Regional Economic Outlook for Asia-Pacific, April 2022

Good evening and good morning to those who are joining us from Asia. Welcome to this press conference on Asian Pacific regions economic outlook. My name is Ting Yan. I'm from the communications department. I'm glad to be joined today by three speakers from the Asian Pacific department. We have Anne Marie Goedde Wulf, acting director of the Asian Pacific department, and also Krishna Srinivasan, deputy director, and also Sanjay Panth, deputy director. As you will know, last week we released our forecast um for all the economies in the world in the World Economic Outlook, including those in Asia. As we speak, we have just released a blog on the Asian Pacific regions economic outlook on imf.org. We hope you have had a chance to read it. Today, Anne Marie will start with some opening remarks to highlight our key messages to the region, and then we will be happy to take your questions either on WebEx or you can submit your questions on IMF Press Center. With that, Anne Marie, the floor is yours. Thank you very much, Ting. A very good evening from Washington and good morning to all in Asia. It is my pleasure to share with you our views on the economic outlook and recommended policies for the Asia and Pacific region. The outlook for Asia, much like for the rest of the world, is being shaped by the shock of the Russian invasion of Ukraine. Asia has only a relatively small direct trade and financial exposure to Russia and Ukraine, but the region's economies will be impacted through higher commodity prices and slower growth in European trading partners. Inflation in Asia, which was relatively low during the pandemic, has started rising following the spike in food and fuel prices. The shock from the war comes at a time when recovery from the pandemic is still incomplete and global financial conditions are tightening. New COVID waves are adding to headwinds in some countries, most notably China. Lower growth in China is affecting many Asian trading partners that are tightly integrated. Monetary tightening in advanced economies is leading to higher interest rates in Asia as well, placing a further drag on growth. These headwinds will exacerbate the medium-term scarring effects from the pandemic that may that many emerging and developing economies in the region are expected to suffer, amplifying amplified by their higher debt burdens. These headwinds to growth come at a time when policy space to respond is limited. Policy makers face a difficult trade-off. They must balance the need to support an incomplete recovery while also responding to rising inflation amid tightening global financial conditions and high debt levels. With this background, let me turn to our detailed forecast. According to our latest forecast, Asian Asian GDP is expected to grow by 4.9% in 2022. That is 0.5 percentage points less than what we projected in January and slower than last year's growth rate of 6.5%. The downgrade in Asia's is in Asia is smaller than in Europe, which has closer economic ties to Russia and Ukraine, but more so than commodity exporting regions like the Middle East and North Africa and Latin America. Despite the downgrade, Asia remains the world's most dynamic region and an important source of global growth. Inflation in Asia is also starting to pick up after being much lower than in other regions last year. Inflation is now expected to increase to 3.4% in 2022, which is 1 percentage point higher than we expected in the January forecast. Therefore, the region faces a stagflationary outlook outlook with growth being lower than previously expected and inflation being higher. For China, we have revised down our 2020 growth forecast to 4.4% compared to 4.8% in the January update. The revision reflects reflects a sizable negative impact from the war in Ukraine and localized COVID outbreaks and lockdown. These negative effects are partly offset by the positive impact of policy stimulus. In India, the difficult policy trade-offs are evident with the fallout from the Ukraine war, especially higher oil prices expected to weigh on growth, increase current account deficits, and push up inflation. While growth is still expected to be strong at 8.2% this is 0.8 percentage points lower than in the January update. Growth in Japan has been revised down to 2.4% a downgrade of 0.9 percentage points. Like China, this reflects a combination of the impact of the war, spillover from Europe, and a bigger than anticipated hit from the Omicron wave. Despite the recent uptick, inflation remains subdued, allowing the BOJ to be more accommodative than the Fed and the ECB. In Korea, growth is expected to slow from a robust 4% in 2021 to 2.5% in 2022, a downgrade of 0.5 percentage points. Meanwhile, the increase in energy and food prices, global supply chain disruptions, as well as domestic demand pressures have pushed inflation above target with a BOK increasing rates four times since August '21, bringing the policy rate to 1.5%. Australia is the only advanced economy where growth for 2022 has been revised up marginally by 0.1 percentage point as the negative spillover from the war in Ukraine and expected tightening of monetary policy are offset by stronger than expected 2021 Q4 GDP growth and the recent surge in Australia's export commodity prices. For ASEAN countries, the downgrade of 0.2 percentage