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1、Rethinking Public Debt for the Sustainable Development GoalsEconomic and Social Surveyof Asia and the Pacific 2023The shaded areas of the map indicate ESCAP members and associate members.*The Economic and Social Commission for Asia and the Pacific(ESCAP)is the most inclusive intergovernmental platfo
2、rm in the Asia-Pacific region.The Commission promotes cooperation among its 53 member States and 9 associate members in pursuit of solutions to sustainable development challenges.ESCAP is one of the five regional commissions of the United Nations.The ESCAP secretariat supports inclusive,resilient an
3、d sustainable development in the region by generating action-oriented knowledge,and by providing technical assistance and capacity-building services in support of national development objectives,regional agreements and the implementation of the 2030 Agenda for Sustainable Development.*The designatio
4、ns employed and the presentation of material on this map do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country,territory,city or area or of its authorities,or concerning the delimitation of its frontiers
5、or boundaries.Economic and Social Surveyof Asia and the Pacific 2023Rethinking Public Debt for the Sustainable Development GoalsEconomic and Social Survey of Asiaand the Pacific 2023Rethinking Public Debt for the Sustainable Development GoalsUnited Nations PublicationLanguage:ENGLISHSales no.:E.23.I
6、I.F.2Copyright United Nations 2023All rights reservedPrinted in BangkokISBN:9789211208542eISBN:9789210025560ISSN:0252-5704eISSN:2412-0979ST/ESCAP/3080Mention of firm names and commercial products does not imply the endorsement of the United Nations.This publication may be reproduced in whole or in p
7、art for educational or non-profit purposes without special permission from the copyright holder,provided that the source is acknowledged.The ESCAP Publications Office would appreciate receiving a copy of any publication that uses this publication as a source.No use may be made of this publication fo
8、r resale or any other commercial purpose whatsoever without prior permission.Applications for such permission,with a statement of the purpose and extent of reproduction,should be addressed to the Secretary of the Publications Board,United Nations,New York.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE P
9、ACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCONTENTS5FOREWORDOur world is facing a rising tide of trouble.The continuing war in Ukraine and a cost-of-living crisis haveincreased poverty and inequality,and deepened the socioeconomic scars left behind by the COVID-19 pandem
10、ic.Historically high inflation is undermining economic stability,while rising interest rates are adding to the fiscal and debt stress of developing economies at precisely the moment when they should be stepping up investments in the Sustainable Development Goals.For Asia and the Pacific-home to 4.3
11、billion people,or three out of every five people on Earth-these crises are threatening to reverse years of development gains and hindering investments in an inclusive and sustainable future.Growing post-pandemic public debt,together with weaker economic growth prospects and higher interest rates,hav
12、e considerably increased the risk of public debt distress across the region.The Economic and Social Survey of Asia and the Pacific 2023 highlights a fundamental truth:recovery and development depend on equitably and sustainably managing debt,massive investments in the Sustainable Development Goals,a
13、nd transforming the international financial system to make it fairer and more resilient.This is why I have called for a fundamental reform of the international financial architecture and an SDG Stimulus to increase financing at the scale required to deliver on the 2030 Agenda for Sustainable Develop
14、ment.Throughout,the United Nations will continue standing with countries across Asia and the Pacific to help them invest in a sustainable,inclusive and resilient future for their people.Antnio GuterresSecretary-General ofthe United NationsECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHI
15、NKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSPREFACEviPost-pandemic economic growth in developing Asian and Pacific countries weakened considerably in 2022 and is expected to remain weak in 2023,amid the global economic slowdown,unprecedented inflation and uncertainty brought about by the
16、war in Ukraine.These setbacks to past development gains have also been worsened by a food and fuel price crisis,which has increased poverty and inequality across the region.Thus,restoring price stability has become a priority and a critical factor for implementing the 2030 Agenda for Sustainable Dev
17、elopment in the region.Not surprisingly,monetary tightening has gathered pace in many economies.As both demand and supply factors are responsible for high inflation in most economies,the conduct of monetary policy has become increasingly complex.Higher interest rates have implications for the fiscal
18、 and debt positions of developing economies and thus their ability to pursue sustainable development and tackle climate challenges.Indeed,fiscal policy management in support of the Sustainable Development Goals has become ever more challenging.To shield poor households from high food prices,fiscal r
19、esources are needed to complement monetary policy and abate the rising cost of living through targeted subsidies or cash transfers.Fiscal space is also needed for countercyclical stimulus packages,amid the risk of a sharp global economic slowdown in 2023.Large financing needs to effectively pursue t
20、he Sustainable Development Goals,in the backdrop of limited progress in achieving these Goals,should not be forgotten either.At the same time,climate-related financing needs for mitigation and adaptation and for dealing with climate-induced disasters and loss and damage are also weighing on public f
21、inances.Yet,rising government debt levels,higher financing costs and uncertain economic outlook mean that the risk of public debt distress would be considerable in coming years.This implies that the scale of fiscal responses needed for investing in the Sustainable Development Goals and for climate a
22、ction is likely to remain limited.In this context,the Economic and Social Survey of Asia and the Pacific 2023 calls for a significant shift in thinking about leveraging public debt for development gains.The Survey offers new perspectives on fiscal and public debt analysis to help developing countrie
23、s in the region continue their investments aimed at achieving the Goals and maintaining public debt sustainability over a longer-term horizon.Armida Salsiah AlisjahbanaUnder-Secretary-General of United Nationsand Executive Secretary of ESCAPPREFACEECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2
24、023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSPREFACEviiThe Survey argues that a higher debt level does not necessarily mean a higher risk of debt distress.Nor is higher debt necessarily detrimental to economic growth.Rather,deploying public debt as an investment in people and the
25、planet offers sizeable medium-and long-term economic,social and environmental returns.While there is no consensus on optimum public debt levels,fiscal consolidation undertaken to restore public debt sustainability and sovereign debt defaults is known to cause significant and long-lasting adverse soc
26、ioeconomic impacts.Thus,there is a need to revisit conventional debt assessment tools and associated policies.The Survey proposes an innovative approach to public debt sustainability analysis that augments the conventional short-to medium-term methodologies of international financial institutions an
27、d credit rating agencies.This augmented approach considers a countrys Sustainable Development Goal financing needs and Goal financing strategies along with the Governments structural development policies in determining the sustainability of public debt.Using different policy scenarios,the approach s
28、hows that public debt goes down over the long term when the socioeconomic and environmental benefits of public investments are incorporated.The Survey also offers guidance to Governments for achieving a balance between investing in the Sustainable Development Goals and reducing fiscal and debt distr
29、ess.Increasing fiscal revenues and improving public spending effectiveness and efficiency are key to expand the fiscal space and reduce debt distress.Better management of public debt can also reduce fiscal risks and government borrowing costs.Similarly,developing domestic capital markets not only su
30、pports public debt financing but also increases financial inclusion and reduces exchange rate risks.The Survey discusses several policy options that countries can consider while pursuing these broad objectives.For countries already facing elevated debt distress,the Survey also recommends sovereign d
31、ebt restructuring.It highlights that successful sovereign debt restructuring depends on three conditions.First,pre-emptive,swift and adequate sovereign debt restructuring,informed by reliable debt sustainability assessments.Second,strong political commitment,along with a credible strategy for comple
32、mentary reforms aimed at addressing the root causes of debt distress,which addresses potentially strong resistance from powerful vested interest groups,especially with regard to domestic debt restructuring.Third,fair treatment of all stakeholders that reasonably balances the concerns of debtor count
33、ries and creditors.The international development community,including multilateral and bilateral creditors,can also step up its efforts to accelerate progress towards common international debt resolution mechanisms and restructuring frameworks.Asia and the Pacific must respond to the call by the Comm
34、ission last year to pursue a common agenda for sustainable development in the region.Effective pursuit of such an agenda requires fiscal and financial investments,among other policy considerations.Providing such investments is challenging when countries are faced with difficult economic conditions a
35、nd debt distress.I am confident that member States will find the analytical assessment and policy recommendations in this edition of the Survey,which revolves around debt-related issues,helpful in their journey towards an inclusive,resilient and sustainable future.ECONOMIC AND SOCIAL SURVEY OF ASIA
36、AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSEXECUTIVE SUMMARYviiiEXECUTIVE SUMMARYEconomic activity in Asia and the Pacific is expected to remain weak,amid high inflation,fiscal stress and rising geopolitical risksPost-pandemic economic performance in developing
37、countries in Asia and the Pacific was considerably weak in 2022.Average output growth is estimated at 3.3 per cent,which is much lower than the pre-pandemic averages.The sluggish economic activity is mainly driven by historically high inflation,which not only undermined economic stability but has al
38、so increased poverty and inequality,thus worsening the deep socioeconomic scarring resulting from the COVID-19 pandemic.Restoring price stability and safeguarding the vulnerable are thus not just macroeconomic issues,but critical prerequisites for implementing the 2030 Agenda for Sustainable Develop
39、ment in the region.The end of 2022 witnessed a global economic slowdown amid a rising cost of living,tighter financial conditions and the continuing war in Ukraine.Without further worsening of the geopolitical risks or a deeper global economic recession,average GDP growth in developing countries in
40、Asia and the Pacific is expected to rise moderately to 4.2 per cent in 2023.However,this outlook remains fraught with uncertainty and is uneven across the region.In addition to declining exports,the growth prospects are clouded by the extent of expected monetary policy tightening in the major develo
41、ped economies.In responding to high inflation in the region and rising interest rates in advanced economies,monetary tightening in several developing Asia-Pacific economies gathered pace in the second half of 2022.The average rate of inflation in developing countries in the region is estimated to ha
42、ve been 7.6 per cent in 2022,the highest rate since 1998,compared with 3.4 per cent in 2021.Inflation is expected to remain at the elevated level of 5.9 per cent in 2023.Although both demand and supply factors are responsible for high inflation in most economies,it is difficult to pin down their rel
43、ative contribution.Likely upward pressure on wages due to high inflation,and thus inflationary expectations,cannot be ignored either.This makes the conduct of monetary policy increasingly complex.Central banks in the region need to balance management of expectations about inflation amid supply-drive
44、n factors while they minimize the adverse impacts of higher interest rates on the prospects for economic recovery.Fiscal policy can and must complement monetary policy in tempering high inflation.Limited fiscal resources should be used for abating the rising cost of living through targeted subsidies
45、 or cash transfers to shield poor households from high food prices amid the risk of social unrest.Other longer-term solutions are needed to ensure food security,such as improved agricultural productivity,reduced food waste and fewer trade barriers for food items.In addition to food price surges,the
46、leap in global energy prices in 2022 also has long-term implications for Asia and the Pacific in addition to an immediate impact on driving inflation.To reduce heavy reliance on fossil fuels and meet targets for carbon reduction,the region needs to accelerate the transition towards clean and renewab
47、le energy.This also will help reduce the regions vulnerability to climate shocks in the form of increased frequency and intensity of natural disasters.In going forward,fiscal policy management in support of the Sustainable Development Goals is a significant challenge.Critical spending needs for heal
48、th care,education and social protection are substantial.Fiscal space would also be needed for countercyclical stimulus packages amid the risk of a sharp global economic slowdown in 2023.Yet,rising government debt levels in post-pandemic years,higher financing costs and an uncertain economic outlook
