The cease fire struck almost a week ago between China and the US has lifted hopes that a damaging trade war between the two countries will be averted. But even if the truce beaks down, we don’t think the impact on the region will be too great. We believe the bigger concern for most economies in Asia is that global growth continues to disappoint, dragging down demand for the region’s exports.
Meanwhile, falling inflation figures for Thailand released earlier this week have cast doubt on whether the Bank of Thailand (BoT) will raise rates at its next meeting on 19th December. However, given that the BoT’s main concerns have always been about the risks to financial stability stemming from rates being left too low, and the need to build “policy space”, we still think a rate hike is still more likely than not.
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