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Managing Director’s Remarks at ASEAN Luncheon

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Via IMF (Den Internationale Valutafond)

Managing Director’s Remarks at ASEAN Luncheon

November 4, 2019


Good afternoon and thank you for this invitation.

I am delighted that my first overseas trip as Managing Director of the IMF
is to the ASEAN region, a bright spot in the global economy for the last decades.
The region’s rapid growth and poverty reduction is the product of global
integration and collaboration combined with sound economic policies.

And ASEAN has steadily increased its contribution to global growth. In
fact, in 2019, the 10 ASEAN countries contributed 10 percent of global
growth—just about as much as the 19 countries in the Euro zone. As in most
of the rest of the world, however, growth in ASEAN is now decelerating.

Outlook and Risks: Synchronized global slowdown

During the Annual Meetings of the IMF, the key message was “ synchronized slowdown.” We are projecting 3 percent growth
for this year, the lowest rate in a decade. And while the ASEAN region
outperforms with 4.6 percent growth, this is still a downward revision from
our previous estimate of 5 percent.

Why is this happening? Partly because of trade tensions taking a toll on
business confidence and investment. Partly because of Brexit, high debt,
and geopolitical tensions—all of these are contributing to uncertainty.

Clearly, the near-term challenge is to navigate slower growth. And for
this, countries really have to tap all instruments as appropriate— monetary
policy, fiscal policy, and structural reforms.

Above all, trade tensions need to be reduced. In that context, the recent
announcements from the U.S. and China are very welcome, we really hope that
we can go from trade truce to a sustainable, long-term trade peace.

ASEAN can help a lot in fostering trade by moving beyond trade in goods to
increased integration in services, finance and labor.

Medium-term challenge: achieving sustainable, inclusive growth

ASEAN is also right to focus not only on the short-term challenges but also
the longer-term goal of sustainable development.

That requires addressing issues such as inequality, pressures from aging in
some countries, quality infrastructure, quality human capital, and climate

So, let me share some thoughts from the IMF’s research and experience:

Human capital

First, while the region is making a good progress on the Sustainable
Development Goals (SDGs), more needs to be done, specifically, more
spending for quality infrastructure, more investment in people.

The Asian Development Bank estimates that between 2016 and 2030, ASEAN
needs to invest $2.8 trillion in quality infrastructure.

When we look at the human capital index for ASEAN, it is widely spread—
with Singapore being number one in the world, Vietnam number 40, and the
rest of the ASEAN countries spread all the way to 111.

The point is so simple: invest in people today, so you can be wealthy

This requires domestic resource mobilization, but it also requires making
it possible for the private sector to invest for the SDGs massively.

Female labor force participation

Secondly, despite significant progress, female labor force participation in
ASEAN is about 7 percentage points lower than the East Asia and Pacific

Count on women, and tap into the talent of the women of ASEAN. We estimate
that this could raise per capita GDP growth in ASEAN by about 1½ percentage
points and significantly reduce inequality.

Social protection

Third, social protection in the region needs to be at a higher level, and
better targeted. For this, new identification systems, such as the ones put
in place in India and the Philippines, can help target more precisely those
who need assistance most.

Climate change

Finally, we have an urgent and collective need to make rapid progress on
climate change. We can avoid a bleak future for our children and
grandchildren by reducing emissions, offsetting what cannot be reduced,
adapting to new climate realities, and building resilience to climate

Action to move from a brown to a green economy would
actually be a big boost for growth in ASEAN. And those who move first would
have a competitive advantage. This is not to be ignored.

To accelerate this transition—I know this is controversial—we need a price
on carbon. IMF research tells us that the most efficient way to do it is by
introducing a carbon tax.

Again, I know this is not a concept with which everyone agrees, but I owe
you to tell what our research indicates that this is the best way to
travel. The key is to retool the tax system not just adding a new tax. And
the revenues would also allow to compensate vulnerable people and those
most affected.


The IMF is at your disposal. We work not only in countries that are in
economic trouble, but we are also available to provide advice and technical

To everybody, you can count on us! We embrace the “ASEAN Way” of
collaborating and cooperating. In that spirit, we believe sustainable
development can be achieved.

As the great Nelson Mandela said “It always seems impossible until it is

Thank you.

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