49、mean that the risk of public debt distress would be considerable in coming years.Against this background,the Survey for 2023 examines how new perspectives on fiscal and public debt analyses and policies can help countries in Asia and the Pacific to effectively pursue not only the Sustainable Develop
50、ment Goals by 2030 but also improve their long-term sustainable development prospects.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSEXECUTIVE SUMMARYixThere is a need to rethink the public debt-development nexus to effectively pur
51、sue sustainable development under current difficult economic conditions According to ESCAP estimates made in 2019,to implement the 2030 Agenda Asia-Pacific developing countries would require an average annual investment of$1.5 trillion,an additional 5 per cent of the regions 2018 GDP.The bulk of thi
52、s would have to come from public resources.The requirements have certainly increased since then,especially for least developed countries.Climate-related financing needs will also put significant strain on public finances in the region.Importantly,countries most vulnerable to climate change and with
53、the highest development deficits have the most limited fiscal space.As fiscal firepower is shrinking in the Asia-Pacific region,it is time to rethink the relationship between public debt and development financing.The view that high debt levels are necessarily detrimental to economic growth has been
54、challenged in recent years.On the other hand,development deficits and climate risks,if left unaddressed,will have serious implications for growth and the sustainability of public finance.The Survey for 2023 is based on the premise that public debt can be a powerful sustainable development tool if us
55、ed judiciously and with a long-term horizon.Public borrowing decisions to finance development can be effective,if expected broader socioeconomic and financial returns are incorporated into debt assessments.More recently,potential environmental benefits have also been assigned a high weight in assess
56、ing the impact of debt issuance.Most development expenditures offer clear financial co-benefits,such as enhanced economic growth prospects due to an improvement in education or job creation resulting from investment in renewable energy.It has been well documented that fiscal consolidation episodes,i
57、n trying to achieve debt sustainability in the short term,and sovereign debt defaults can result in significant and long-lasting increases in inequality and poverty.Thus,developing a better understanding of the link between public debt and inequality is another good example of the important role of
58、debt in development.The argument analysed in the Survey for 2023 is that the quantity and quality of debt-funded spending for development can be enhanced.In this regard,it is worth highlighting that there is no consensus on the optimum level of public debt,and thresholds used for developing countrie
59、s,which do not account for Sustainable Development Goal financing needs,are often quite low.This has led to suboptimum development outcomes for many developing economies.Transparency of debt management is key for ensuring effective development outcomes and increasing national debt carrying-capacity.
60、Functioning domestic debt markets are a powerful tool for financing development while improving financial inclusion and limiting exposure to foreign exchange risk.International debt markets can also be leveraged in tandem with domestic markets to meet large financing needs,but they need to be accomp
61、anied by measures to limit the macroeconomic risks of international borrowing.A better understanding of the public debt profile along with its main drivers and objectives should be a main consideration while undertaking debt sustainability analysisPrior to the pandemic,the average government debt-to
62、-GDP ratio in developing countries in the Asian and Pacific region was already at an 11-year high of 40.6 per cent in 2019.This jumped to 49.5 per cent in 2021 with two thirds of Asia-Pacific economies reaching the highest level since 2008.Rising interest rates in 2022 have added further pressure to
63、 the debt service payments,which are expected to increase in many countries in the region in coming years.Along with rising public debt and debt servicing costs,the number of countries rated at high risk of debt distress has been increasing.Currently,19 countries are rated at high risk of debt distr
64、ess based on the joint World Bank-IMF Debt Sustainability Framework for Low-Income Countries or equivalent credit ratings assessed by credit rating agencies.However,not all of them have high levels of debt.In fact,six of these countries have experienced stable or even decreasing trends in their debt
65、 levels in the last decade,and their government debt-to-GDP ratios were all below 20 per cent in 2021.In contrast,public debt levels of a few other countries are extraordinarily high but their credit ratings are also high.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT
66、 FOR THE SUSTAINABLE DEVELOPMENT GOALSEXECUTIVE SUMMARYxIndeed,the Survey for 2023 demonstrates that a low debt level does not automatically prevent a country from facing high risk of debt distress while a higher debt level does not necessarily translate into higher risk.A thorough examination from
67、multiple perspectives of the public debt profile of countries reveals that this situation depends on several factors.First,strong macroeconomic fundamentals,certain structural,governance and institutional aspects,most critically political stability,which has impacts on every aspect of economic perfo
68、rmance,are considered prerequisites for a high credit rating.Second,understanding the main drivers and purpose of increasing debt is critical.For countries facing a high risk of debt distress,primary deficit is the key factor in driving up their public debt.In contrast,a negative interest rate-growt
69、h differential has helped limit debt surge,thanks to the unprecedented low interest environment globally and rapid economic growth in the region in the past decade.However,these two factors may not continue to work in favour of the developing countries in the region.Interest rates have risen and are
70、 expected to continue rising,and the region may no longer sustain higher levels of economic growth.This implies that stemming rising debt levels will be challenging in the near future,indicating the risk posed by rising debt vulnerabilities.Third,composition of public debt portfolios and of creditor
71、s matters.Half of the developing Asia-Pacific economies rely heavily on external debt.At the same time,several small island developing States and landlocked developing countries have witnessed the sharpest increases in debt owed to China.Beyond official creditors,the role of government bondholders,s
72、uch as institutional and individual investors,is increasing in the regions sovereign creditor landscape.The rise of unconventional creditors opens the door to new sources of public financing,but their inherent shorter maturities and higher costs imply a higher interest rate and rollover risks.Moreov
73、er,the evolution of the creditor landscape makes debt resolution discussions more difficult,as there is no existing framework that can facilitate effective coordination among unconventional creditors.On the other hand,several Asia-Pacific countries with larger levels of domestic debt have issued mor
74、e local currency government bonds in domestic markets,especially in 2020 and 2021 to fund pandemic-stimulus packages.Yet,as foreign holdings of these bonds have also increased since 2008,Governments need to be wary of the increasing risk of sudden capital outflows.A countrys Sustainable Development
75、Goal investment needs,its Governments structural development policies and national Goal financing strategies need to be incorporated into“augmented”conventional debt sustainability analysis Given the urgency of investing in the Sustainable Development Goals and climate action,it is time for policyma
76、kers in Asia and the Pacific and the international development community to rethink public debt assessments.The Survey for 2023 proposes an“augmented”approach to analyse public debt sustainability in the long term that supplements the short-to medium-term debt sustainability methodologies used by in
77、ternational financial institutions and credit rating agencies.A long-term approach can supplement the current exclusive focus on reducing near-term debt distress,which can compromise efforts to promote inclusive,resilient and sustainable development.The augmented approach takes into account a countr
78、ys additional spending needs to achieve the Sustainable Development Goals by 2030,government structural development policies that go beyond financial investments and national Goal financing strategies.It also integrates climate change issues through various channels,such as investments in climate ad
79、aptation and mitigation,government transfers for disaster-affected households and fiscal support for commercial banks burdened with stranded asset values in carbon-heavy industries.By illustrating different trajectories of government debt under different scenarios of public policies and adverse shoc
80、ks,this approach helps to inform policy choices for balancing reasonable fiscal risks in the near term with long-term development ambitions.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSEXECUTIVE SUMMARYxiImplementing this new aug
81、mented approach to conduct a debt sustainability analysis for Mongolia shows that investing in a package of development policies to promote a greener,more diversified Mongolian economy,in addition to Sustainable Development Goal investments,can boost socioeconomic and environmental gains.Not surpris
82、ingly,these investments also result in much higher government debt.Yet,the analysis shows that financing strategies to enhance fiscal resources and mobilize more private finance for development can reduce government debt significantly.Indeed,it is estimated that,by 2040,the government debt level wou
83、ld eventually converge to the same level as under the baseline scenario,which assumes fiscal consolidation.The key difference is that the people and the environment are much better off under the proposed alternative scenario.This analysis emphasizes the importance for all stakeholders to consider pu
84、blic debt sustainability from both short-and long-run perspectives.Besides providing a longer,more holistic view on public debt sustainability,the quantitative analysis has other policy implications.First,Governments should aim to strike a balance between achieving the Sustainable Development Goals
85、and public debt sustainability.Attempts to meet statutory fiscal rules should be mindful of the broader economic situation and its social impact.The analysis for Mongolia shows that,while controlling government debt,strict fiscal deficit rules push up poverty to a notable extent.Second,international
86、 financial institutions and credit rating agencies can play an important role in supporting debtor countries to navigate this balancing act.For example,when public debt sustainability is also assessed by public investment quality and potential returns,and not just the governments debt repayment abil
87、ity in the near term,the sovereign risk premium should become less sensitive to government debt levels.In such a case,the analysis reveals that government debt declines along with poverty amid lower interest rates and higher employment.While efficient fiscal and debt management can help ease debt di
88、stress,timely debt restructuring and effective debt resolution mechanisms are also needed While prudence requires Asia-Pacific countries to take precautionary measures to manage sudden or chronic sovereign debt increases and,in some cases,prepare for potential debt distress,precaution should not be
89、misinterpreted as fiscal conservatism.Instead,policies should seek to enhance the efficiency and risk management gains through improvements in fiscal institutions and transparency,productivity of debt-financed public investments and resource mobilization.Preparation for swift and smooth debt restruc
90、turing under the worst-case scenario can also help mitigate economic and social shocks from sovereign defaults.Ensuring productivity of debt-financed public investment to support long-term development remains the first defence against sovereign debt distress.However,it should be recognized that esse
91、ntial public spending,such as for pandemic and natural disaster relief or climate adaptation,may not immediately or adequately yield revenue flows.While Governments efforts on revenue mobilization will be critical,the scale of financing needs may substantially exceed the fiscal capacity of many poor
92、 and vulnerable Asia-Pacific countries.To this end,the international community needs to live up to its development commitments and adopt much bolder ambitions for cross-border development transfers.Sound fiscal management and improved debt transparency can reduce fiscal distress risks associated wit
93、h sovereign debt.Transparency is essential for early detection of debt sustainability risks and early debt restructuring,which have historically been much less costly than delayed actions.Debt transparency also reduces information asymmetry barriers for effective restructuring design and coordinatio
94、n.Preemptive,swift and adequate sovereign debt restructuring and relief can serve as the last resort to control damage in the event of serious debt distress.Yet,debt restructuring is often hampered by concerns over domestic political and financial stability as well as fears of capital market denials
95、 and creditor holdouts in restructuring negotiations.This tends to result in protracted negotiations,prolonged debt overhang and repeated debt restructuring needs with significant socioeconomic loss.This“too little,too late”challenge has been aggravated by the recent increase in non-traditional offi
96、cial creditors,semi-official creditors and large numbers of small or individual sovereign bond investors.Such fragmentation renders traditional debt resolution mechanisms ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSEXECUTIVE SUM
97、MARYxiiineffective and has significantly increased coordination costs in negotiated restructuring.A significant increase in litigation against sovereign debt restructuring by holdout creditors and vulture funds for unwarranted preferential treatment has also caused additional disruptions and delays.
