaker 2: And then, uh, I, I, I'm a bit concerned in 557 00:28:26,900 --> 00:28:29,930 Speaker 2: the sense that uh uh there needs to be greater 558 00:28:29,930 --> 00:28:35,060 Speaker 2: thought being given to fiscal consolidation, having a well specified 559 00:28:35,449 --> 00:28:38,250 Speaker 2: medium term framework which they don't have to address the 560 00:28:38,250 --> 00:28:40,489 Speaker 2: fiscal issues. So that, that to me is, is, is a, 561 00:28:40,530 --> 00:28:42,560 Speaker 2: is a, is a concern for sure. 562 00:28:43,219 --> 00:28:45,420 Speaker 1: There there was a time, Krishna, as you know, I 563 00:28:45,420 --> 00:28:48,859 Speaker 1: used to cover India when I was a economist, program 564 00:28:48,859 --> 00:28:51,739 Speaker 1: economist in the IMF, and the question used to be 565 00:28:51,739 --> 00:28:53,260 Speaker 1: always that, you know, I mean, India doesn't have too 566 00:28:53,260 --> 00:28:55,170 Speaker 1: much debt held by foreigners, so why does it matter? 567 00:28:55,219 --> 00:28:57,510 Speaker 1: You can always print its way out any debt burden. 568 00:28:57,739 --> 00:28:59,770 Speaker 1: And at that time we sort of pointed out that 569 00:28:59,979 --> 00:29:04,270 Speaker 1: despite debt being domestic currency issued, it mattered because the 570 00:29:04,270 --> 00:29:06,540 Speaker 1: interest spending by the government of India was more than 571 00:29:06,540 --> 00:29:08,339 Speaker 1: combined spending on health and education. 572 00:29:08,609 --> 00:29:11,969 Speaker 1: So that's the kind of stuff, especially Japan as it ages, 573 00:29:12,089 --> 00:29:15,170 Speaker 1: fiscal demands would rise, you don't want the interest payment 574 00:29:15,170 --> 00:29:16,770 Speaker 1: to sort of crowd out all the other needs. 575 00:29:17,180 --> 00:29:20,229 Speaker 2: Exactly, and that's, that's exactly the point. And you know, in, 576 00:29:20,270 --> 00:29:22,750 Speaker 2: in the case of India, they, that argument, I mean, 577 00:29:22,829 --> 00:29:26,030 Speaker 2: they have been very fiscally prudent, they have managed the 578 00:29:26,030 --> 00:29:28,430 Speaker 2: fiscal quite well, not just in terms of numbers, which 579 00:29:28,430 --> 00:29:30,579 Speaker 2: have been clearly they put a new, uh, you know, 580 00:29:31,229 --> 00:29:35,099 Speaker 2: the way they've provided guidance to the medium term debt. 581 00:29:35,109 --> 00:29:38,030 Speaker 2: I think that's very good. They also made fiscal accounts 582 00:29:38,030 --> 00:29:39,550 Speaker 2: more transparent. So on the fiscal. 583 00:29:39,680 --> 00:29:42,550 Speaker 2: I think that India is doing very well. Despite elections, 584 00:29:42,589 --> 00:29:45,390 Speaker 2: they did not, they kept a prudent fiscal stance. So 585 00:29:45,390 --> 00:29:47,030 Speaker 2: I think that those are lessons we should have learned 586 00:29:47,030 --> 00:29:49,439 Speaker 2: from the paper tantrums what they saw at that time. 587 00:29:49,550 --> 00:29:52,310 Speaker 2: So I think the fiscal part, I think India is 588 00:29:52,310 --> 00:29:55,030 Speaker 2: doing very well there, you know, in terms of bringing 589 00:29:55,030 --> 00:29:58,069 Speaker 2: debt down and, you know, giving guidance, that's good. We 590 00:29:58,069 --> 00:29:59,829 Speaker 2: would like to see something similar in the case of 591 00:29:59,829 --> 00:30:02,109 Speaker 2: Japan where debt levels are much, much higher. 