Although there remains the geographical distance between Asia-Pacific economies, owing to technological innovation it is far less an obstacle to economic exchanges than before, and the Asia-Pacific countries have become able to enjoy the benefits of sitting around the same sea together.
Quantifying the impact of these supply factors is difficult, but the implication is that there is likely less excess supply in the economy than we thought there would be. We now expect the output gap to close sometime in the middle quarters of 2022, which is earlier than we projected in July.