98、Debtor countries need to expedite the adoption of the latest collective action clauses and,potentially,state-contingent clauses in their sovereign borrowing contracts to better hedge against uncertainties and risks in debt restructuring.At the same time,the international community needs to improve t
99、he international architecture of sovereign debt restructuring by(a)strengthening its commitments and efforts to set up expanded umbrella frameworks to facilitate broad-based creditor coordination;(b)promoting the adoption of contract and market-based solutions in order to reduce creditor holdouts;an
100、d(c)exploring pragmatic multilateral frameworks for sovereign debt resolution.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSINFOGRAPHICSxiiiINFOGRAPHICSECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT
101、 FOR THE SUSTAINABLE DEVELOPMENT GOALSINFOGRAPHICSxivMACROECONOMIC PERFORMANCE AND OUTLOOK FOR ASIA AND THE PACIFICHigher food and energy prices affect the poor more than others.Rising interest rates and lower growth is constraining fiscal and debt position,making it difficult to pursue SDGs and cli
102、mate ambitions.INFLATION PERSISTENCE AND POVERTYGOING FORWARD,WEAK GROWTH PROSPECTSRISING RISK OF DEBT DISTRESSCENTRAL BANKS FACINGA DIFFICULT BALANCEEconomic growth outlook remains weak in 2023-2024 amid global slowdown,high inflation,and war-induced uncertainties.Ensuring price and economic stabil
103、ity while supporting post-pandemic economic recovery.addressing the cost-of-living crisis requires timely monetary policy response,targeted fiscal support and sustained efforts to ensure food security.202247.33.34.24.7Real GDP Growth3.47.65.94.4Inflation rate20224ECONOMIC AND S
104、OCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSINFOGRAPHICSxvHuge spending needs to attain SDGs and climate goals.Limited progress towards achieving the SDGs.Rising climate risks weigh on public finances.Rising public debt level amid weak econom
105、ic prospects.High public debt level undermines economic growth and stability.There is a common optimum public debt level for different countries.Bold fiscal consolidation is needed to reduce near-term fiscal risks.Revisiting the debt-development nexusChanging context in Asia and the PacificConventio
106、nalThinkingREVISITING THE NEXUS BETWEEN PUBLIC DEBT AND DEVELOPMENTPublic debt can be a powerful tool for development,if used judiciously.Appropriate public debt level is country-specific,keeping in view the SDGs.The optimal public debt thresholds advocated by international financial institutions ar
107、e too low.Need to revamp conventional debt assessment tools that have short-term horizon.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSINFOGRAPHICSxviPUBLIC DEBT PROFILE OF ASIA-PACIFIC ECONOMIEScountries are currently rated at hi
108、gh risk of debt distress,*but level of public debt is not the sole factor impacting public debt sustainability.PUBLIC DEBT DISTRESS DEPENDS ON SEVERAL FACTORS:19Public debt in 2/3 of economies reached its highest level since 2008.OTHER FACTORSMAIN DRIVERS AND PURPOSECOMPOSITIONRise of unconventional
109、 creditorsHalf of developing Asia-Pacific economies rely heavily on external debt*Based on the joint World Bank-IMF Debt Sustainability Framework for Low-Income Countries or equivalent credit ratings assessed by credit rating agencies.External vs domestic debt Creditor profiles Foreign currency expo
110、sure Concessionality Political stability Debt carrying capacity and fiscal position Macroeconomic strength Structural features Institutions and governance strengthThe number of countries rated at high risk of debt distress is increasing.Primary deficit Interest rate-growth differential Exchange rate
111、ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSINFOGRAPHICSxviiRETHINKING PUBLIC DEBTSUSTAINABILITY ANALYSIS FOR THE SUSTAINABLE DEVELOPMENT GOALS WHERE WE STANDOUR PROPOSALCurrent approaches on public debt sustainability analysis
112、focus on reducing near-term debt distress risks,thus undermining Governments access to financial resources.TIME TO RETHINKAmid shrinking fiscal space and large spending needs to attain the SDGs and climate ambitions,it is time to revisit how public debt sustainability should be analysed.PROMISING EV
113、IDENCE FOR MONGOLIA AS A PILOT COUNTRYGovernment debt would eventually converge to the baseline level that assumes fiscal consolidation,but people and the environment are much better off here.ESCAP proposes an augmented approach that duly incorporates a countrys SDG spending needs and financing stra
114、tegies and structural development policies.WHAT DOES THIS MEAN FOR ALLSTAKEHOLDERS?Creditors,credit rating agencies and markets should consider not only short-term perspectives.Debtors should strike a balance between the SDGs and debt sustainability.Economic and Social Survey ofAsia and the Pacific
115、2023ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSINFOGRAPHICSxviiiPOLICY OPTIONS FOR MANAGING PUBLIC DEBT SURGEReduce debt risk through effective sovereign debt management and monitoring.FISCAL AND DEBT RISKSEnhance domestic fisc
116、al resources through revenue mobilization and productive use of public funds.FISCAL SPACEProvide development transfers now rather than debt reliefs later.DEVELOPMENT COOPERATIONPre-emptive debt restructuring incurs much smaller socioeconomic costs than sovereign defaults.DEBT RESTRUCTURINGA conduciv
117、e framework is needed for timely and orderly sovereign debt restructuring.INTERNATIONAL COMMUNITYDEBTRELIEFDEVELOPMENTTRANSFERSAvoiding costly defaultstnempoleved dna tbed elbaniatsuSECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSA
118、CKNOWLEDGEMENTSxixACKNOWLEDGEMENTSThe Economic and Social Survey of Asia and the Pacific is a flagship publication of the United Nations Economic and Social Commission for Asia and the Pacific(ESCAP).Published annually since 1947,the Survey is a valuable companion for policymakers,civil society,acad
119、emia,other United Nations entities,including the United Nations Resident Coordinator offices,and other stakeholders in the Asia-Pacific region,and provides forward-looking analyses and recommendations on economic conditions and key sustainable development challenges.The Survey is produced under the
120、overall guidance of Armida Alisjahbana,Under-Secretary-General and Executive Secretary of ESCAP,and Kaveh Zahedi,Deputy Executive Secretary of ESCAP,with support from the Editorial Board of ESCAP.It draws on expertise available in ESCAP substantive divisions and subregional offices and from across t
121、he United Nations system.Hamza Ali Malik,Director of the Macroeconomic Policy and Financing for Development Division,provides overall leadership and management,and shares valuable feedback,comments and suggestions at various stages of preparation of this flagship publication.This 2023 edition of the
122、 Survey was prepared by a core team initially led by Shuvojit Banerjee and then by Vatcharin Sirimaneetham,including Nixie Abarquez,Zheng Jian,Micha Podolski,Kiatkanid Pongpanich and Lin Zhuo of the Macroeconomic Policy and Financing for Development Division.ESCAP staff who provided valuable inputs
123、and feedback include:Michael Williamson(Energy Division);Patrik Andersson and Sabine Henning(Social Development Division);Rachael Beaven and Petra Nahmias(Statistics Division);Rupa Chanda(Trade,Investment and Innovation Division);and Sudip Ranjan Basu(Subregional Office for the Pacific).Radhika Lal,
124、Tim Strawson and Delgernaran Tumurtogoo(United Nations Development Programme(UNDP)provided valuable data and information on Integrated National Financing Frameworks.The report benefited from extensive debates among and suggestions from a group of policymakers,scholars,private sector participants and
125、 development practitioners who acted as external peer reviewers and/or provided inputs at the five-day Expert Group Meeting on Public Debt and Sustainable Financing in Asia and the Pacific,held in Bangkok and on-line from 28 November to 2 December 2022.Representing ministries of finance,think-tanks,
126、a regional macroeconomic surveillance organization,a private organization and academia,they include:Mr.Debapriya Bhattacharya(Centre for Policy Dialogue,Bangladesh);Ms.Margarita Debuque-Gonzales(Philippine Institute for Development Studies);Mr.Barry Eichengreen(University of California,Berkeley);Ms.
127、Ravisara Hataiseree(ASEAN+3 Macroeconomic Research Office);Mr.Juan Jose Pradelli(global expert in fiscal policy and public financial management);Mr.Pisit Puapan(Ministry of Finance,Thailand);Mr.Thomas Rookmaaker(Fitch Ratings,Hong Kong,China office);Ms.Sherine El Sharkawy(Ministry of Finance,Egypt);
128、Ms.Ruenvadee Suwanmongkol(Securities and Exchange Commission,Thailand);Mr.Ulrich Volz(SOAS,University of London);and Mr.Arshad Zaman(independent scholar).From the United Nations and other international organizations,they include:Ms.Shamshad Akhtar(former Executive Secretary of ESCAP);Mr.S.Ali Abbas
129、and Mr.Arindam Roy(International Monetary Fund);Mr.Jean-Paul Adam(Economic Commission for Africa);Mr.Sean Craig and Ms.Delphine Moretti(International Monetary Fund Capacity Development Office in Thailand);Mr.Sudyumna Dahal and Ms.Mizuho Okimoto-Kaewtathip(UNDP Bangkok Regional Hub);Mr.Benno Ferrarin
130、i and Mr.Yothin Jinjarak(Asian Development Bank);Mr.Lars Jensen(UNDP);Mr.Paul Martin(United Nations Capital Development Fund Local Development Finance Practice,Bangkok);and Mr.Daniel Munevar(United Nations Conference on Trade and Development).ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:R
131、ETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSACKNOWLEDGEMENTSxxThe following consultants provided substantive inputs:Mr.Jaromir Hurnik,Mr.Theo Maret and Mr.Arshad Zaman.Chawarin Klongdee provided excellent research assistance and valuable administrative assistance,including support for
132、 the publications launch(Macroeconomic Policy and Financing for Development Division).The following ESCAP Interns:Shahed Hassanaly,Anant Jha,Ashwin Kwatra,Mingqing Yin,Xing Zheng and Jiada Zhou,provided inputs for the report and excellent research assistance.The manuscript was edited by John Loftus.