592 00:30:03,560 --> 00:30:07,089 Speaker 1: Krishna, East Asia and North Asia over the previous decades 593 00:30:07,089 --> 00:30:10,849 Speaker 1: have strived on an export-led growth model. Now you have 594 00:30:10,849 --> 00:30:12,979 Speaker 1: the likes of India who want to join that fray 595 00:30:12,979 --> 00:30:17,969 Speaker 1: industrialized heavily manufactured superpower and then become an export-oriented economy 596 00:30:17,969 --> 00:30:19,439 Speaker 1: as well. Um. 597 00:30:19,900 --> 00:30:22,479 Speaker 1: But you and the IMF for the last 2 years 598 00:30:22,479 --> 00:30:25,209 Speaker 1: have been writing about the cost of, you know, geoeconomic 599 00:30:25,209 --> 00:30:29,119 Speaker 1: fragmentation as the world sort of turns inward, your argument 600 00:30:29,119 --> 00:30:30,800 Speaker 1: has been that, you know, it sort of shaves up 601 00:30:30,800 --> 00:30:33,439 Speaker 1: potential GDP growth rate for the whole world. It's a 602 00:30:33,439 --> 00:30:36,560 Speaker 1: net loss for the entire world economy. So is Asia 603 00:30:36,560 --> 00:30:39,479 Speaker 1: sort of losing its plot that all these decades of 604 00:30:39,479 --> 00:30:41,750 Speaker 1: prosperity through trade, it's about to come to an end, 605 00:30:41,920 --> 00:30:45,000 Speaker 1: or you remain constructive that there's still some game there? 606 00:30:46,489 --> 00:30:50,079 Speaker 2: So that was, that's a great question. Uh, and I think, uh, 607 00:30:50,300 --> 00:30:52,699 Speaker 2: if I were to tell you, the, my bottom line 608 00:30:52,699 --> 00:30:56,780 Speaker 2: would be that countries need to follow a balanced approach 609 00:30:56,780 --> 00:30:58,780 Speaker 2: to growth. In fact, that's what we're pushing for, seeing 610 00:30:58,780 --> 00:31:02,530 Speaker 2: that in Asia, which has relied a lot on, uh, 611 00:31:02,739 --> 00:31:05,099 Speaker 2: you know, export-led growth, especially in the last few years, 612 00:31:05,180 --> 00:31:08,819 Speaker 2: it's actually intensified. It needs to find a, a, a 613 00:31:08,819 --> 00:31:10,339 Speaker 2: more balanced model approach. 614 00:31:10,505 --> 00:31:15,176 Speaker 2: To growth, relying more on domestic demand, and that's the case, 615 00:31:15,186 --> 00:31:17,865 Speaker 2: not just in China. I think many countries need to 616 00:31:17,865 --> 00:31:21,836 Speaker 2: provide a greater need to pivot more towards domestic demand. 617 00:31:21,985 --> 00:31:25,125 Speaker 2: I'm not saying that growth is, is that model is 618 00:31:25,125 --> 00:31:28,306 Speaker 2: completely over. You can still have growth going through uh 619 00:31:28,306 --> 00:31:35,316 Speaker 2: through the exports by greater integration, both both intraregional and 620 00:31:35,391 --> 00:31:39,391 Speaker 2: and across regional integration, you could have that diversification of 621 00:31:39,391 --> 00:31:42,271 Speaker 2: export markets. All the potential is there. At the same time, 622 00:31:42,312 --> 00:31:45,072 Speaker 2: you also need to think in terms of rebalancing towards 623 00:31:45,072 --> 00:31:48,761 Speaker 2: a more balanced growth model, and that's where I feel 624 00:31:49,031 --> 00:31:52,491 Speaker 2: that the countries in Asia can still have strong growth, 625 00:31:52,751 --> 00:31:55,472 Speaker 2: but they need to undertake some structural reforms which can 626 00:31:55,472 --> 00:31:59,442 Speaker 2: underpin that domestic demand and there's, I think there's huge 627 00:31:59,442 --> 00:32:00,072 Speaker 2: potential there. 628 00:32:00,989 --> 00:32:03,300 Speaker 1: Right. I wanna talk to you a little bit about 629 00:32:03,300 --> 00:32:07,800 Speaker 1: the US dollar question. Uh, you know, region is trade dependent, 630 00:32:08,060 --> 00:32:11,099 Speaker 1: trade is largely invoiced in US dollar. Uh, there are 631 00:32:11,099 --> 00:32:12,819 Speaker 1: some parts of the region that has a lot of 632 00:32:12,819 --> 00:32:16,619 Speaker 1: dollar liquidity, other parts of the region that don't. You 633 00:32:16,619 --> 00:32:21,829 Speaker 1: have a set of, uh, lending arrangements that countries can 634 00:32:22,020 --> 00:32:24,380 Speaker 1: use if they have bond payments crisis. 