We have taken out the two 25bps cuts that we had pencilled in for Bank Indonesia’s last two meetings of the year. But for most places in Asia, a Trump presidency shouldn’t have a huge impact on monetary policy, at least in the near term. We expect other central banks to carry on loosening monetary policy over the coming months.
A universal 10% tariff that Trump has threatened to impose on all US imports would be bad news for the region, other things being equal. That said, a 10% universal tariff accompanied by a 60% tariff on all US imports from China could leave South East Asia ahead, by enabling producers to gain market share and, possibly, encouraging inward investment. Vietnam would be best placed to benefit from this trend.
A significant change in US policy towards Taiwan opens up the possibility of a misunderstanding between China and the US that could result in military conflict.
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