133、The graphic design and layout were created by Jastyn Alain Limon and Infinite Vision.The printing was provided by Ideol Digital Print.Mitchell Hsieh,Raggie Johansen and Kavita Sukanandan,all from the ESCAP Communications and Knowledge Management Section,coordinated the media launch and dissemination
134、 of the report.Mahesh Uniyal supported the dissemination of the report.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSEXPLANATORY NOTESxxiEXPLANATORY NOTESAnalyses in the Economic and Social Survey of Asia and the Pacific 2023 are
135、based on data and information available up to 15 February 2023.Groupings of countries and territories/areas referred to in the present issue of the Survey are defined as follows:ESCAP region:Afghanistan;American Samoa;Armenia;Australia;Azerbaijan;Bangladesh;Bhutan;Brunei Darussalam;Cambodia;China;Co
136、ok Islands;Democratic Peoples Republic of Korea;Fiji;France;French Polynesia;Georgia;Guam;Hong Kong,China;India;Indonesia;Iran(Islamic Republic of);Japan;Kazakhstan;Kiribati;Kyrgyzstan;Lao Peoples Democratic Republic;Macao,China;Malaysia;Maldives;Marshall Islands;Micronesia(Federated States of);Mong
137、olia;Myanmar;Nauru;Nepal;Netherlands;New Caledonia;New Zealand;Niue;Northern Mariana Islands;Pakistan;Palau;Papua New Guinea;Philippines;Republic of Korea;Russian Federation;Samoa;Singapore;Solomon Islands;Sri Lanka;Tajikistan;Thailand;Timor-Leste;Tonga;Trkiye;Turkmenistan;Tuvalu;Uzbekistan;Vanuatu;
138、and Viet Nam.Developing ESCAP region:ESCAP region excluding Australia,Japan and New Zealand.Developed ESCAP region:Australia,Japan and New Zealand.East and North-East Asia:China;Democratic Peoples Republic of Korea;Hong Kong,China;Japan;Macao,China;Mongolia;and the Republic of Korea.North and Centra
139、l Asia:Armenia,Azerbaijan,Georgia,Kazakhstan,Kyrgyzstan,Russian Federation,Tajikistan,Turkmenistan and Uzbekistan.Pacific:American Samoa,Australia,Cook Islands,Fiji,French Polynesia,Guam,Kiribati,Marshall Islands,Micronesia(Federated States of),Nauru,New Caledonia,New Zealand,Niue,Northern Mariana I
140、slands,Palau,Papua New Guinea,Samoa,Solomon Islands,Tonga,Tuvalu and Vanuatu.Pacific island developing economies:All those listed above under“Pacific”except for Australia and New Zealand.South and South-West Asia:Afghanistan,Bangladesh,Bhutan,India,Iran(Islamic Republic of),Maldives,Nepal,Pakistan,S
141、ri Lanka and Trkiye.South-East Asia:Brunei Darussalam,Cambodia,Indonesia,Lao Peoples Democratic Republic,Malaysia,Myanmar,Philippines,Singapore,Thailand,Timor-Leste and Viet Nam.Least developed countries:Afghanistan,Bangladesh,Bhutan,Cambodia,Kiribati,Lao Peoples Democratic Republic,Myanmar,Nepal,So
142、lomon Islands,Timor-Leste,Tuvalu.Samoa and Vanuatu were part of the least developed countries prior to their graduation in 2014 and 2020,respectively.Landlocked developing countries:Afghanistan,Armenia,Azerbaijan,Bhutan,Kazakhstan,Kyrgyzstan,Lao Peoples Democratic Republic,Mongolia,Nepal,Tajikistan,
143、Turkmenistan and Uzbekistan.Small island developing States:American Samoa,Cook Islands,Fiji,French Polynesia,Guam,Kiribati,Maldives,Marshall Islands,Micronesia(Federated States of),Nauru,New Caledonia,Niue,Northern Mariana Islands,Palau,Papua New Guinea,Samoa,Singapore,Solomon Islands,Timor-Leste,To
144、nga,Tuvalu and Vanuatu.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSEXPLANATORY NOTESxxiiOwing to the limited availability of data,selected small island developing States are excluded from the analysis.For the purpose of this Sur
145、vey,Singapore is not considered to be a small island developing State due to its high level of development and high-income status.Bibliographical and other references have not been verified.The United Nations bears no responsibility for the availability or functioning of URLs.Many figures used in th
146、e Survey are on a fiscal year basis and are assigned to the calendar year which covers the major part or second half of the fiscal year.Growth rates are on an annual basis,except where indicated otherwise.References to dollars($)are to United States dollars,unless otherwise stated.The term“billion”s
147、ignifies a thousand million.The term“trillion”signifies a million million.In the tables,two dots(.)indicate that data are not available or are not separately reported;a dash()indicates that the amount is nil or negligible;and a blank indicates that the item is not applicable.In dates,a hyphen(-)is u
148、sed to signify the full period involved,including the beginning and end years,and a stroke(/)indicates a crop year,fiscal year or plan year.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSACRONYMSxxiiiACRONYMSADBADBIASEANASEAN+3BISC
149、ACCDS CEICCOPCOP27COVID-19CRADACDBMDDRDfCSDSA DSSI EDRESCAPESGFAO FDI G20 GDPGNIHIPCIFI ILO IMF JETPs LCYLIC-DSF Asian Development BankAsian Development Bank InstituteAssociation of Southeast Asian NationsASEAN countries plus China,Japan and the Republic of KoreaBank for International Settlementscol
150、lective action clausescredit default swaps CEIC Data,part of ISI Emerging Markets GroupConference of the Parties to the United Nations Framework Convention on Climate Change27th session of the Conference of the Partiescoronavirus disease 2019credit rating agencyDevelopment Assistance CommitteeDevelo
151、pment Bank of Mongoliadomestic debt restructuringdebt-for-climate swapsdebt sustainability analysisDebt Service Suspension Initiativeexternal debt restructuringUnited Nations Economic and Social Commission for Asia and the Pacificenvironmental,social and governanceFood and Agriculture Organization o
152、f the United Nationsforeign direct investmentGroup of Twentygross domestic productgross national incomeheavily indebted poor countriesinternational financial institutionsInternational Labour OrganizationInternational Monetary FundJust Energy Transition Partnerships local currencyjoint World Bank-IMF
153、 Debt Sustainability Framework for Low-Income CountriesECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSACRONYMSxxiv1 A group of 23 oil-exporting countries which meets every month in Vienna to decide how much crude oil to sell on the
154、 global market;created in 2016,when the Organization of the Petroleum Exporting Countries(OPEC)joined forces with 10 non-OPEC oil producers:Azerbaijan,Bahrain,Brunei Darussalam,Kazakhstan,Malaysia,Mexico,Oman,Russian Federation,South Sudan and Sudan.MDRI ODA OECD OPEC+PM2.5 PMIPPG PPP R&DSCDISDGs SE
155、EA SNAUNCTADUNDPUNEP V20 WFP WHOWTOMultilateral Debt Relief Initiativeofficial development assistanceOrganisation for Economic Co-operation and DevelopmentOrganization of the Petroleum Exporting Countries Plus1 particulate matter that has a diameter of 2.5 micrometres or smallerpurchasing managers i
156、ndexpublic and publicly guaranteed debt public-private partnershipresearch and developmentstate-contingent debt instrumentsSustainable Development GoalsSystem of Environmental-Economic AccountingSystem of National AccountsUnited Nations Conference on Trade and DevelopmentUnited Nations Development P
157、rogrammeUnited Nations Environment ProgrammeVulnerable Twenty Group of Ministers of Finance United Nations World Food ProgrammeWorld Health OrganizationWorld Trade OrganizationECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCONTENTS
158、xxv1.Introduction 2.Global economic developments and prospects 3.Economic performance in developing Asia-Pacific economies in 2022 3.1.GDP dynamics and employment trends 3.2.Inflation and monetary policy 3.3.Fiscal assessment and debt position 4.Economic outlook for developing Asia-Pacific economies
159、,2023-2024 4.1.Risks to the outlook 5.Policy considerations6.Conclusion CONTENTSForeword PrefaceExecutive summary AcknowledgementsExplanatory notesAcronymsVVIVIIIXIXXXIXXIII6262834041Chapter 1|Macroeconomic performance and outlook for Asia and the PacificChapter 2|Revisiting th
160、e public debt-development nexus1.Introduction2.Public debt as a powerful tool for financing sustainable development3.Public debt and climate change4.Is there a single“optimal”level of public debt for assessing the debt sustainability of developing economies?5.Navigating a changing creditor and debt
161、landscape to meet financing needs6.The potential of domestic and international capital markets7.The role of international cooperation in dealing with debt vulnerabilities and supporting sustainable development8.Concluding remarksECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBL
162、IC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCONTENTSxxviChapter 3|Public debt profiles of Asia-Pacific economiesChapter 4|Rethinking public debt sustainability analysis for achieving the Sustainable Development Goals1.Introduction 2.Rethinking public debt sustainability analysis for the Sustainable
163、 Development Goals:an augmented approach 3.Applying the augmented debt sustainability analysis approach in the case of Mongolia 3.1.Country context:selected development challenges and policy options 3.1.1.Development challenges from the economic,social and environmental perspectives 3.1.2.Policy pri
164、ority:diversifying the economy 3.1.3.Policy priority:reducing fiscal risks and maintaining public debt sustainability 3.2.Policy scenarios and key assumptions 3.2.1.Additional Sustainable Development Goal spending needs 3.2.2.Structural development policies 3.2.3.National Sustainable Development Goa
165、l financing strategies 3.2.4.Stress tests and contingent liabilities 3.3.Results of the augmented debt sustainability analysis 3.3.1.Sustainable Development Goal spending scenario 3.3.2.Sustainable Development Goal spending and structural development policies 3.3.3.The combined scenario:Sustainable
166、Development Goal spending,structural development policies and Goal financing strategy 3.3.4.Stress tests of the combined scenario4.Broader policy implications 5.Concluding remarks1.Introduction 2.Government debt profile of Asia and the Pacific:Where do we stand?3.Changes in public debt:What are the
167、key drivers?4.Composition of Asia-Pacific public debt:How are Governments borrowing?4.1.External public and publicly guaranteed debt:half of the Asia-Pacific developing economies rely heavily on external debt 4.1.1.Creditors:the role of unconventional creditors,such as China and bondholders,has incr
168、eased recently 4.1.2.Currencies:United States dollar is still the dominant currency 4.1.3.Concessionality:the proportion of concessional loans has dropped 4.1.4.Debt service:surges are expected in many countries 4.2.Domestic debt:share of local currency government bonds has increased 5.Assessing deb
169、t distress in the Asia-Pacific region:Whose public debt is at a higher risk?5.1.Risk of debt distress:the number of countries at high risk is rising 5.2.Public debt profiles of high-risk countries:What are their common characteristics?6.Policy implications 7.Concluding remarks43445054545559606264676
170、772767679808383838586878788899090909497 98100101ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCONTENTSxxviiChapter 5|Managing sovereign debt surges:policy considerations and options1.Introduction 2.Managing sovereign debt risks wi
171、thout sacrificing development 2.1.Sovereign debt management and monitoring 2.2.Enhancing spending efficiency and productivity of public investment 2.3.Revenue mobilization and international development transfers 3.Mitigating sovereign debt distress damage through debt restructuring 3.1.Desirability
172、of preemptive,adequate and collaborative sovereign debt restructuring 3.2.Unique challenges of sovereign debt restructuring 3.3.Domestic debt restructuring 3.4.External debt restructuring 3.4.1.Problems with the current external debt restructuring framework 3.4.2.Existing umbrella initiatives for ex
173、ternal debt restructuring 3.4.3.Market-based approaches to improve external debt restructuring 3.4.4.Proposed improvements in the international debt restructuring architecture4.Conclusions and policy recommendationsReferencesBOXES1.1.Beyond GDP an alternative measurement of progress and well-being1.
