Filtered by Subscriptions: Asia Economics Use setting Asia Economics
In this Update, we answer several key questions about how the announced 25% tariffs on US imports of autos and parts might affect the global economy and the US itself. Mexico, Slovakia and Korea are most exposed with up to 1.6% of GDP at risk. But the …
27th March 2025
While Korea’s productivity growth has slowed, this has been offset by faster employment growth as more women and elderly have entered the labour market. If that trend continues and productivity growth picks up a bit in response to the AI revolution, …
24th March 2025
The sharp fall in Indonesia’s stock market today seems to reflect growing worries about the direction of fiscal policy and the state’s role in the economy under President Prabowo Subianto, which could weaken medium-term growth and raise the country risk …
18th March 2025
Vietnam has seen a surge in exports to the US in recent years and arguably emerged as the biggest winner of Trump’s first trade war with China. However, Vietnam’s huge bilateral trade surplus with the US makes it a likely target for penal tariffs in …
6th March 2025
Prabowo Subianto came into office in Indonesia in October pledging to raise economic growth to 8%, up from around the 5% rate it has been stuck at recently. However, the policy changes he has introduced so far risk causing trend growth to slow. One of …
5th March 2025
The events of the past two weeks have called into question whether the US is severing ties not just with adversaries such as China but also allies, including Canada, Mexico and the European Union. This would radically alter the shape of the fractured …
4th March 2025
The small uptick in the EM manufacturing PMI in February appears in part to be a result of the front-running of US tariffs, and is unlikely to be sustained. For now, the surveys continue to point to weak goods price inflation across the emerging world. …
3rd March 2025
Bank Indonesia now owns a larger share of government bonds than some DM central banks did at the height of their pandemic QE programmes. Amidst worries that the fiscal guardrails are coming off, BI’s continued bond purchases could create the impression …
27th February 2025
A week spent visiting clients, policymakers and contacts in India underlines that the digital economy is thriving, that there is hope that India will not be hit hard by Trump’s tariffs, and that much-needed improvements in macroeconomic data reporting …
25th February 2025
The Bank of Korea today cut interest rates by a further 25bps (to 2.75%) and made clear that further easing is on the way. With growth set to struggle and inflation likely to remain low, we are sticking with our view that the policy rate will be lowered …
The January PMIs for Asia were generally weak, supporting our view that manufacturing activity and GDP growth in the region are likely to remain below trend in the near term. And with inflation back to target in most Asian economies, we think central …
3rd February 2025
Thailand’s recovery from the COVID-19 pandemic has not only been much weaker than that experienced in other parts of Asia, but also compared with past crises. The weakness of the economy is the key reason why inflation in Thailand is so low, and we think …
27th January 2025
India’s outbound tourism market is poised to become one of the world’s largest over the coming years. The Maldives and the UAE are arguably the biggest beneficiaries, though Oman and Thailand are well placed to take advantage too. Other EMs – particularly …
Headline inflation in Asia has continued to ease over the past year and is now back to (or below) target everywhere. We expect inflation to remain subdued over the coming year as improved growing conditions help keep a lid on food prices and below-trend …
22nd January 2025
Vietnam could take a number of measures to reduce its huge bilateral trade surplus with the US, notably stepping up its purchases of US farm products and clamping down on transshipments from China. But even if these were successful, they would still leave …
21st January 2025
The Bank of Korea today left its main policy rate unchanged at 3.00%, but with the economy struggling and inflation under control, we doubt it will be long before the central bank resumes its easing cycle. The decision not to cut interest rates for the …
16th January 2025
In a major surprise, Bank Indonesia today cut interest rates by 25bps (taking its main policy rate to 5.75%), citing the need to support economic growth. Given the central bank’s renewed focus on supporting the economy we are making adjustments to our …
15th January 2025
The Cold War was defined by geopolitical blocs – the Soviet or Eastern bloc against the Western bloc. Geopolitics retreated with the collapse of the Soviet Union. The period from the early-1990s to the early-2010s was instead an era of globalisation: most …
7th January 2025
GDP growth in Vietnam picked up in the fourth quarter of 2024 and we expect another year of strong growth in 2025, with the main support coming from exports. This was the second quarter in a row when Vietnam’s statistical office waited until the end of …
6th January 2025
The December PMIs for Asia were a mixed bag, but we continue to expect manufacturing activity and GDP growth in the region to remain subdued in the near term. With growth set to struggle and inflation below target in most countries, we think central banks …
2nd January 2025
Korea’s political crisis deepened today after parliament voted to impeach acting president, Han Duck-soo, just two weeks after President Yoon Suk Yeol was himself impeached following his shock declaration of martial law. This Update discusses the …
27th December 2024
President Yoon Suk Yoel has rescinded his declaration of martial law, but Korea’s political crisis is far from over. The opposition are now trying to impeach the president, while financial markets remain volatile. This Update answers five key questions on …
4th December 2024
The declaration of martial law by Korea’s president is an extraordinary step that seems likely to trigger either the suspension of Constitutional democracy in Korea or the president’s own rapid impeachment and removal. For investors the key question is …
3rd December 2024
The November PMIs for Asia remained weak and are consistent with our expectation for manufacturing activity in the region to remain subdued in the near term. The data also showed a modest pick-up in price pressures. But with headline inflation now below …
2nd December 2024
We held an online session on US import tariffs on 26th November. (See a recording here ). In this Update we answer the questions we were most asked. What are Trump’s motives for threatening tariffs and will he follow through? Trump has spoken about using …
