ADB Chief Economist on BOJ, Asia Economy
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Albert Park, Chief Economist at the Asian Development Bank, discusses his outlook for Asia's economic growth and Bank of Japan monetary policy. He expects Asia's recovery from the pandemic to continue to be robust. Central banks in Asia have been holding tight and waiting for the Federal Reserve to move first before easing further. The Fed's interest rate decisions are important for Asia, as a half percent higher inflation than expected this year and no interest rate cuts from the US and European Central Banks could increase inflation in Asia by about 0.15 percentage points. Geopolitical tensions and conflicts globally, including the tension between the US and China, pose risks to inflation. The disruption in the Red Sea has affected shipping costs and increased inflation in the region by 0.2 percentage points. The relationship between the US and China is expected to ease this year, and the Biden administration does not want to escalate tensions. Stagflation fears in China may be overdone, as core inflation has remained positive and inflation in China is expected to be above 1% this year. FDI into China has declined, but some strategic sector investment is moving to other parts of Asia, especially Southeast Asia. Policymakers in Beijing are trying to balance a soft landing in the property sector while avoiding an economic collapse. The Bank of Japan is considering a rate hike, and Governor Way has signaled a desire to move away from negative interest rates. Wage increases in Japan could pass through to households and support economic growth. Albert Park is optimistic about Japan's post-pandemic recovery and hopes that higher wage increases will give consumers more confidence to continue spending.

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https://www.bloomberg.com/news/videos/2024-03-18/adb-chief-economist-on-boj-asia-economy-video