174、2.Subregional perspectives1.3.Food security in Asia-Pacific economies1.4.From financial inclusion to financial resilience2.1.Public debt and inequality2.2.What falls under the definition of public debt?3.1.Definitions of terminology discussed in the present chapter 3.2.Key drivers that contribute to
175、 the change in the level of public debt 3.3.Types of loans extended by China4.1.Review of IMF and World Bank approaches to debt sustainability analysis4.2.IMF public debt sustainability analysis for Mongolia4.3.Impact of varying sensitivity between sovereign risk premium and government debt level4.4
176、.Impact of fiscal rule adjustments on government debt5.1.General steps of sovereign debt restructuringFIGURES1.1.Global quarterly GDP growth,2019-20221.2.Signs of slowdown driven by weakening demand from monetary tightening1.3.Persistent inflationary pressures have resulted in rapid monetary tighten
177、ing1.4.Quarterly real GDP growth in developing Asia-Pacific subregions1.5.Exports continued to expand in 2022 but at a slower pace than in the previous year626026284599124ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINK
178、ING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCONTENTSxxviii 1.6.PMI trends indicate a slowdown in economic activity 1.7.Economies where unemployment declined in 2022 1.8.Prices of key commodities have risen considerably since mid-2021 1.9.Inflation remains higher in many economies than centr
179、al bank targets 1.10.Headline,core and food price inflation remain on a rising trend since mid-2021 1.11.Food and energy components represent the main drivers of inflation 1.12.Central bank interest rate decisions in developing Asia-Pacific economies 1.13.Interest rates in Asia-Pacific economies fol
180、low monetary tightening in major developed economies 1.14.Fiscal space in Asia-Pacific economies 1.15.Debt positions and servicing costs in Asia and the Pacific,2016-2022 3.1.More than two thirds of economies faced an increase of more than 10 percentage point in general government gross debt since 2
181、008 3.2.General government gross debt 3.3.Gross government financing needs in 2022 3.4.General government gross debt is expected to stabilize in most developing economies 3.5.In general,the primary deficit pushes up the debt level while the interest rate-growth differential reduces debt 3.6.Average
182、contribution to public debt changes from exchange rate versus share of external debt,20082021 3.7.Half of Asia-Pacific developing economies still rely heavily on external debt 3.8.Bilateral and multilateral loans constitute the major sources of external borrowing for most developing countries in all
183、 subregions,2021 3.9.China has become one of the major bilateral creditors in the region 3.10.The share of government bond holders in total external public and publicly guaranteed debt has increased considerably in many countries 3.11.Ten countries have issued their first international sovereign bon
184、ds since 2007 3.12.The share of United States dollar-denominated debt in external debt was larger than 70 per cent in two thirds of the economies shown in the figure in 2021 3.13.The proportion of concessional loans in multilateral public and publicly guaranteed debt has dropped 3.14.Chinese loans,a
185、lthough in less concessional terms,make new funding source possible for developing countries in Asia and the Pacific 3.15.External public and publicly guaranteed debt service payments are expected to surge in most countries,2022-2027 3.16.Debt securities account for the largest share of domestic deb
186、t 3.17.ASEAN+3 has seen increasing issuances of local currency government bonds in the domestic market 3.18.Investor profiles of local currency government bonds in ASEAN+3 countries,2021 3.19.Historical foreign holdings of local currency government bonds in selected ASEAN+3 countries 3.20.Risk of ov
187、erall debt distress in Asia and the Pacific,2012-2021 3.21.Trend of sovereign credit ratings in Asia and the Pacific,2008-2022 3.22.General government gross debt level versus risk of debt distress5749505254555657585859606687072ECONOMIC AND SOCIAL SURVEY OF ASIA AND T
188、HE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCONTENTSxxix4.1.Four key components of augmented debt sustainability analysis4.2.Gross general government debt in Mongolia,2006-20224.3.Mongolias additional annual Sustainable Development Goal spending needs4.4.Mongolias add
189、itional Sustainable Development Goal spending needs,by Goal4.5.Scenarios on structural development policies for Mongolia4.6.Selected scenarios on Sustainable Development Goal financing strategies:Mongolia4.7.Stress tests and contingent liabilities:Mongolia4.8.Impacts of Sustainable Development Goal
190、spending on selected economic,social and environmental variables 4.9.Impacts of Sustainable Development Goal spending on selected fiscal variables4.10.Impacts of Sustainable Development Goal spending and structural development policies4.11.Impacts of Sustainable Development Goal spending,structural
191、development policies and Goal financing strategy4.12.Impacts of lower global coal demand and prices on the government debt ratio4.13.Impacts of selected macroeconomic shocks and contingent liabilities on the government debt ratio5.1.Estimated fiscal cost of contingent liability realization in Asia-P
192、acific countries,1980-20195.2.Correlation between sovereign debt level and gross capital formation and social-education spending in Asia-Pacific economies 5.3.Annual military spending as percentage of GDP in Asia-Pacific countries 5.4.Changes in tax-to-GDP ratio,2010-20195.5.Total number of governme
193、nt debt restructuring events during the period 1980-20205.6.Brady Plan debt restructuring in a nutshell TABLES1.1.Real GDP growth and consumer price inflation,percentage,2021-2024 3.1.Latest Debt Sustainability Analyses under the joint World Bank-IMF Debt Sustainability Framework for Low-Income Coun
194、tries3.2.Summary of sovereign credit rating actions,January 2022 February 20233.3.Summary of key areas used to determine sovereign credit ratings 3.4.List of countries facing a high risk of distress5.1.Outlook for introduction of collective action clauses in international sovereign bonds246971747512
195、082848788888990909114117ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 130CHAPTER 1ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCH
196、APTER 11Macroeconomic performance and outlook for Asia and the PacificCHAPTER 11.IntroductionDeveloping economies in Asia and the Pacific experienced strongeconomic momentum at the beginning of 2022,driven by increases in regional and global economic activity from border re-openings and a pickup in
197、domestic consumption and growth in external trade.This positive start to the year,however,was soon derailed by the war in Ukraine which triggered global economic turmoil through trade disruptions and the breaking of supply chains,which triggered a shock to food and energy prices.The resulting econom
198、ic slowdown towards the end of 2022 is expected to continue in 2023.The average GDP growth rate in Asia and the Pacific in 2022 is estimated to have been 3.3 per cent;it is forecasted to increase moderately to 4.2 per cent in 2023.This outlook remains fraught with uncertainty,however.In addition to
199、declining exports,the growth prospects are clouded by the extent of expected monetary policy tightening in the major developed economies.Against the backdrop of ultra-accommodative fiscal and monetary policies of 2020/21,the disrupted global supply of goods and the war-induced shock to food and ener
200、gy prices,these conditions have unleashed a wave of global inflation and have led to a considerable increase in inflation in the Asia-Pacific region.The substantial increase in ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER
201、 12the cost of living and the plunging purchasing power of disposable incomes has pushed again millions of people into poverty amid growing inequalities.The average rate of inflation in developing countries in Asia and the Pacific is estimated to have been 7.6 per cent in 2022 compared with 3.4 per
202、cent in 2021.Inflation is expected to remain at an elevated level of 5.9 per cent in 2023.Responding to rising inflationary pressures,monetary tightening in developing Asia-Pacific economies gathered pace in the second half of 2022.At the same time,higher interest rates in developed economies have l
203、ed to accelerated currency depreciations among many developing Asia-Pacific countries,producing further adverse impacts on their import costs and thus domestic inflation,as well as their foreign currency debt obligations.This situation serves as an additional reason for interest rate increases in th
204、e region.The impact of higher interest rates in controlling the elevated rate of inflation is not expected to materialize fully in 2023.Furthermore,positive economic developments,such as the opening of the Chinese economy in 2023,are likely to keep inflation under pressure;increases in pent-up deman
205、d,however,may in turn lead to surges in commodity and energy prices.Although both demand and supply factors are responsible for high inflation in most economies,it is difficult to pin down their relative contributions.Likely upward pressure on wages due to highinflation and thus inflation expectatio
206、ns cannot be ignored either.This makes the conduct of monetary policy increasingly complex.Central banks in the region need to balance managing inflation expectations amid supply-driven factors while minimizing the adverse impacts of higher interest rates on the prospects for economic recovery.Overa
207、ll,policymakers are advised to follow a cautionary approach despite a recent decline in inflation.With rising inflation and interest rates,the risk of public debt distress has increased,and policymakers are facing potential fiscal consolidation.This may make it difficult to support economic recovery
208、 and sustainable development.Nevertheless,fiscal policy can and must complement monetary policy in tempering high inflation.Limited fiscal resources should be used for abating the rising cost of living and shielding poor households through targeted subsidies or cash transfers.It is uncertain whether
209、 debt will become unsustainable for more economies in 2023;however,it is apparent that fiscal resources have been mostly depleted.It is also clear that addressing fiscaldeficits will require changing current fiscal management paths to follow the much more challenging road of fiscal efficiency,smart
210、spending and increases in fiscal revenues a continuation of the key messages contained in last years Survey.Other longer-term solutions are needed to ensure food and energy security,such as improved agricultural productivity,reduced food waste and fewer trade barriers for food items.2.Global economi
211、c developments and prospectsThe global economy experienced a broad-based slowdown in 2022As the impact of the COVID-19 pandemic gradually receded and national borders reopened,economic activities across the globe experienced a resurgence in 2021 and at the beginning of 2022(ESCAP,2022a).However,the
212、war in Ukraine,starting towards the end of February 2022,has resulted in numerous setbacks,leading to a simultaneous global economic slowdown in 2022(United Nations,2023a).The substantial supply disruptions drove up global food and energy prices,resulting in multi-decade high inflation across the gl
213、obe,escalating food insecurity and malnutrition in many parts of the Asia-Pacific region(FAO and others,2022).This triggered rapid monetary policy tightening,led by the United States of America,and thus a rise in borrowing costs,which weighed on economic activities across the globe.At the same time,