635 00:32:24,810 --> 00:32:27,719 Speaker 1: ASEAN +3, the Chiang Mai initiative was set up also 636 00:32:27,719 --> 00:32:32,020 Speaker 1: it's conjunction with the IMF. So there are some emergency taps, 637 00:32:32,050 --> 00:32:33,920 Speaker 1: if you will, available in the region for the dollar, 638 00:32:34,130 --> 00:32:36,530 Speaker 1: but overall, uh, with the 639 00:32:36,709 --> 00:32:39,060 Speaker 1: You know, US authorities also sort of not giving somewhat 640 00:32:39,060 --> 00:32:42,060 Speaker 1: mixed signals about what they think about the dollar's fair 641 00:32:42,060 --> 00:32:45,459 Speaker 1: value and whether it should appreciate or depreciate. Um, you 642 00:32:45,459 --> 00:32:49,729 Speaker 1: just mentioned about making demand more balance between domestic and external. 643 00:32:49,930 --> 00:32:53,540 Speaker 1: Should there be a more balanced holding of hard currencies 644 00:32:53,540 --> 00:32:55,459 Speaker 1: between the US dollar and maybe some other hard currencies? 645 00:32:56,660 --> 00:32:58,859 Speaker 2: So you see some of that already happening, but it's 646 00:32:58,859 --> 00:33:01,180 Speaker 2: a very gradual way. And for the most part, the 647 00:33:01,180 --> 00:33:03,819 Speaker 2: US is a reserve currency. You look at trade transactions 648 00:33:03,819 --> 00:33:08,780 Speaker 2: across the world, including Asia, it's all dollar-based, you look 649 00:33:08,780 --> 00:33:11,939 Speaker 2: at oil, it's all dollar based. So that, that, that 650 00:33:11,939 --> 00:33:15,699 Speaker 2: will continue. Some shift may happen. It'll, it's going to 651 00:33:15,699 --> 00:33:17,099 Speaker 2: be happen in a very gradual way. 652 00:33:17,989 --> 00:33:20,310 Speaker 2: So I think that's something which, uh, you know, you, 653 00:33:20,349 --> 00:33:22,910 Speaker 2: you'll see, you see, you see more talk, but the sciences, 654 00:33:22,949 --> 00:33:24,989 Speaker 2: if you look at the hard numbers, the change has 655 00:33:24,989 --> 00:33:28,819 Speaker 2: been pretty uh uh contained. And over the time over 656 00:33:28,819 --> 00:33:32,010 Speaker 2: the years, I mean, just like with diversify that diversification 657 00:33:32,010 --> 00:33:34,349 Speaker 2: will happen, but my sense is going to be much 658 00:33:34,349 --> 00:33:35,349 Speaker 2: more gradual because 659 00:33:35,609 --> 00:33:39,469 Speaker 2: You know, what are the other currencies you can diversify into? 660 00:33:39,599 --> 00:33:42,719 Speaker 2: Are they open? Are they liquid, you know, are these, uh, 661 00:33:42,880 --> 00:33:45,010 Speaker 2: do you, do you have, I mean, there's nothing like 662 00:33:45,010 --> 00:33:46,760 Speaker 2: the dollar right now, right, in terms of the open 663 00:33:46,760 --> 00:33:49,699 Speaker 2: capital account in the US. You don't have that in 664 00:33:49,699 --> 00:33:51,599 Speaker 2: the if you think in terms of Asia. So I 665 00:33:51,599 --> 00:33:53,869 Speaker 2: think that's the process which will happen over the years, 666 00:33:54,079 --> 00:33:56,479 Speaker 2: but now I don't see a fundamental shift happening in 667 00:33:56,479 --> 00:33:58,609 Speaker 2: the next few years. Right? 668 00:33:58,880 --> 00:34:01,270 Speaker 1: May the open US capital account remain open. 669 00:34:01,650 --> 00:34:04,760 Speaker 1: A final question, Krishna, I want to sort of leave 670 00:34:04,760 --> 00:34:07,469 Speaker 1: economics aside for a second and talk about financial sector. 671 00:34:08,080 --> 00:34:11,239 Speaker 1: What's your sense of financial sector stability risks in Asia, 672 00:34:11,399 --> 00:34:13,560 Speaker 1: especially given what's happening right now. We've seen quite a 673 00:34:13,560 --> 00:34:15,669 Speaker 1: bit of unrest in global financial markets in the last 674 00:34:16,159 --> 00:34:16,949 Speaker 1: couple of months. 675 00:34:17,709 --> 00:34:19,810 Speaker 2: So if you look at what's happened to financial markets then, 676 00:34:20,000 --> 00:34:23,189 Speaker 2: I would say equity markets have been a lot more volatile. 