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Autos in the firing line Donald Trump’s announcement that he will impose 25% tariffs on all automotive imports into the US from 3 rd April could be a big deal for parts of Asia. Korea and Japan are the most vulnerable. Exports of these products to the US …
28th March 2025
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
With GDP growth set to struggle and inflation to remain low, central banks are likely to continue to cut interest rates over the coming months. Overall, we expect most central banks to cut rates by 50bps-200bps between now and the end of the year. US …
Overview – We expect economic growth across the region to remain subdued, with most economies set to record below-trend and below-consensus growth this year. While lower interest rates will provide some support to growth, this boost is likely to be offset …
25th March 2025
It is becoming clear that President Trump’s actions are driven by both his fixation on reducing the US trade deficit and his transactional approach to dealing with other countries. So, even though the Trump administration’s ideas to transform the entire …
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
BoK’s dovish minutes This week’s publication of the minutes from the Bank of Korea’s February meeting , at which it cut rates for a third time in four meetings, show the Bank is becoming increasingly worried about the poor growth outlook. The concern was …
21st March 2025
On hold throughout 2025 Taiwan’s central bank (CBC) left its main policy rate on hold today (at 2.0%), and is likely to leave rates unchanged throughout 2025. The decision to keep rates on hold came as no surprise and was correctly predicted by all 33 …
20th March 2025
Rates on hold, but further easing likely later in the year Bank Indonesia today left its main policy rate unchanged (at 5.75%) but hinted that further easing was likely later in the year. We are maintaining our view that the central bank will cut rates …
19th 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
Duterte arrest puts political instability in spotlight The arrest this week of former Philippine president Rodrigo Duterte by the International Criminal Court for his role in extra-judicial killings of over 6,000 suspected drug dealers has no direct …
14th March 2025
Taiwan vulnerable to semiconductor tariffs China, Mexico and Canada have so far been the focus of Trump’s tariff measures. But it seems likely other countries will soon enter the firing line. Given its large trade surplus with the US, Taiwan is an …
7th 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
Rates on hold (again), no change likely this year Bank Negara Malaysia (BNM) today left its main policy rate unchanged at 3.0%, and once again made clear that it was in no rush to adjust its monetary policy settings anytime soon. The decision comes as no …
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
Korea: jump in fertility unlikely to last Figures published earlier this week showed the fertility rate in Korea increased last year for the first time in nine years, rising from 0.72 in 2023 to 0.75 in 2024. (See Chart 1.) This uptick, though still below …
28th February 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
Asia Chart Pack (February 2025) …
26th February 2025
BoT to cut rates further over the coming year Thailand’s central bank (BoT) today cut interest rates by a further 25bps (to 2.00%), and we think more easing is likely before the end of the year. Today’s decision was predicted by just 10 out of the 26 …
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 …
Further interest rate cuts coming The Bank of Korea cut interest rates today by 25bps (to 2.75%) – the third cut in the past four meetings. The move was predicted by 35 out of 36 analysts polled by Reuters, including ourselves. The central bank will …
Singapore’s budget focused on election Singapore’s budget on Wednesday included a number of measures designed to boost support for the government ahead of the general election that must be held by November. They included spending vouchers worth S$800 …
21st February 2025
We expect Korea’s economy to grow by just 1.0% this year, with the political crisis and the downturn in the property sector set to weigh heavily on demand. Our forecast is well below both the consensus expectation and our estimate of trend growth. We …
19th February 2025
Rates on hold, but further easing likely later in the year Bank Indonesia today left its main policy rate unchanged (at 5.75%) but hinted that further easing was likely later in the year. We are maintaining our view the central bank will cut rates …
The decision by the US and Russia to “lay the groundwork” to end the war in Ukraine marks a potentially significant turning point after three years of conflict. Negotiations will take time and the macroeconomic implications will depend on the features of …
18th February 2025
GDP growth in Thailand slowed in Q4, but we are expecting a better year ahead, with loose fiscal policy and further recovery in tourism spending set to be the key drivers. However, downside risks remain high. The 3.2% y/y rise in Q4 GDP was below …
17th February 2025
India most vulnerable to reciprocal tariff President Trump looks to have abandoned the idea of imposing a flat universal tariff of 10%-20% on all imports to the US, and now appears to be favouring new reciprocal tariffs that will be imposed on a …
14th February 2025
Economy enters a softer patch Malaysia’s economy contracted in Q4 but that comes after a very strong run in recent quarters. We think growth will ease slightly this year due to tighter fiscal policy and a moderation in investment growth. According to the …
BSP to resume easing cycle soon In a surprise move the central bank in the Philippines (BSP) left its policy rate on hold at 5.75% today, but we think this represents a pause, rather than a halt to the easing cycle. The announcement was predicted by just …
13th February 2025
Trade war begins: winners and losers in Asia Donald Trump’s 10% tariffs on China (along with those threatened for Mexico and Canada) could prove to be the start of a protracted trade war. (See here .) While there is a lot of uncertainty over what will …
7th February 2025
Official figures released today suggest that economic growth in Indonesia was virtually unchanged again last quarter at about 5.0% y/y, but we don’t have much faith in the official data. Our own Indonesia Activity Tracker (IAT) suggests that the economy …
5th February 2025
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
Pakistan: easing to be more gradual from here The State Bank of Pakistan (SBP) lowered its policy rate earlier this week by a further 100bps (to 12.0%), the sixth consecutive meeting at which rates were lowered. However, the accompanying statement makes …
31st January 2025
Asia Chart Pack (January 2025) …
30th January 2025
Interest rate cuts to support growth in 2025 GDP growth in the Philippines picked up slightly in the final quarter of last year, and we expect decent growth in 2025 as interest rate cuts help offset the drag from weaker exports and tighter fiscal policy. …
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 …
Homegrown problems a bigger risk to growth Our assumption is that Trump will impose a 10% tariff on all US imports (including on Korea), most likely sometime in the second quarter. On its own this would not have a huge impact on Korea, since a universal …
24th January 2025
Strong exports and investment supporting the economy Taiwan’s economy picked up in Q4, and we expect GDP growth to remain robust over the coming quarters, helped by continued strong growth in information and communication technology exports. The advance …
MAS loosens policy, further easing likely amid low inflation Singapore’s central bank loosened monetary policy today and with inflation likely to remain low and economic growth soft, we expect further easing in the coming quarters. The MAS conducts …
Korea’s economy continued to struggle in Q4 and we suspect that the weakness in activity could persist in the near term due to the ongoing political crisis and the bleak outlook for the construction sector. Data released today show that GDP growth …
22nd January 2025
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 …
Rates on hold (again), prolonged hold likely Bank Negara Malaysia (BNM) today left its main policy rate unchanged at 3.0%, and hinted that it was in no hurry to change rates anytime soon. The decision comes as no surprise – the outcome was correctly …
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
Korea: political crisis weighing on growth The political crisis in Korea is continuing to drag on, with no clear sign of when or how it will come to an end. President Yoon Suk Yeol was arrested this week on charges of insurrection following his …
17th January 2025
The Shape of the Fractured World in 2025 The share of the fracturing global economy that is accounted for by China and its geopolitical allies contracted in 2024, leaving it under a third the size of the US bloc at the start of 2025. This fall was in part …
Tighter fiscal policy to weigh on growth Economic growth in Malaysia softened in Q3 and we expect a year of fairly subdued growth ahead as tight fiscal policy weighs on demand. According to the advanced estimate published today, GDP growth eased to 4.8% …