214、climate change and such natural disasters as heat waves,drought,cyclones,floods and earthquakes have resulted in massive economic and humanitarian damage,requiring emergency responses and recovery at a time when fiscal resources have become increasingly limited(ESCAP,2023b).Tightening financing cond
215、itions amid high levels of debt and higher debt servicing costs have increased the risk of sovereign defaults and amplified the pressure to expedite fiscal consolidation.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 13The
216、economic slowdown is visible in severaleconomic indicators Signs of weakening sentiments and demand are seen in declining consumer and business sentiment(figures 1.2a and 1.2b),moderating manufacturing and export volumes(figures 1.2c and 1.2d)and Among developed economies,the United States fell into
217、 a technical recession in the first half of the year and rebounded thereafter to register an economic growth at 2.1 per cent for 2022.1 The European Union,responsible for importing about 30 per cent of exports from the Asia-Pacific region(United Nations,2023c),was on a strong GDP growth path of 5.6
218、per cent in the first quarter of 2022.However,after the onset of the war in Ukraine,quarterly GDP steadily declined to an annual growth rate of 3.6 per cent for 2022 due to the consequent energy crisis and dampened demand caused by rising inflation(Eurostat,2023).Against this background,the global e
219、conomic growth rate is estimated to have 1 Recession is defined as two consecutive quarters of negative annualized GDP growth at negative 1.6 and 0.6 per cent in the first and second quarters of 2022(United States Bureau of Economic Analysis,2023).There is no consensus on whether the United States e
220、conomy had indeed fallen into recession in 2022,due to the relatively strong performance of its other economic indicators,such as labour market data.dropped to 3 per cent in 2022,from 5.8 per cent in 2021(United Nations,2023a).Importantly,the risk of a global reces-sion in 2023 has risen considerabl
221、y,and economic growth is projected to moder-ate further in 2023 to 1.9 per cent before slightly picking up in 2024 to 2.7 per cent(United Nations,2023a).This is driven by output declines in the Euro zone and expected growth moderation in the United States in 2023 and 2024.lower demand for raw materi
222、als towards the end of 2022(figure 1.2e).Trade prospects for 2023 are likely to be shaped by sluggish economic growth,relatively high interest rates,winding down of post-COVID stimuli,high inflationary pressures and rising debt concerns.Figure 1.1 Global quarterly GDP growth,2019-2022Source:CEIC,acc
223、essed on 15 February 2023.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 14a.Consumer sentimentd.Exports volume,2019-2023e.Freight costs,Baltic Dry Index,2020-2023b.Business sentimentc.Manufacturing PMISource:CEIC,accessed
224、on 15 February 2023.Note:Change in business and consumer confidence is calculated by CEIC based on data from national statistical institutes,central banks and government agencies of respective countries;Purchasing Managers Index(PMI)readings above 50 indicate expansion;readings below 50 indicate con
225、traction;and a reading at 50 indicates no change.Source:World Trade Monitor December 2022,CPB Netherlands Bureau for Economic Policy Analysis.Source:I.Figure 1.2Signs of slowdown driven by weakening demand from monetary tighteningECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUB
226、LIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 15Persistent inflationary pressures have resulted in a rapid monetary tightening(figure 1.3b).Since the start of 2022,the United States has increased its policy interest rate by 475 basis points up to January 2023,and the European Central Bank by
227、 300 basis points.As inflation remains considerably high in the United States and Euro zone,further monetary tightening should be expected,with the likelihood of developing countries,including those from the Asia-Pacific region,following suit.Inflation has emerged as a top global macroeconomic chall
228、enge Global inflation reached historic levels in 2022 driven by food andenergy supply shocks,pandemic-related expansionary fiscal and monetary measures in 2020/21,strained global trade routes and tight labour markets in developed economies(figure 1.3a).The price growth peaked at 9.1 per cent in the
229、United States in June 2022 the highest level in 40 years,and at 10.6 per cent in the Euro area in October 2022(Eurostat,2023).The rise in core inflation across the globe indicates that current high inflation is not just a supply-side phenomenon.It also seems that inflation expectations have been unh
230、inged.a.Inflation,monthly,year-on-year,2019-2023Source:ESCAP based on CEIC,accessed on 15 February 2023.Figure 1.3Persistent inflationary pressures have resulted in rapid monetary tighteningECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT
231、 GOALSCHAPTER 163.Economic performance in developing Asia-Pacific economies in 2022Before discussing the economic performance of the Asia-Pacific region,it is worth highlighting that policymakers primary focus on economic growth has not shielded their economies from experiencing the negative impact
232、of recent multiple crises.Neither has it translated into improved well-being of people or health ofthe planet.Measuring progress solely in terms of economic growth does not adequately capture the well-being of people and environmental sustainability.Thus,there is a growing need to complement measure
233、ment and assessment of GDP growth with measures that go“Beyond GDP”(box 1.1)b.Changes in effective Federal Funds Rate during past tightening cyclesSource:CEIC,accessed on 15 February 2023.GDP has long been a universally comparable measurement of economic progress based on an agreed set of internatio
234、nal standards and accounting framework firmly rooted in economic theory.a One approach to move beyond GDP is to improve existing statistical frameworks,such as the System of National Accounts(SNA).The 2025 SNA revision is one example where more disaggregate information will be included to enable ana
235、lysis of distributions and inclusiveness aspects,such as digitalization,globalization,well-being,sustainability,informal economy and unpaid work(United Nations,2023b).The System of Environmental-Economic Accounting(SEEA)Central Framework is another example which builds on SNA and provides a measure
236、linking economic activity and the environment.Box 1.1 Beyond GDP an alternative measurement of progress and well-beingECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 17Within Asia and the Pacific,24 countries have compiled S
237、EEA-based accounts either in physical or monetary terms(SEEA,2022).Indonesia topped the list with 16 accounts,followed by Australia and the Philippines with 12 each,some examples being water,air emissions,energy/minerals,material flow and waste(figure A).Compilation of SEEA-based accounts does not c
238、over an extended time period,and therefore does not permit usage in assessments or reporting.The lack of sustained partnerships and coordination among government agencies and lack of common understanding on the uses of these accounts have had impacts on the consistent implementation of SEEA.Moreover
239、,knowledge-building on how to generate the data is lacking.Figure ASEEA progress in the Asia-Pacific regionSEEA accounts compiled by Asia-Pacific countries,2021 Number of SEEA accountscompiled by countries,as of 2021 Other approaches to developing“Beyond GDP”metrics include composite indices or mult
240、idimensional indices summarizing well-being,sustainability and inclusivity aspects,or highlighting such priority areas as poverty or human development as in the Human Development Index developed by UNDP.In 2019,approximately 500 global initiatives where indicators of well-being and/or sustainability
241、 had been developed were identified(United Nations,2022).In the Asia-Pacific region,Bhutans Gross National Happiness,and New Zealands Living Standards Framework are some of the best-known examples of the“Beyond GDP”initiative.New Zealand was the first country to embed well-being and sustainable deve
242、lopment into budgetary decisions.b To move“Beyond GDP”,there is still a need for common understanding on what it is,the need forimproved awareness of measurements,construction of new measures and usage of indicators.Similarly,understanding policy constraints and why countries are unable to produce m
243、easurements on a continual basis or why they are not fully embedded into national accounting needs more discussion.A recent United Nations report prepared by the High-Level Committee on Programmes on Valuing What Counts proposed a framework to guide national,regional and global efforts,including cri
244、teria for identifying the metrics and technical reforms needed(United Nations,2022)(figure B).Source:ESCAP,based on SEEA 2022.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 18economies benefiting from border reopenings,comm
245、odity-dependent economies benefiting from higher global commodity prices,North and Central Asian countries proving to be resilient to adverse impacts from the war while many economies suffered from balance of payment crisis and impacts of high inflation weighing on sentiments and domestic demand.a S
246、NA are international standards and an accounting framework on how to compile information about economic activities.It continues to evolve and is maintained by the United Nations,IMF,World Bank,OECD and Eurostat.b Other initiatives undertaken in the region:Australia:National Development Index;China:G
247、ross Ecosystem Approach;India:Gross Domestic Knowledge;Indonesia:SEEA&Inclusive Growth Index;Japan:Well-Being Dashboard;Philippines:Quality of Life Index;Republic of Korea:National Quality of Life Index;Thailand:SEEA,Bio-Circular Green Economy&Human Achievement Index.3.1.GDP Dynamics and employment
248、trendsOverall,economic growth in developing Asia-Pacific countries moderated to 3.3 per cent in 2022,which is considerably lower than the 4.5 per cent growth rate that had been projected in 2022 for that year(ESCAP,2022a).This is a stark slowdown compared with the strong growth rate of 7.3 per cent
249、in 2021 and the average growth rate of 5.5 per cent in the five years prior to the start of the pandemic.Chinas deeper than expected deceleration due to its zero-COVID policy and instability in the property sector contributed to the regions weak economic performance in 2022.Nevertheless,economic per
250、formance varied considerably across the subregions(figure 1.4,box 1.2),with tourism-dependent Figure BFoundational dimensions of a framework for Beyond GDPSource:United Nations(2022).ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSC
251、HAPTER 19Malaysia,Papua New Guinea and Turkmenistan.Exporters of wheat in Kazakhstan,palm oil in Indonesia and rice in Thailand also benefited from higher food prices(FAO,2023).Tourism gradually recovered in 2022 as travel restrictions were lifted but tourism remained below pre-pandemic levels.Trade
252、 and manufacturingGlobal demand for goods and services produced by economies in the Asia-Pacific region declined considerably in terms of value as the global economy decelerated in 2022.Asia-Pacific merchandise export volume grew at a moderate pace of 2.9 per cent in 2022,compared with 13.3 per cent
253、 in 2021(WTO,2022)(figure 1.5).However,export growth was strong in value terms due to rising prices of commodities.Among the key beneficiaries of high commodity prices were Azerbaijan,Indonesia,Kazakhstan,Figure 1.4Quarterly real GDP growth in developing Asia-Pacific subregionsFigure 1.5Exports cont