point is smaller than others and reflects the positive terms of trade shock for some commodity exporters in the region. However, the war is adding to inflationary pressures and tighter financial conditions including spillovers from the ongoing monetary policy normalization in advanced economies uh are amplifying the policy challenges. In Sri Lanka, the rise in food and fuel prices and and and the hit to tourism has exacerbated pre-existing vulnerabilities and debt sustainability pressures leading to social unrest and policy instability. The authorities have requested a fund program and technical level discussions have started. Finally, many of the smaller states and Pacific Islands are large net importers of oil and food and are expected to be hit especially hard by the crisis. Food and fuel price increases are particularly painful for these countries given their large given their large share in consumption baskets often hurting the poorest and most vulnerable households within each country. Growth in these countries has been revised down by 0.8 percentage points on average. This downgrade is significantly larger at 2.3 percentage points if we exclude Papua New Guinea, a net oil and gas exporter. There is significant uncertainty around our baseline forecast with risks tilted to the downside. A further escalation in the war in Ukraine, new COVID waves, and a faster or larger than expected tightening in US monetary policy are all downside risks. In addition, given the strong trade linkages within Asia, a larger than expected slowdown in China due to prolonged or more widespread lockdowns or a longer than expected slump in the property market constitutes a significant risk for the region. Over the medium term, the potential fragmentation of supply chains and geopolitical tensions are big risks to a region that has benefited from globalization and relative peace over the last few decades. As we have described in our recent blog, this a challenging This is a challenging time for policy makers as they try to address pressures on growth and tackle rising inflation. The extent of these trade-offs varies across countries, thus requiring tailored policy responses. In broad terms, fiscal policy should aim to protect the vulnerable from rising food and fuel prices, assistance and within a framework for medium-term consolidation. Monetary tightening will be needed in most countries with a speed of tightening depending on domestic inflation developments and external pressures. And supporting long-term growth remains a priority, especially in those economies with larger expected scarring. I look forward to taking your questions. Thank you. Thank you very much, Anne Marie, and thank you for joining us. I already see many journalist friends on the screen on WebEx. And let me remind you that you can either submit your questions on IMF Press Center or join the WebEx link to ask your questions live. Um first, um we have a question from Leika Kihara, Reuters, Tokyo. Leika, please go ahead. Morning. Hi. Um, I have uh three questions. Um, first one is about um the implications uh from the Fed's policy. The US Fed's um Chairman Powell has said um a half point interest rate hike is on the table and signaled the chance of much faster rate hikes than initially um expected by markets. I know that Asia does have big bigger buffers than before countering any abrupt capital outflows. But um given the expected fast pace of US rate hikes, is there a risk the outflows could be bigger than some emerging Asian economies can swallow? And um how should policy makers in the region brace for the risk of market volatility? Uh that's my first question. Uh my second question is about uh supply chains. Um when will Asia uh see supply chain disruptions clear up in a permanent fashion? How would the war in Ukraine and China's zero COVID policy affect the timing of this? Um and lastly uh my third question is about Sri Lanka. Um can you update us on the IMF's negotiation with Sri Lanka on its loan request? Um the country's finance minister, I understand, said that about 500 million dollars in aid was considered. Can you confirm that that will be the approximate size of the aid? Um what conditions will be required for the country to receive aid? And do you have a time frame for when negotiations could conclude, conclude, sorry? Uh will conclude given the urgency of the situation. Thank you very much. Thank you very much, Leika. Actually, um you raised uh many good questions, but uh um Sri Lanka actually we received two related questions. One from Lalit Jha, Press Trust India. His question is, "What's the IMF's prescription on addressing the major challenges that Sri Lanka is facing?" And also from Madhusha, The Morning in Sri Lanka. She Her question is, "What are the measures Sri Lanka could take to prove that its debt is sustainable?" Okay, thank you. Very interesting questions. Let me let me start with the issue of the of the Fed interest rate rising. And obviously increasing interest rates, especially if more and faster increases in interest rates in the US than was previously expected, are going to have an impact on on Asia. There are various channels. The first one is the trade channel, and that one could actually be positive if the interest rate action in the US responds to higher demand in um in the US. That would mean that the appreciating US dollar