Despite China’s ongoing slowdown, growth in the rest of Emerging Asia should pick up over the next couple of years, helped by a combination of loose monetary policy and stronger global demand. The improving outlook means that the end of the region’s rate-cutting cycle is now in sight. Indonesia hiked rates in June, and other central banks will start to follow suit next year. However, the pace of easing is likely to be gradual, and policy will remain supportive of growth. Meanwhile, Asian currencies and equities have been caught up in the recent sell-off of EM assets, but we think the worst is now over.
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