254、inued to expand in 2022 but at a slower pace than in the previous yearSource:ESCAP,based on CEIC,accessed on 15 February 2023.Note:Subregional aggregates are weighted averages based on 28 economies in Asia and the Pacific for which quarterly GDP data are available.Source:ESCAP,based on World Trade M
255、onitor December 2022 CPB Netherlands Bureau for Economic Policy Analysis.Note:Developing countries in Asia include 11 developing economies in Asia and the Pacific.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 110Similar to
256、 the situation with regard to trade,manufacturing activities remained subdued,with few exceptions,due to highercost of inputs and tighter financial conditions.Manufacturing PMI for most economies has been on a declining trend since mid-2022(figure 1.6).Nevertheless,PMIs for India,the Republic of Kor
257、ea and South-East Asian economies remained above the 50-point threshold,indicating some expansion.Declines inthe second half of 2022 are indicativeof muted global demand.Figure 1.6PMI trends indicate a slowdown in economic activitySource:CEIC,accessed on 15 February 2023.Note:PMI readings above 50 i
258、ndicate expansion;readings below 50 indicate contraction;and readings at 50 indicate no change.Box 1.2Subregional perspectivesEast and North-East AsiaSubdued growth in the subregion was attributed mainly to Chinas lockdown throughout 2022 in response to the pandemic.Within China,growth was driven ma
259、inly by government spending on infrastructure while the slowing property sector,which fell by 5.1 per cent in 2022,was a drag on growth(China NBS,2023).Economic activities in Hong Kong,China;and Macao,China;were similarly constrained by Chinas zero-COVID policies in 2022.Inflation was more subdued i
260、n China but on the other hand,inflation in the Republic of Korea accelerated further despite the central bank having raised interest rates by 275 basis points since July 2021,mainly driven by high food and oil prices.Moreover,export growth has suffered severe impacts due to the war in Ukraine and th
261、e slowing global economy.Mongolias inflation also rose rapidly due to import constraints from prolonged border closure with China.Chinas border reopening will likely provide positive spillover effects,particularly through increased tourism in the Asia-Pacific region.ECONOMIC AND SOCIAL SURVEY OF ASI
262、A AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 111North and Central AsiaThe impacts of the war in Ukraine on countries in North and Central Asia were more benign than anticipated.Growth in the subregion was driven mainly by higher commodity prices,which be
263、nefited commodity exporters,along with inflows of Russian citizens,tourists and migrant workers.Economies in North and Central Asia have also seen gains in trade with the Russian Federation(EBRD,2023).Economic growth in the Russian Federation contracted by 3.5 per cent in 2022 as investments were da
264、mpened by international sanctions and the withdrawal of foreign businesses while oil production and exports were higher than expected through diverted exports at discounted prices.Armenia,Georgia and Kyrgyzstan expanded on the back of strong private consumption,inflows of workers and firms from the
265、Russian Federation and tourist arrivals.Azerbaijans growth has been driven by rising oil and gas prices and high growth in construction and manufacturing.Kazakhstans economy grew modestly due to reduced capacity in oil production from ongoing repairs to its oil pipeline.Tajikistans economy was drive
266、n by increased industrial production.Turkmenistans economy benefited from buoyant gas exports.Inflation in North and Central Asia was driven by high food prices and robust domestic demand.South and South-West Asia Growth in South and South-West Asia is attributed to strong growth in exports and the
267、services sector in India.The Indian economy was not spared the impact of high commodity prices,inflation and higher interest rates but is still expected to remain one of the worlds fastest-growing economies.Growth for the subregion declined in mid-2022 reflecting external imbalances and high inflati
268、on in Bangladesh and the heavy floods in Pakistan on top of an economy struggling to regain macroeconomic stability amid a balance of payments crisis.Sri Lankas growth was also estimated to have contracted for the whole of 2022 due to a balance of payments crisis leading to widespread shortages of f
269、ood,medicine and raw materials.The situation has since stabilized but remains fragile and requires international support.Tourist arrivals and construction supported growth in Maldives.In Bhutan,improved agricultural outputs,construction of large projects and hydropower exports contributed to growth,
270、but the tripling of the daily visitor tariff fee will dampen the recovery of tourism.Growth in Nepal in FY2022(ended 16 July 2022)was supported by electricity generation,expansion in construction and rebound in tourism,but domestic demand is being hampered by monetary tightening.Afghanistan remains
271、in deep economic depression since 2021 as a result of reduced public revenues,remittance inflows and international aid limited to basic human needs,such as education,health care and nutrition.The Islamic Republic of Iran faced inflation reaching up to 50 per cent and strong currency depreciation.The
272、 country remains challenged by global geopolitical headwinds.Despite high inflation,Trkiye recorded modest economic growth on the back of expanding domestic demand and tourism.However,the earthquake which struck in early February 2023 will likely have adverse impacts on infrastructure and supply cha
273、ins and could result in a loss of up to 1 per cent of GDP(EBRD,2023).South-East AsiaThe majority of South-East Asian economies performed better in 2022 than a year earlier on the back of strong consumption,exports and rebound of tourism.In Indonesia a surge in exports of commodities supported growth
274、 along with a pickup in private consumption and investments.Likewise,in Malaysia domestic demand was supported by an increase in the minimum wage and improved labour market conditions.In the Philippines growth was driven by robust private consumption,investments and public infrastructure spending al
275、ong with tourism recovery.The return of migrant workers helped to accelerate growth in construction in Singapore while global inflation and tightened financial conditions weighed on demand for financial services.In Cambodia,Thailand and Viet Nam,growth was driven by the return of international touri
276、sts,robust exports,private consumption and investments.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 112EmploymentLabour market conditions improved somewhat in 2022 aspandemic-related restrictions were gradually lifted but
277、 conditions remain uneven.Unemployment rates declined significantly from the pandemic peaks and were close to pre-pandemic levels across the region by 2022(figure 1.7).Working hours recovered as pandemic restrictions were lifted but mostly remain below pre-pandemic levels.According to ILO,working ho
278、urs in the Asia-Pacific region registered a decline of 1.2 percentage points in the second quarter of 2022 due to the lockdown in China and dampening effects from the war in Ukraine(ILO,2022a).Migrant workershortages were also a factor inhibitingfull recovery in some sectors.For example,internationa
279、l migrant workers account for nearly 40 per cent of the employed population in Singapore mainly concentrated in the construction and processing sectors.Oil and gas output from Brunei Darussalam decreased due to maintenance work on its production facilities.Most central banks in South-East Asia have
280、raised policy rates in response to rising global interest rates,which have led to capital outflows and currency depreciation;those higher policy rates were also aimed at taming domestic inflationary pressures due to higher global food and energy prices.The Lao Peoples Democratic Republic suffered fr
281、om high commodity prices,as its rapidly depreciating currency and depletion of foreign exchange reserves led to shortages of fuel,resulting in social unrest.The situation has since improved but the economys high foreign currency-denominated debt exposes it to debt sustainability risks.The global eco
282、nomic slowdown will translate into lower demand for exports from the subregion.Pacific islands The Pacific small island States remain extremely vulnerable to global economic shocks,largely due to their high dependence on imports particularly of food.Tourism dependent economies Cook Islands,Fiji,Pala
283、u,Samoa and Vanuatu recovered in 2022 albeit by varying degrees.Fijis tourism industry recovered more strongly than expected,while growth in Palau and Vanuatu was also supported by agriculture,fishing and construction.Papua New Guineas economic recovery has been supported by higher export volumes of
284、 tea,palm oil and copra,as well as benefiting from higher liquefied natural gas prices.Solomon Islands has been affected by multiple shocks social unrest and a significant COVID-19 outbreak in early 2022 led to an economic contraction for the third year.High inflation is having adverse impacts on gr
285、owth recovery prospects in Tonga and Marshall Islands although positive signs have emerged since the border reopening in September 2022.Developed economiesThe Australian economy expanded robustly over 2022 due to reopening and increases in private consumption.Labour demand was strong and was met by
286、the return of international migrants;nevertheless,the labour market remains tight.Rising living costs and interest rates have reduced spending power,and declines in housing prices are affecting consumer sentiment and demand for new homes.Consumption growth slowed towards the end of 2022.Japans econo
287、my remained resilient amid the global slowdown and high inflation,yet private consumption managed to pick up.High import costs weighed on growth but inbound travel after reopening in September 2022 alleviated trade balances.New Zealand registered moderate growth in 2022,supported by household spendi
288、ng and construction,government spending and recovery in tourism.Labour shortages have limited economic activity to someextent.Recent signs of slowing consumption reflects lower house prices,high inflation and rising interest rates.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PU
289、BLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 113Inflation in Asia and the Pacific in 2022 reached historically highlevels in many economies.Average inflation in developing Asia-Pacific economies reached 12.8 per cent in 2022,which was 8.4 percentage points higher than the pre-pandemic aver
290、age.Rising price levels are driven by both supply and demand factors,including pandemic-related supply chain disruptions,the lagged effects of pandemic-related expansionary fiscal and monetary measures and the war-related supply chain disruptions which led to rapid increases in the prices for food,f
291、uel and key commodities(figure 1.8).Expectations of inflation remaining low and stable seems to have been unhinged as inflation remains persistently above central bank targets in many economies(figure 1.9).3.2.Inflation and monetary policyFigure 1.7Economies where unemployment declined in 2022Source
292、:ESCAP,based on CEIC and ILO data(2023).Rapid rise in inflation was driven by both supply and demandfactorsECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 114Towards the latter half of 2022,food and energy prices moderated s
293、omewhat due to softening global demand and better food crop expectations.Nevertheless,both headline and core inflation remained well above pre-pandemic levels across the region(figure 1.10).Figure 1.9Inflation remains higher in many economies than central bank targetsSource:ESCAP,based on CEIC,acces