leads to higher demand and more exports from from Asia to from Asia to to the US. But the through the financial channels there will be complexities that arise for Asia from from higher funding costs and especially for those that have debt in foreign currency. And we have seen that Asia is now the largest global globally the largest region with the largest debt. And within the within the debt there is there is corporate and sovereign debt that is denominated in foreign currency. And those those debts would be most affected. As was mentioned, uh is better prepared now uh than at the time of the temp temp temp temper tantrum, um there are higher Most countries have higher reserves, uh better monetary frameworks, and uh are generally more attuned to the to the risk. This that um if it it presents a policy challenges, and uh policy makers, especially central banks, need to remain uh watchful and nimble in their policy actions. Let me move on to the issue of the supply chains. Um Uh there the issue has been that I mean, China is uh is a very important uh trading partner for Asia. Uh growth within Asia has been growing very fast, in part uh as as a result of integrating supply chains within within Asia. T- Trade in within Asia is now half of Asia's overall o- half of o- overall trade in Asia. Um We have downgraded uh We have downgraded China somewhat. This notwithstanding, it remains a dynamic uh economy, and uh supply chain-related uh trade remain is continues going going on. Uh going forward, the countries uh that have integrated with China on the uh on the supply chain uh channel, um there might be some rebalancing, and this would be beneficial, but it will be requiring that those countries continue on a on a credible reform path. Let me turn to Sri Lanka. Um uh The many questions that we received on Sri Lanka clearly signal um that this is a a country that is on everybody's radar screen. There's a lot of attention given given the deep economic problems the country faces right now, and I want to start by saying that we at the IMF are clearly very concerned about Sri Lanka and trying to work on on finding as fast possible as possible uh solution for the country. Let me go to the questions on what is needed at the economic level. There is The most important issue is for the to to find a credible and coherent macroeconomic strategy that addresses the key risks in the country, and this would include on the fiscal side uh revenue-based consolidation strategy uh that increases ability of the country to to raise revenues and to to address the spend most critical spending needs. Um monetary policy has to be tightened to keep inflation in in uh in in check, uh and we we see a need for for a flexible for a flexible exchange rate. And I want to emphasize that in this adjustment measures, we have to be mindful of the most vulnerable, and fiscal policy has to be formulated in a way that uh that protects the the livelihood of the most vulnerable. So, when I say there has to be a revenue-based um uh consolidation, it would also mean that in in wherever possible um that the that the the taxes should be should be paid more by those that are well off compared and adjustment should not be forced on the most vulnerable segments of of society. Now, if we have received a program request from from Sri Lanka and we have had a very good fruitful technical discussions on on on preparations for for the negotiations with the authorities over over the past weekend and and a couple of days before um a number of concerns arise on as you you know, we had a we had an country report that was done in February our regular country report and it contains a debt sustainability assessment so debt in Sri Lanka is assessed as being unsustainable we therefore welcome the authorities intend to engage with their with their creditors. uh The the requirement for for fund lending will be that progress on towards debt sustainability and the first step to in in this uh on on this process has been taken by the authorities. Uh let me leave it here on on Sri Lanka. Thank you. Thank you, Anne Marie. Uh next we have Enda Curran, Bloomberg Hong Kong. Good morning, Enda. Thank you again and thank thank you all very much. Um my question is on inflation, please. You mentioned that inflation is accelerating across Asia. I wonder how concerned you are about the pick up in inflation in Asia. And secondly, do you see inflation in Asia transmitting globally as well through producer prices, for example? Thank you. Yes, thank you for the question on inflation. I mean, as you know, inflation in 2021 was lower in Asia than in the rest of than in most other regions of the world. In Asia is now catching up in most countries, not all of them. I mean, inflation remains low in in in in Japan and China, for example. Inflation two sources in to some extent, it reflects increasing demand in some of the Asian countries, but most in most countries inflation really reflects spillovers from the war in in the Ukraine, rising food and fuel prices, and and that is definitely definitely a concern. Now, looking at at policy measures, we have to to look at at the monetary policy room in different countries, which is which is quite different, but our expectation is that in most countries we will have to see some monetary tightening in the over the over the next periods, where the speed of