677 00:34:23,399 --> 00:34:26,280 Speaker 2: If you look at the bond spreads, if you look 678 00:34:26,280 --> 00:34:29,120 Speaker 2: at currency movements, they're not, they've been much more contained. 679 00:34:29,500 --> 00:34:32,830 Speaker 2: If I, the one issue which um if you look 680 00:34:32,830 --> 00:34:35,310 Speaker 2: at Asia's share of global debt and talk about all 681 00:34:35,310 --> 00:34:38,509 Speaker 2: debt corporate household, it has gone up quite a lot 682 00:34:38,510 --> 00:34:41,510 Speaker 2: between the GFC and now. So the question is, this 683 00:34:41,510 --> 00:34:44,149 Speaker 2: is not a systemic thing across the region, but there 684 00:34:44,149 --> 00:34:46,540 Speaker 2: are some countries where household debt is high. 685 00:34:46,629 --> 00:34:49,330 Speaker 2: They need to be worried about that. They should be careful. 686 00:34:49,750 --> 00:34:53,189 Speaker 2: Korea as an example. In some countries you have public 687 00:34:53,189 --> 00:34:55,550 Speaker 2: debt which is very high, China, Japan. So it's not 688 00:34:55,550 --> 00:34:58,510 Speaker 2: a uniform distribution of debt across these countries, but there 689 00:34:58,510 --> 00:35:01,500 Speaker 2: are spots which have to be carefully monitored and so on. 690 00:35:01,870 --> 00:35:03,679 Speaker 2: Given the fact that over the 691 00:35:04,469 --> 00:35:07,959 Speaker 2: Last 30 years since the Asian financial crisis, both policies 692 00:35:07,959 --> 00:35:11,850 Speaker 2: and institutional frameworks in Asia have improved significantly. I'm less 693 00:35:11,850 --> 00:35:15,050 Speaker 2: concerned in terms of, uh, you know, financial stability risks. Yes, 694 00:35:15,169 --> 00:35:17,290 Speaker 2: there are countries where some of these debt levels are high, 695 00:35:17,330 --> 00:35:19,209 Speaker 2: but they have to be monitored, but I do, I 696 00:35:19,209 --> 00:35:22,850 Speaker 2: think those risks are more contained than, than ever before. 697 00:35:23,669 --> 00:35:26,199 Speaker 1: Right, and especially if we're talking about inflation risk, more 698 00:35:26,199 --> 00:35:27,889 Speaker 1: of a US thing and for the rest of the world, 699 00:35:27,919 --> 00:35:30,479 Speaker 1: it's like disinflation or deflation risk. So I think the 700 00:35:30,479 --> 00:35:32,719 Speaker 1: risk of, you know, interest rate spike around that is 701 00:35:32,719 --> 00:35:36,149 Speaker 1: fairly small. So yeah, fingers crossed indeed. Krishna, I know 702 00:35:36,149 --> 00:35:38,819 Speaker 1: you had an extremely busy last week during the spring meetings, 703 00:35:38,840 --> 00:35:40,840 Speaker 1: and I know your busyness is not over this week. 704 00:35:40,879 --> 00:35:42,510 Speaker 1: You have a lot of work to do. So I really, 705 00:35:42,520 --> 00:35:44,469 Speaker 1: really appreciate that you took the time to talk to us. 706 00:35:45,360 --> 00:35:47,009 Speaker 2: Always a pleasure. Always a 707 00:35:47,010 --> 00:35:47,489 Speaker 2: pleasure. 708 00:35:47,879 --> 00:35:50,000 Speaker 1: Thank you, Krishna, and thanks to our listeners and viewers 709 00:35:50,000 --> 00:35:52,399 Speaker 1: as well. Copy Time was produced by Ken Delbridge at 710 00:35:52,399 --> 00:35:55,750 Speaker 1: Sly Studios. Violet Lee and Daisy Sharma provided additional assistance. 711 00:35:56,040 --> 00:35:58,520 Speaker 1: It is for information only and does not represent any 712 00:35:58,520 --> 00:36:02,320 Speaker 1: trade recommendations. All 152 episodes of the podcast are available 713 00:36:02,320 --> 00:36:05,750 Speaker 1: on YouTube and on all major podcast platforms, including Apple, Google, 714 00:36:05,760 --> 00:36:08,879 Speaker 1: and Spotify. As for our research publications, webinars, and live streams, 715 00:36:08,919 --> 00:36:11,550 Speaker 1: you can find them all by Googling DBS Research Library. 716 00:36:11,800 --> 00:36:12,520 Speaker 1: Have a great day.