294、sed on 15 February 2023.Figure 1.8Prices of key commodities have risen considerably since mid-2021High food price inflation is amajor concern for low-incomehouseholds and thus povertyreduction efforts.Figure 1.8Prices of key commodities have risen considerably since mid-2021Source:Based on CEIC,acce
295、ssed on 15 February 2023,and World Bank pink sheets(January 2023).ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 115Such persistence of inflation has increased the cost of living and reduced peoples purchasing power conside
296、rably.Food price inflation affects low-income households most as they spend a higher share of disposable income on food consumption.This is likely to push many more people into poverty and delay achievement of food security and malnutrition objectives(box 1.3).Figure 1.10Headline,core and food price
297、 inflation remain on a rising trend since mid-2021Source:ESCAP,based on CEIC,accessed on 15 February 2023.Figure 1.11Food and energy components represent the main drivers of inflationSource:ESCAP,based on CEIC,accessed on 15 February 2023.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHI
298、NKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 116Appropriate monetary policy response depends on the source(demand versus supply)and nature(temporary versus permanent)of the price shock,as well as the credibility of a central bank in managing expectations of low and stable inflation
299、.Aggressive tightening to offset a temporary supply side shock dampens consumption and investments but may not sufficiently abate price increases of inputs.On the other hand,persistence of inflation at a higher level creates self-fulfilling inflationary expectations and will also dampen economic gro
300、wth.Not surprisingly,central banks in the Asia-Pacific region started to tighten monetary policy only gradually.Monetary tightening gathered pace in developing Asia-Pacific countries in the latter half of 2022 as inflation persisted.By the end of 2022,of 26 developing Asia-Pacific economies for whic
301、h policyinterest rate data are available,22 had raised interest rates by an average of more than 300 basis points(figures 1.12 and 1.13).Because there is a lag of 9-12 months between a change in monetary policy stance and its impact on inflation,central banks will have to wait until at least the mid
302、dle of 2023 to start seeing some decline in inflation.In the meantime,higher interest rates will raise debt servicing costs for Governments,firms and households and limit public and private investments.For economies with high household debt(Malaysia,Republic of Korea and Thailand),there may be an im
303、pact on poverty as well.The main driver of inflation is the pass-through of higher international food and energy prices to domestic inflation.Owing to the lack of data disaggregation for many countries,energy price-related components are reflected through data on housing and transport(figure 1.11).A
304、ccording to ADB(2022),the pass-through effects of a percentage point increase in international food prices raises the average domestic price level by 0.28 percentage points and fuel prices by 0.03 percentage points in developing Asian countries.As most developing Asia-Pacific economies are net impor
305、ters of food and fuel,and the share of food and oil account for up to 40 per cent of the consumer price index basket in many economies,the impact of the global price shocks has contributed considerably to domestic inflation.The higher cost of living will erode purchasing power and will likely dampen
306、 consumption and investments.Weakened currencies,higher import costs,country-specific factors and revival of domestic demand also contributed to rising inflationary pressures in 2022.Aggressive interest rate increases in the United States and Europe led to sharp appreciation of the United States dol
307、lar and thus depreciating currencies of developing countries.This pushed up prices in local currencies through imported inflation.To safeguard the domestic supply of certain food products,export protectionist measures,such as the export ban on chicken from Malaysia and palm oil from Indonesia,among
308、others,contributed to raising prices of these products.Natural disasters,such as the flood in Pakistan,typhoon in the Philippines and earthquake in Trkiye,pushed food prices even higher.For example,the affected region in Trkiye accounts for approximately 15 per cent of the countrys agricultural outp
309、ut,a decline in which could further add to Trkiyes food price inflation,which stood at 71 per cent in January 2023(Aksoy and others,2023).In small Pacific island economies,fishing activities were shortened due higher fuel costs while crop production was reduced due to higher fertilizer prices,thus c
310、ontributing to high food prices.Moreover,the lagged effects of expansionary fiscal and monetary measures introduced since 2020 as a response to the pandemic and increases in demand from reopening also added to upward price pressures.Central banks are faced with a dilemma of calibratingmonetary polic
311、y to maintain price and macroeconomic stability without stalling economic recovery.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 117Figure 1.12 Central bank interest rate decisions in developing Asia-Pacific economiesSourc
312、e:ESCAP,based on CEIC,accessed on 15 February 2023.Note:Central bank interest rate decisions are based on policy rate data for 26 developing countries in the Asia-Pacific region.Figure 1.13Interest rates in Asia-Pacific economies follow monetary tightening in major developed economies Source:ESCAP,b
313、ased on CEIC(accessed 15 February 2023).ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 1183.3.Fiscal assessment and debt positionMost Asia-Pacific economies entered 2022 with constrained fiscal space and rising public debt
314、levels.The immense fiscal needs generated by the COVID-19 pandemic and the subsequent economic downturn drained fiscal resources considerably in recent years.Fiscal deficits in the region jumped from merely 1 per cent of GDP in pre-pandemic years to about 4-5 per cent of GDP in 2020 and 2021(figure
315、1.14a).Similar deficit levels are expected in 2022 and 2023,as government revenues are set to recover only gradually while pandemic-related fiscal expenditures are slowly phased out(figure 1.14a).4 In 2022,the fiscal shortfalls shrank in several Asia-Pacific economies,partly reflecting the effort on
316、 fiscal consolidations(figure 1.14b).Loss in purchasing power is having an impact on poverty.Based on ILO(2022a),global average monthly wages were estimated to have declined in real terms by 0.9 per cent in the first half of 2022 the first time in this century that real global wage growth has been n
317、egative.In Asia and the Pacific,average real wage growth in 2021 was 3.5 per cent,which slowed to 1.3 per cent in the first half of 2022.Excluding China,average real wage growth for the region was much less at 0.3 per cent in 2021 and 0.7 per cent in the first half of 2022.For countries with data av
318、ailable on spending across the income distribution,it is estimated that the increase in prices in the last two years has increased the cost of living at the bottom income deciles by a greater amount than at the top income deciles.This cost-of-living crisis is in addition to the wage losses seen duri
319、ng the pandemic years.In terms of impact on poverty,the World Bank(2022a)estimated that the bottom 20 per cent of the population in Indonesia experienced inflation that is 0.8 percentage points higher than the top 20 per cent of the population.2 Furthermore,household purchasing power has declined on
320、 average by 5.5 per cent in the six countries studied with variations across the countries.3 In the same study,it was estimated that poverty could have increased by 0.2 to 3.4 percentage points using the lower-middle-income poverty line of$3.65 per day and by 0.9 to 8.3 percentage points based on th
321、e upper-middle-income poverty line of$6.85 per day.2 However,some exceptions might occur.For example,in the Lao Peoples Democratic Republic,the richest quintile experienced inflation at 2.6 percentage points higher than the poorest quintile as the poor relied more on their own food production while
322、the rich were more exposed to the price of transport(World Bank,2022a).3 Indonesia,Lao Peoples Democratic Republic,Mongolia,Philippines,Thailand and Viet Nam.4 In addition to these assumptions on fiscal policy directions,the IMF projections are also based on assessments of economic outlook and an as
323、sumption that countries follow IMF policy advice,including on fiscal consolidation.ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 119Rapidly growing fiscal deficits have their mirror reflection in swiftly growing debt.The a
324、verage government debt-to-GDP ratio in developing Asia-Pacific countries hovered around 40 per cent of GDP during the period 2016-2019 but jumped drastically to 49.5 per cent in 2021 with government debt in two thirds of Asia-Pacific economies reaching its highest level since 2008(figure 1.15a).Not
325、surprisingly,several economies are and will be facing rising public debt sustainability challengein the years to come(see chapter 3),especially as rising interest rates push up debt servicing costs amid already tight fiscal space and weak economic growth prospects(figure 1.15b).a.Developing Asia-Pac
326、ific countries,median values,percentage of GDPFigure 1.14Fiscal space in Asia-Pacific economiesSource:ESCAP estimates based on IMF data.Note:f forecasts,shaded.Note:Based on data of 37 countries with fiscal deficit in 2021(11 Asia-Pacific countries with fiscal surplus in 2021 are excluded).b.Top 10
327、fiscal consolidations in the Asia-Pacific region,2022,percentage of GDPECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 120Interest payments on external debt have been on the rise,both relative to the size of the economy and
328、in total terms,narrowing fiscal policy options.Debt levels rose rapidly since the beginning of COVID-19 crisis,while the negative global inflationary outlook points to further monetary tightening and debt service challenges.a.Average debt-to-GDP ratio,developing Asia-Pacific economiesFigure 1.15 Deb
329、t positions and servicing costs in Asia and the Pacific,2016-2022Source:ESCAP estimates based on IMF World Economic Outlook data.Source:ESCAP estimates based on World Bank data.b.Interest payments on external debt in developing Asia-Pacific economiesECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC
330、 2023:RETHINKING PUBLIC DEBT FOR THE SUSTAINABLE DEVELOPMENT GOALSCHAPTER 121While the need for social spending remains,there is an additional short-term fiscal priority to address food security concerns.Such concerns have been rising globally since early 2022;they require fiscal interventions to ea
331、se the burden on poor and vulnerable households.WFP and others(2022)also painted a grim picture of food security for 2023 for many Asia-Pacific economies.Supply of agricultural products and fertilizer to global markets dropped in 2022,while prices increased significantly,driven largely by the war in
332、 Ukraine(WFP,2023).The resultant shortage of fertilizer,amplified by global fertilizer trade restrictions(World Bank,2022a),has directly decreased the agricultural production in the region for crops in 2022 and 2023.Beyond the headwinds created by geopolitical tensions,food insecurity has been long
333、driven by climate change and biodiversity loss,drawing attention to the lack of resilience and permanent underinvestment in agriculture(box 1.3).The Survey for 2022 stressed the importance of“Spend Smart”and“Tax Fair”policies.Public spending in the areas of education,health care and social protection generate the largest benefitswhen fiscal resources are limited.Amid relatively low tax-to-GDP rati