tightening will will be depending on country-specific on country-specific factors. What is important to stress is is communication. We really think that communication by central banks has an important role to play in stabilizing expectations and in in addressing the inflationary the inflationary challenges within within the monetary frameworks. Thank you. Thank you. And next we have Sho Takaoka, GG Press, Japan. Sho, please go ahead. Thank you very much. Thank you very much for taking my questions. My question is on the Japanese yen's depreciation and uh uh as you mentioned earlier that uh Japan Japanese yen's dep- depreciated uh drastically due to uh Federal Reserve monetary policy and you you have said that the uh uh BOJ could do uh could do uh more accommodative than uh Federal Reserve or uh European Central Bank. And uh my question is uh but on the other hand uh uh uh yen's dep- yen's sharp depreciation could put some risk on Japanese economy in terms of inflation. Mhm. And uh what is your view on the on this point that is uh further uh further potential uh weaker yen could put uh some risk on growth uh of Japan. Thank you, Sho. Thank Thank you very much for that question. Um I think, you know, the there are two things that have happened over the last few weeks that I think fundamentally explain what's been happening to the Japanese yen. First and foremost, we've had a fairly large increase in in fuel prices, commodity prices in general, but fuel prices particularly for Japan. And that has put some strains on the current account in terms of the import bill. The second is the increase in inflation that we're seeing a globally and the sharper tightening uh stance taken by the Fed and and and and and more generally going going forward on that. The signals that we're getting out of that we talked talked about a little earlier. Now, one has to keep in mind that Japan's situation is very different from that of the other central banks in the advanced economies and particularly in places like the US in the sense that inflation has yet to pick up significantly in Japan. Um, you know, inflation right now is very much below the Bank of Japan's target of reaching it at 2% on a sustained basis going forward. We may see headline inflation pick up a little bit going ahead in the next few months, but our sense is that that continues to be temporary and basically core inflation, once you strip out some of the one-off things, has not really increased. So, the Bank of Japan is, in our view, very appropriately con- continuing to conduct an accommodative monetary policy, which is very appropriate given Japan's situation, which I said is very different from that of others. So, the hope is that inflation will pick up um, and in fact, we would like to see that happening a little bit, and so would the Bank of Japan. So, in that sense, we are not concerned at all. However, that is not to say that there is not an impact on people because of the the the the weakening yen in the sense that while, of course, imports have become more expensive, households have have felt some of that, um, but exports are also increasing on the other hand a little bit on offsetting that. Plus, Japan's current account is also built very much now on the services side. It's not just the trade balance. So, yes, it will have an impact on some people. It's a little bit of a mixed bag, as I have said, and there we do see the the the scope for supporting the households in a very targeted manner on on the on on the inflationary side, but overall, the the policy is driven by fundamentals, and it is aimed at getting inflation up, which is appropriate for Japan's current situation. Thank you. Thank you, Sanjay. Uh, now let's move on to questions about China. Uh, we have Maoling Shong, Xinhua News Agency. Maoling. Thank you, Dean, for taking my question. Um, I wanted to ask about the Chinese economy. The IMF revised down the uh, forecast for Chinese economy and um, among other factors, there is the COVID-19 uh, spread and the lockdown. Uh, so what are the main challenges for the Chinese economy at this point? And also, China recently released guidelines to accelerate the establishment of a unified domestic market. I was wondering whether that would be helpful in supporting the economic growth amid headwinds. Thank you. Thank you, Maoling. Maybe uh, Krishna, before you answer, uh, we have one more questions online received on China, so we can uh, answer them together. This is from Qingting Chen, uh, 21st Century Business Herald. Her question is, how do you see the impact of the latest lockdowns on inflation in China? How much space is there for the PBOC to cut interest rates? What is your suggestion for Chinese policymakers at this moment? Um, um, also on China from Anthony Rowley, South China Morning Post. He's asking uh, about China's Renminbi. So, to what extent is the use of Renminbi increasing in Asia as a transaction currency and what are the implications? Thank you. Uh, thank you, Maoling. It's a good question. Let me take the first the second question you asked first, which is on on the internal market. I think the the regulations they passed and the guidelines they passed uh, to unify the domestic market, I think it's a welcome step. In in in short, it's a welcome step. Why is that the case? Because China being a large market, if you want to reap its full