Asia School of Business in collaboration with The SEACEN Centre is organizing a joint seminar for IMF Launch of World Economic Outlook Analytical Chapters.

• Global Trade and Value Chains in the Pandemicby Davide Malacrino – Economist, IMF Research Department 

When COVID-19 hit, the combined supply and demand shock was expected to lead to a dramatic collapse in trade. However, trade in goods bounced back quite rapidly—faster than it has in previous global slowdowns like the global financial crisis. But trade in services still remains sluggish. And some sectors that participate heavily in global value chains, such as automobiles, experienced larger and longer disruptions. Along with on-going disruptions in supply chain logistics, this has prompted calls among policy makers to bring more production on-shore, which would lead to permanent changes in the structure of global value chains. In this context, the chapter investigates the following questions: (1) what were the main drivers of trade in the pandemic; in particular domestic pandemic intensity and pandemic containment policies, as well as international spillovers on trade from pandemic containment policies; (2) how did key GVCs adapt to the pandemic; and (3) what can governments do to help strengthen global value chains against future disruptions, which may arise not just from future health crises, but also from conflict, cyberattacks, or from climate-related weather events? 

• Private Sector Debt and the Global Recovery by Jean-Marc Natal – Deputy Division Chief, IMF Research Department

During the pandemic, and in particular its most acute phase, government policies helped maintain private access to credit, staving off a deeper recession in 2020. This chapter examines whether the resulting increase in leverage may affect the pace of the recovery. As countries prepare to normalize monetary policy, assessing how leverage is distributed and its interaction with countercyclical policies is key to forecasting the pace of the recovery and calibrating the unwinding of pandemic-time support. Analyzes based on micro-level data show that the recovery is likely to be slower in countries where (1) leverage is concentrated among vulnerable firms and low-income households, (2) insolvency procedures are inefficient, (3) public and private deleveraging coincide and (4) monetary policy must be tightened rapidly. 

• IMF’s Asia and Pacific Regional Outlook – Spring 2022 by Nour Tawk

While the growth outlook for Asia and the Pacific has been downgraded for 2022, the region remains the world’s most dynamic. Headwinds to the region’s recovery include trade and commodity price spillovers from the Ukraine war, the tightening of financial conditions amid US monetary policy normalization, and COVID developments in some countries. High global food and fuel prices have added inflationary pressure in much of Asia, hurting the poor the most. Medium-term scarring from the pandemic in emerging and developing Asia is expected to be significant. Risks are tilted to the downside and include further escalation of the war in Ukraine, new COVID waves, a larger than expected slowdown in China, and tighter global financial conditions. Over the medium term, the potential fragmentation of supply chains and geopolitical tensions is a big risk to a region that has benefitted from globalization over the last few decades. Rising inflation and slowing growth are worsening an already-difficult tradeoff facing policymakers. With output gaps still large in many countries, the withdrawal of fiscal policy stimulus will need to be well calibrated to support the post-Covid recovery, structural transformation, and protect the vulnerable from rising food and fuel prices while the pace of consolidation is articulated in medium term fiscal frameworks focused on maintaining debt sustainability. In countries with more advanced recoveries, signs of de-anchoring of inflation expectations and/or external pressures, continued tightening of monetary policy will be required.

In this seminar Professor Ivashina will present her recent paper (joint with Bryan Gutierrez and Juliana Salomao) that explores the interest rate differential for lending rates is closely matched by the differential in the deposit market using the evidence in Peru. The findings highlight that the preference for dollar loans is rooted on the local household preference for dollar savings and a banking sector that is closely matching its foreign assets and liabilities. It is also discovered that borrower competitive pressure increases the pass-through of this differential.

This event is part of our Macro, Finance and Emerging Economies Webinar Series, hosted in collaboration with the SEACEN Centre.

In this seminar Professor Chari will present her recent paper (joint with Karlye Dilts Stedman, Kristin Forbes) that explores the relationship between macroprudential stance and vulnerability to the global financial cycle by using a policy-shocks approach that corrects for reverse causality by combining high-frequency risk measures with weekly data on portfolio investment and a new measure of macroprudential regulations that captures the intensity of policy stances. The findings highlight that macroprudential regulation can reduce the volume and volatility of bank flows but shift risks in ways that aggravate vulnerabilities in other parts of the financial system.

This event is part of our Macro, Finance and Emerging Economies Webinar Series, hosted in collaboration with the SEACEN Centre.

Digital technology has long held the great promise of putting within reach the goal of financial inclusion. The achievements of digital technology seem to have gone beyond the low-hanging fruit of mobile payments and into micro-savings and micro-credit. Nonetheless, these remarkable technological advances seem to have yet to transform the lives of most of the poor.

This conference will bring together some of the leading thinkers in digital technology and financial inclusion. The discussions will assess where we stand and allow an exchange of views on the best ways of moving forward.

 

PROGRAM:

Day 1: Models of digital inclusive finance and stories of success 

This session will discuss the frontier in digital payments and digital credit in achieving financial inclusion. What models are working? What can we learn from China and India as leading models? What are the key elements of successful digital innovation?

 

Day 2: Financial resilience in the large and in the small 

This session will consider financial resilience at two levels – the level of the individual household and the level of the economy at large. To what extent does increased access to credit translate into unsustainable indebtedness? How does low financial literacy interact with transparency and ethical practices such as sales tactics, fee structures and detailed terms and conditions?

 

Day 3: Central Banks as Enablers 

This session will be about creating an environment that fosters both digital financial inclusion and financial stability. What enabling role should central banks have in digital infrastructure, building trust, mitigating risks, education, and working with other regulators?