29th November 2024
The Bank of Korea cut interest rates again today by a further 25bps (to 3.00%) and made clear in its statement that more easing is on the way. We are sticking with our view that the central bank will continue to cut interest rates steadily over the coming …
28th November 2024
Friendshoring into India has for the most part been limited to high-end manufactured goods, but broader supply chain reconfiguration into the country could take place if the Trump administration imposes a 60% tariff on China. Trump has also been critical …
21st November 2024
US President-elect Donald Trump’s plans to curb immigration and undertake a mass deportation of undocumented migrants could boost labour supply in countries that are the source of migrants. But there could be social and fiscal costs, as well as lower …
18th November 2024
With inflation falling back further in October, growth struggling and the property market in the doldrums, the conditions are in place for the Bank of Korea to cut interest rates again soon. We think the consensus is wrong to rule out the prospect of a …
5th November 2024
The October PMIs from Asia remained weak and while the PMI surveys aren’t always a good guide to the hard activity data, their recent signals are consistent with our expectation for manufacturing activity in Asia to struggle in the near term, price …
1st November 2024
We held online Drop-In sessions this week to discuss how we factor the US election into our thinking on the macro and market outlook for the US and other parts of the world. See here for a recording of the session focused on the US and here for the rest …
24th October 2024
A victory for Donald Trump in the US election would probably result in higher US Treasury yields and a stronger dollar. That’s an environment in which central banks in EMs with strained balance sheets (notably Turkey) could hike rates and others that are …
Having stormed to victory in February’s presidential election, Prabowo Subianto, a former army general and the current defence minister, will take over from Joko Widodo on Sunday (20 th October). Since his election victory, Prabowo has made a number of …
15th October 2024
The Bank of Korea today cut interest rates by 25bps (to 3.25%), but tried to dampen speculation that it would cut rates at its final meeting of the year in November. With growth struggling and inflation low, we think it is too early to rule out another …
11th October 2024
GDP growth in Vietnam rebounded strongly in the third quarter of the year and we expect growth to remain robust in the near term, helped by strong export demand. Data published over the weekend showed that GDP growth accelerated in the third quarter to …
7th October 2024
Inflation in Thailand is the lowest not just of any country in Asia, but across the emerging world. (See Chart 1.) The headline rate in August fell to just 0.4% y/y, while the core rate was 0.6%. (See Chart 2.) We expect inflation to rise a little over …
1st October 2024
The September PMIs from Asia generally declined from the previous month. And while the PMI surveys aren’t always a good guide to the hard activity data, their recent signals are consistent with our expectation for manufacturing activity in Asia to …
We recently held a series of Asia-focussed roundtable discussions with clients in London, covering an array of topics including the impact of Fed easing, the US election, global fracturing and China’s stimulus blizzard. This Update answers several of …
The Fed’s upcoming monetary easing cycle will probably provide less of a tailwind to EMs than is widely thought. While it’s likely to give some central banks (such as in the Gulf, Mexico and Indonesia) a green light to lower interest rates, EM rate …
12th September 2024
Inflation in Korea fell back sharply last month, supporting our view that the central bank will cut interest rates at its next meeting in October. Inflation data published today showed that the headline rate fell from 2.6% y/y in July to 2.0% in August. …
3rd September 2024
The Bank of Korea left rates on hold again today but sounded very dovish. With policymakers now more confident about achieving their inflation target and domestic demand set to remain weak, we think the BoK will start to cut rates in October and that the …
22nd August 2024
Signs of a thaw in frosty relations between India and China don’t point to a fundamental realignment in India’s position in a fracturing global economy. But they highlight a growing theme of some EMs tactically courting investment from China to put …
13th August 2024
The outbreak of political violence and the sudden resignation of Prime Minister Sheikh Hasina has rocked Bangladesh today. But provided that peace and stability is restored relatively soon, the economy is unlikely to suffer major long-term effects. Sheikh …
5th August 2024
Fears of a US recession have rattled EM equity markets at a time when EM economies themselves are showing more pronounced signs of weakness. Most EM currencies have held up well, suggesting a dovish tilt may come from EM central banks – particularly those …
Newly-published data show that the Philippines has entered a demographic sweet spot that could provide a big boost to economic growth. But this will only happen if enough new jobs can be created for the wave of young people that will enter the workforce …
16th July 2024
A narrowing of the current account deficit and a decline in the share of government bonds held by non-residents means the rupiah is much less exposed to sudden shifts in global risk appetite than in the past. This should ensure that the currency performs …
11th July 2024
The Bank of Korea left its policy rate unchanged today at 3.5%, but dropped clear hints that interest rate cuts would be coming soon. With growth set to struggle and inflation likely to fall further, we are maintaining our view the central bank will cut …
Exports from Taiwan, Korea and Vietnam have surged over the past 18 months, thanks to strong demand for AI-related products and friendshoring. In contrast, shipments from the rest of the region have struggled. We expect this divergence to continue over …
10th July 2024
A La Niña could bring with it favourable growing conditions for crops in South East Asia, and help to put downward pressure on food prices across the region. It adds to the reasons to think the upcoming rate-cutting cycle in the region will be more …
8th July 2024
The PMIs from Emerging Asia picked up strongly last month, but we doubt this will last given the subdued outlook for global demand. Meanwhile, the decline in inflation in Indonesia last month supports our view that the central bank will cut interest rates …
1st July 2024