potential, you don't want local barriers, you don't want local protectionism and so on. So, in that sense, having uh, these guidelines is very helpful. Now, going beyond that, to achieve uh, high high quality growth, which is balanced, inclusive, and green and and and green. China needs to work on one thing which is very very important, which is declining productivity. We've seen productivity declining quite sharply in China and that needs to be addressed. And again, that takes more importance in the context of decoupling pressures in terms of technology and China's shrinking workforce. So, how do you address productivity? I think that goes beyond addressing just unifying the the domestic market. You need to work in terms of opening up the domestic market for competition. You want to ensure greater market neutrality between private firms and state-owned enterprises allowing market-based policy mechanisms to work. So, that's in in terms of your second question. In terms of first question, you asked what are the reasons why we marked down our forecast. We've explained that in quite a lot of detail in the in the World Economic Outlook. Mainly, you've seen there has been of course the impact of the war in Ukraine. But also, there's been a significant rise in in COVID cases and associated lockdowns, right? These are two factors which have had which has made us revise our forecast down, which is offset by some policy support provided by the government in the context of the budget. So, going forward, the question is do they have support macro policy space to provide support? And the answer the short answer is yes. They have made some changes in terms of on monetary easing and so on. But we believe that more than monetary easing at this point in time, they need more fiscal support. And again, it's just not the the quantum of the fiscal support, it's the composition of fiscal support. And here we feel we believe that fiscal support that allows an increase in domestic consumption will both help rebalance the economy and also help in its meeting its carbon objectives climate objectives over the medium term. Again, focused fiscal support through transfers to vulnerable households is the way to go and that's where we think the emphasis should be placed. Now again, Anthony you had a question on on the renminbi. I think yes, the renminbi has increased in terms of its role and that reflects growing cross-border trade. But let me put things in perspective. If you look at if you look at the value of transaction global payment transactions, the the renminbi accounts for about 2.2%. Okay? And similarly, if you look at global reserves, what what proportion of reserves are held in renminbi? It's again 2.8%. Again, these numbers have increased but from very low base. And how a currency becomes more international is a is a market-driven process. And as China continues to grow and liberalize its capital account and its role in the global economy, you will see an increase in in the share in in the the role of the renminbi going forward. Thank you. Thank you, Krishna. I see one more hand on WebEx, Gabriel Yin from CCTV. Gabriel? Hi, yes. Thank thank you for doing this. I have two questions. One is that on the latest real, we see that many other Asian economies, Vietnam, India are all projected to have more than 6% growth. I wonder do you see there's some kind of rebalance of Asian supply chain going on? And the second question is related to the Russian Ukraine situation. We see that energy sector is facing a lot of turbulences, which might hinder this green transition to clean energy. I wonder if you think the Asia Pacific region, especially China will have a specific role to play in safeguarding this transition. Thank you very much. Thank you, Gabriel. Um Please. Maybe I can start with the with the uh the supply chains and then with Krishna, ask Krishna for for the um for the rest of the question. So, on the supply chain as as we we we discussed al- already before, uh the growing integration of of Asia is very visible in the growing trade between Asian economies. And most of that trade really is is based on on in- intermediate inputs. So, this in- this integration and we have seen that uh even under the just pre-COVID that um you know, that this is a very very a very fast growing um integration that that has financial and that has real aspects. We see this as a as a way for the lower-income Asian economies uh to catch up, but it requires that those countries continue on their on their reform path, which is something that we that we emphasize in our engagement with them. We see this as a as a beneficial development and we see we would hope that it continues at this stage, you know, with the with the integration that countries have with China and uh and and among them, uh it is a development that is going on. Maybe I can pass it on to Krishna for Yeah, so let me just take that question. I think Lekha ans- asked a question at the beginning in terms of when we see supply chains normalizing and so on. So, here, I mean, supply chains have been disrupted since 2020, since the beginning of the pandemic. And what we've seen more recently is are two things. One is the war in Ukraine, which again led to shortages of commodities and inputs which are integral to supply chains. And second, we saw the rise of COVID outbreaks in China and the more frequent