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Global Think Tank Summit
July 3, 2009
Remarks by Takatoshi Kato
Deputy Managing Director
International Monetary Fund
1
Financial Interconnectedness
International Claims of Reporting Banks EM Asia: External Debt Refinancing
vis-à-vis Major Economies in the Asia Needs
and Pacific Region (In billions of U.S. dollars, left scale)
(In billions of U.S. dollars) 1000 10%
As percent Corporate
Changes adjusted for exchange rate changes (locational, RHS) of GDP
Japanese banks (amount outstanding, consolidated,LHS) (RHS)
European banks (amount outstanding,consolidated,LHS) 800 8%
U.S. banks (amount outstanding, consolidated,LHS)
2,800 350
600 Sovereign and Sovereign 6%
Corporate
2,100 175
400 4%
1,400 0
200 2%
700 -175
0 0%
0 -350
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Dec-85
Dec-87
Dec-89
Dec-91
Dec-93
Dec-95
Dec-97
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Projection
Source: Bank for International Settlements.
Source: IMF, Global Financial Stability Report , April 2009.
2
Trade Interconnectedness
Asia: Export Exposure to Industrial Emerging Asia Intra-regional Exports
Economies1 and U.S. Non-oil Imports1
(In percent of GDP) (Year-on-year percent change)
50 60 1.0
1991-99 2000-08 U.S. non-oil imports (LHS)
40 Asia intra-regional exports (LHS)
40 0.8
30
20 0.6
20
0 0.4
10
-20 0.2
0
1991-99 correlation Post-1999 correlation
Asia Industrial NIEs ASEAN-5
(RHS) (RHS)
Asia
-40 0.0
Sources: IMF, Regional Economic Outlook - Asia and Pacific,
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
April 2008; Direction of Trade Statistics database; and staff
calculations.
1 Sources: Haver Analytics; and IMF, Direction of Trade
Includes indirect exposure through exports of intermediate
Statistics database; and staff calculations.
and capital goods via intra-regional trade. Regional 1
Includes China, Hong Kong SAR, Korea, Singapore,
aggregates are simple averages of the total exposure of
Indonesia, Malaysia, the Philippines and Thailand.
consituent economies.
3
Impact of the Crisis on Asia
Emerging Asia: Exports of Goods Asia: Real GDP Growth1
and Industrial Production (Quarter-on-quarter percent change, SAAR)
(Year-on-year percent change) 20
50 25
40 20
10
30 15
20 10
0
10 5
0 0 -10
Advanced manufacturing
-10 -5
China and India
Others
-20 Exports of goods (LHS) -10 -20
Industrial production (RHS)
2000Q1
2000Q4
2001Q3
2002Q2
2003Q1
2003Q4
2004Q3
2005Q2
2006Q1
2006Q4
2007Q3
2008Q2
2009Q1
-30 -15
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Source: IMF, WEO database.
1
Sources: CEIC Data Company Ltd; and IMF staff Advanced manufacturing economies are Japan, Korea,
calculations. Singapore, Taiwan Province of China and Thailand.
4
The Outlook
Global Asia
Selected Economies: Growth Forecasts Asia: Real GDP
for 2009 and 2010 (Year-on-year percent change)
(Year-on-year, in percent) 15
9 China Projection
2009 forecast
10
6 2010 forecast
3 5
0
0
-3 Japan
-5
-6
-9 -10 Range of growth rates for
United Kingdom
Asia
Brazil
Italy
United States
Russia
India
China
Japan
Germany
Canada
France
(excluding China and Japan)
-15
2006Q1
2006Q3
2007Q1
2007Q3
2008Q1
2008Q3
2009Q1
2009Q3
2010Q1
2010Q3
Source: IMF, World Economic Outlook , April 2009. Source: IMF, World Economic Outlook , April 2009.
5
Implications for China
Rebalancing
Average Consumption Expenditure, Average Investment, 2004–08
2004–08 (Industrial countries and emerging markets)
(Industrial countries and emerging markets) 45
100 China
Private consumption (In percent of GDP)
40
90
Investment (In percent of GDP)
80 35
70
30
60
25
50
20
40
China
30 15
0 20 40 60 0 20 40 60
GDP per capita (US$ thousands) GDP per capita (US$ thousands)
Source: IMF staff calculations. Source: IMF staff calculations.
6
Implications for China
Social Policies
China: Average Savings Rate by Age of
Head of Household
(In percent)
Healthcare—
30
universal coverage
25 and improved
20 quality
15
Pensions—
10
increased
5
2005
1990
coverage,
0
30 40 50 60 70
portability and
Age
funding
Source: IMF staff calculations.
7
Implications for China
Financial Development
Increasing the range of savings vehicles
Greater availability of health insurance, life
insurance, annuities, private pensions
Liberalizing deposit and loan rates
Raising the cost of capital and other inputs
(such as water, land, energy)
8
Implications for the IMF
Mandate at the G20 Meetings
5 key areas
Surveillance
Lending
Resources
Early Warning
Governance
9
Thank you.
10
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