IMF Asia and Pacific Director talks region’s growth, future

Monday, December 2, 2019 - 10:05pm

Changyong Rhee, director of the Asia and Pacific Department at the International Monetary Fund, discusses economic growth in Asia at a policy talk in Weill Hall Monday.

Changyong Rhee, director of the Asia and Pacific Department at the International Monetary Fund, discusses economic growth in Asia at a policy talk in Weill Hall Monday. Buy this photo
Olivia Cell/Daily

Changyong Rhee, director of the Asia and Pacific Department at the International Monetary Fund, delivered a lecture titled “Asia as a Growth Pole: Past, Present, and Future” to an audience of 40 students and community members at the Ford School of Public Policy Monday afternoon. Rhee brought broad experience to the discussion of Asian economies, having served as the chief economist at the Asian Development Bank and a policy advisor to the Office of the South Korean President. 

Rhee’s lecture included country specific stories and short and medium term risks to Asian economic growth. 

Rhee began the lecture saying that the global economic context will make Asian economies increasingly influential in the 21st century. 

“Why is Asia important, especially for students, at this moment?” Rhee said. “Having knowledge about Asia is important to businesses, academics and even politics.”

Rhee displayed a chart of economic growth by world region, pointing out that Asia contributes a disproportionate share of new output. 

“The United States accounts for 24 percent of world GDP, but only 10 percent of world GDP growth,” Rhee said. “Asia has 33 percent of the world’s GDP, but it explains 63 percent of world GDP growth.”

LSA sophomore Noah Ente, who is a columnist for The Daily, told The Daily after the talk that he agreed the numbers suggest Asia is a key area of study for students interested in economics and public policy.

“Asia looks to be the future of a lot of economic growth and output,” Ente said. “That comes from supply chains and also certain countries that are leaders in different industries like India with cars and Korea with artificial intelligence.”

While many economic observers attribute Asia’s economic growth to well known and populous countries like India and China, Rhee emphasized the role of the Association of Southeast Asian Nations countries such as Indonesia, Vietnam, Singapore and the Philippines. 

Rhee noted even his economics colleagues who work in Europe are surprised by the growth of these Southeast Asian countries.

“In 2019, the U.S. accounts for about 12 percent of global growth, and Europe accounts for about 11 percent too,” Rhee said. “This means the ASEAN 10 countries global growth share of 10 percent explains as much as the U.S. or Eurozone. When I say Asia is important, I do not just mean China or India is important.”

LSA sophomore Meiru Chen thought back to her experience traveling to Malaysia when she heard these statistics. 

“They’re living a peaceful life, not like in Tokyo or Beijing or Seoul where people are really trying to get ahead,” Chen told The Daily. “They are quite traditional and there aren’t a lot of innovations happening there, so I was surprised that they are a hub of growth.”

Despite the current optimism, Rhee pointed out several factors that could possibly make Asia’s economic future less rosy than currently projected. He pointed out short-term risks like trade tensions and “too low for long” global interest rates, as well as medium-term risks like a slowdown in productivity and Asia’s aging population. 

Regarding Asia’s lower productivity compared to Western economies, Rhee said Asian economies have grown tremendously with a lot of people working hard, but that higher productivity is needed to sustain wealth. 

“If you look at China, Korea, India, we still push them to work hard. We do not say you have to work creatively,” Rhee said. “So that may be one of the constraints in increasing productivity.” 

Ente was struck by Rhee’s comments on aging populations, particularly the projection that 50 percent of people born after 1990 will live to be at least 100. 

“It’s interesting that now these countries with aging populations like Japan and Korea are still at the forefront of economic development,” Ente said. “The concern is that that will no longer be sustainable as the population continues to age. You need humans for human capital.”

Chen, an international student from China in her first semester at the University, came to the lecture because she is thinking about her own plans to stay in the United States or move back to China after graduation.

“It was good to see Dr. Rhee’s take on where the Asian economy is going,” Chen said. “I wanted to see how the bigger picture is going to affect my personal choices.”

Rhee concluded with a short audience question and answer session. Speaking with The Daily after the lecture, he brought Asia’s importance back to an American context. 

“The US economy cannot be isolated from a global world. Business is more and more connected,” Rhee said. “In the next two decades, the global growth pole will be in Asia.”