and and the associated lockdowns. So, the sooner you see the war end and the sooner you see the pandemic behind us, the sooner will supply chains normalize. Again, China has an important role to play. China is the largest economy in the region. So, there's no there's no question that as things get resolved in China in terms of the COVID outbreak and so on, you will see supply chains becoming more normal. But, this does not mean that other countries don't have a role to play in the in the in the going forward. You'll see other countries You've seen countries like Vietnam and Bangladesh becoming part of supply chains, and that trend will continue as global trade continues to gain momentum after the crisis are behind us. Thank you. Um we also received uh several questions on other countries in the region. We have one question on India from Bloomberg India. It's IMF has lowered India's uh fiscal year '23 uh GDP growth projection to 8.2 from 9%. India's growth is seen slowing further to 6.9 next year. What is the country's growth potential in the near term? Can it sustain a growth of about 7% in the next few years? This is on India, and another uh question on Indonesia from business. The question is, what do you think of the Indonesian economic performance coming out of COVID? Are you concerned about the increasing debt level? Okay, maybe I can take the the question on India. In fact, uh growth in India has been uh downgraded from 9 to 8.2%. So, while still strong, uh it is a significant downgrade, and I think on India, we really see the difficult uh policy trade-off uh for for policy makers supporting the supporting growth while controlling inflation, which has already started going up and which now uh outside of the R of the RBI's band. I mean, the the reason why inflation has gone up is is is really the spillover from from the war in the Ukraine where uh uh India is particularly uh dependent on on oil and commodity on commodity imports. So, in the short run, we think an accommodative fiscal stance is is appropriate uh supporting vulnerable households and uh putting focus on infrastructure investments uh to welcome you and and uh in terms of monetary policy, well-communicated monetary policy actions are are needed, but uh presume probably some monetary tightening. Uh you asked about uh growth potential, and I think that is one of our of our key messages. To enhance India's growth potential, it is important to to address uh structural weaknesses of the Indian economy that need to bottleneck that provide bottlenecks and that need to be addressed uh to achieve longer-lasting growth. Uh these bottlenecks are in the labor labor market, land market, education achieving a better educational uh out outcomes, and very much also getting a higher share of females into into the labor force. So, uh in in in in in some, the potential is definitely there, but it requires policy actions. Uh Thank you. I'd be happy to take on the question on Indonesia, which had two parts. One is uh how you know it is how we view its uh performance over uh over the last few months with uh and then a little bit on question on debt as well. So, first on the question of how we view um economic performance, um you know, Indonesia's economic activity rebounded quite strongly in 2021, and it has continued to strengthen in 2022. Um inflation is I think the last print was about 2.6% which is comfortably within the BI's target band of three plus minus 1%. Um, and overall financial conditions remain stable. So, you know, the economy's performing quite well. In fact, Indonesia is one of the countries in the in the region that stands to benefit from the higher commodity prices. So, the current account surplus should be improving going forward and it'll also have positive knock-on effects on on on on on the fiscal revenue. Um, however, of course, you know, the balance of risks, um, even though it's improving, it it's still tilted to the downside and here it primarily, you know, it's it's externally driven. One is, uh, the extent to which there'll be global growth slowdown which will impact on on exports, on volumes of exports in particular. And the second one is on tighter global financial conditions. So, we need to watch out for those, but the performance has been very good, um, um, so far. Um, as far as your debt question is concerned, as you know, after every Article four, we conduct a very in-depth assessment of both public and external debt. We finished our Article four consultation in Indonesia just a few weeks ago and in that report, uh, we found out that both the external and public debt remain moderate and sustainable. So, although there has been an increase in debt during the pandemic uh, reflecting the government's appropriate policy response to support the economy, debt remains moderate and sustainable in the case of, um, uh, Indonesia. Furthermore, this this this positive assessment is underscored by the fact that Indonesia is committed to the 3% of deficit target going forward over the medium term. So, that adds to our further comfort on the debt side. Thank you very much. Thank you, Sanjay. I think we also have the question on green transition uh, energy transition on answered. You want to add to So, so on green transition, I think clearly, uh, global energy prices have been volatile most recently because of the war in Ukraine and it's too early to see whether it to assess whether it's how much of supply and how much of demand factors play a role in this. But as a largest economy in the region and the biggest carbon emitter, China clearly has a major role to play in safeguarding the transition to green energy. Now that said, in in many Asian economies, countries are providing targeted support to to protect the vulnerable households from the rising energy prices and we welcome that because we want those measures to be temporary and we want those to be targeted to those who are most vulnerable. But going beyond this the near term, I think over the medium term, what we see the current events clearly tell you one thing is you have to there are sufficient incentives right now to move towards renewables, towards clean energy and also to diversify where you access your energy from. So these are these are developments which will happen and we we will wait to see how that happen, but China clearly has a role in safeguarding the transition to to green energy. So that would be a question, I think. Thank you. As we are towards the end of the press conference, let me take two more questions. One is on Pacific Islands. So could you tell us more about the impact of the pandemic and the war in Ukraine on the Pacific Islands and what has the IMF done to help these countries since the pandemic? And another question from Vietnam Economic Times, it's how do you compare the recovery of Vietnam's economy with other countries in Asia? What should the country do to achieve growth rate at 6% in 2022 and 70 7.2% in 2023? Thank you very much. On on on the Pacific Islands, three questions. One is on the pandemic and the second one is the war in Ukraine and third is where the fund has come in to help. So beginning first with the pandemic, the pandemic has had different impacts on the different Pacific Islands uh on their circumstances, particularly the countries that were most reliant on tourism have seen the largest impact because they've had to close down borders for a long period of time, and that has affected them and that has caused scarring going forward. Um, as you know, countries have started reopening their borders. Now, Fiji has done that as well. We see a prospect for a rebound, but again, this is something that that that that that that will vary um, in individual countries because in some countries, you're beginning to see localized COVID outbreaks. So far, they've avoided that, but you're beginning to see that. These are some of the less tourism-dependent economies, but we still see that. So, in a sense, um, to sum up on that side, there's been, you know, it's it's it's varied, but it's the tourism-dependent economies that have suffered the most, but um, but that also where the prospects for a rebound remain the strongest going forward. In terms of the war in in Ukraine, I think the first and foremost channel by which the affects the Pacific Islands is through the import bill. Um, food as well as fuel, um, it's adding to inflationary pressures in the region, and and we'll see that, um, continuing to go forward. Um, you know, if especially if the war escalates further if commodity prices rise further. Finally, in terms of the how the IMF has assisted, you know, we have a multifaceted um, engagement with the region. We have, you know, a lot of technical assistance in the region, which we've been able to provide even through through long distance. Uh, we have a regional center in in in in in Fiji, in Suva, that that also engages with the countries, but we've also had ongoing policy dialogue. We've had Article IVs with various countries, and then also very fundamentally, financial assistance when it has been required. Um, this was, for example, the case with Papua New Guinea, where we had a disbursement of about $350 million in June 2020 under our rapid credit facility. Uh, we also had a disbursement to Tonga, which again now this was last year but now that following the the natural disaster, we're engaging with them again on on on our follow-up financial assistance. So, you know, continuous dialogue um as well as financial assistance. Thank you very much. Let me take the question on on Vietnam. Vietnam really was one early success case in dealing with COVID. So, in 2020, it was the country that was growing fastest in all of Asia. Unfortunately, that also led to a a slow start of the vaccination campaign and in 2021, we saw a significant downgrade of our growth from more than 5% to 2.6% as the country was forced by a new wave of COVID to impose very strict restrictions on on mobility. Um Luckily, now in 2022, we see signs of the economy rebounding rebounding strongly. This is based on a very successful vaccination campaign. We see rising retail sales, production, exports going up, and we see a shift of living with COVID, which has allowed much higher mobility than what we saw before. We now project growth at 6% for this year and 7.2% in 2023 as economy normalizes and recently approved fiscal support package that we find appropriate is starting to show if its effect. This fiscal package will also help uh compensate some of the still sluggish household demand as households rebuild their buffers. Um let me leave that here. Thank you. Thank you, Anne Marie. Thank you, Krishna and Sanjay. And thank you everyone for joining us today. This concludes our press conference.