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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
Interest rates on hold, but BoK to resume easing cycle soon The Bank of Korea today left its main policy rate unchanged at 3.00%, but we doubt it will be long before the central bank resumes its easing cycle. The decision was correctly predicted by just …
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
If Donald Trump were to impose a universal 10% tariff on US imports, we wouldn’t expect widespread reshoring of manufacturing production back to the US. And if it were accompanied by a 60% tariff on Chinese imports, the main beneficiaries would be other …
14th January 2025
Signs that political crisis is weighing on growth With inflation under control and signs the political crisis is weighing on the already-weak economy, we expect the Bank of Korea to cut interest rates by a further 25bps at its meeting on Thursday. …
10th 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
Donald Trump’s second term could redraw the global geopolitical map. A sustainable “Grand Bargain” with China, warmer relations with Russia, or a breakdown in the relationship between the US and its traditional allies could each reshape supply chains and …
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
Asia Chart Pack (December 2024) …
30th December 2024
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
Dovish BoK minutes point to further rate cuts This week’s publication of the minutes from the Bank of Korea’s November meeting , at which it cut rates for a second month in a row, confirmed that inflation concerns have now largely subsided and that the …
20th December 2024
Taiwan’s central bank (CBC) left its main policy rate unchanged today (at 2.0%) and with risks to the inflation outlook skewed firmly to the upside we expect rates to remain on hold throughout 2025. In contrast, the consensus is expecting the central bank …
19th December 2024
Low inflation in the Philippines to prompt further rate cuts The central bank in the Philippines (BSP) today cut rates by 25bps (to 5.75%) for the third consecutive meeting and signalled that more rate cuts of the same magnitude are likely over the …
Currency concerns to keep Bank Indonesia on the sidelines Bank Indonesia today left interest rates on hold at 6.00%, and given worries about the exchange rate we don’t think it will be until the second half of next year at the earliest that it resumes …
18th December 2024
BoT to resume easing cycle next year Thailand’s central bank (BoT) today left interest rates unchanged (at 2.25%), but kept the door open to rate cuts next year. With inflation set to stay very low and growth likely to struggle, we are expecting a total …
Overview – We expect another year of below-trend and below-consensus GDP growth in most of Asia in 2025, as tight fiscal policy and weak exports weigh on output. In China, a slowdown in construction will act as a further drag. Inflation is back to (or …
13th December 2024
Deflation concerns to sway BoT After a relatively quiet week in terms of scheduled events and releases, the coming week sees central bank meetings in Pakistan, Thailand, Indonesia, Taiwan and the Philippines. We are expecting holds in Indonesia and …
Prolonged crisis would weigh on the economy The easiest way out of the political crisis that Korea finds itself in would be for President Yoon Suk Yeol to resign. A resignation would trigger a presidential election within 60 days. Given the extent of …
6th 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
Activity data highlight need for further support We were one of the few analysts to correctly predict this week’s rate cut by the Bank of Korea , and we think it is only a matter of time before the Bank cuts again. The central bank’s statement and the …
29th November 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 …
Asia Chart Pack (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
Interest rates cut, further easing ahead The Bank of Korea cut interest rates today by 25bps (to 3.00%) for a second meeting in a row. We were one of the few analysts to correctly predict a cut, with 34 out of 38 forecasters polled by Reuters expecting …
Further rate cuts likely as deflation concerns increase Sri Lanka’s central bank (CBSL) today loosened policy further, and hinted at more rate cuts over the coming months amid continued deflationary pressures, weak growth and a further improvement in the …
27th November 2024
We discussed the global impact of higher tariffs in a Drop-In on Tuesday, 26th November. Click here to watch the 20-minute online briefing. In this Focus, we construct a framework to explore the channels through which an import tariff works, which we use …
25th November 2024
More policy support is needed When the Bank of Korea started its easing cycle in October , it pushed back strongly against the prospect of back-to-back rate cuts. Most analysts still expect rates to be left unchanged at 3.25% when the central bank meets …
22nd 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
Policy easing to resume in the second half of next year Bank Indonesia today left interest rates on hold at 6.00%, and we don’t think it will be until the second half of next year that the central bank resumes its easing cycle. The decision was broadly …
20th 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
Economic growth in Thailand accelerated in Q3 and we think the boost from loose fiscal policy will support growth in the coming quarters and help offset a slowdown in the tourism sector. The 1.2% q/q rise in Q3 GDP, following the 0.8% increase in Q2, was …
New currency forecast and policy implications We have finalised our financial market forecasts following Donald Trump’s election victory. In short, we think US Treasury yields will remain elevated over the coming year (we previously anticipated falls) …
15th November 2024
Economy set to cool further The second estimate of Q3 GDP confirmed that growth in Malaysia remained above trend again. Looking ahead we think GDP growth will drop back close to trend if, as we expect, a jump in inflation driven by the removal of food and …
Financial market and monetary policy impact Asian currencies fell against the dollar after the US election result was announced, and we think they will weaken over the coming months on the back of higher US Treasury yields and an increase in US tariffs. …
8th November 2024
Growth to cool in the coming quarters GDP growth accelerated in Q3 but we think this strength is unlikely to last as slower growth in remittances, tighter fiscal policy and weaker export demand weigh on activity. According to the data published today, GDP …
7th November 2024
Rates on hold, set to remain unchanged 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 predicted …
6th 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
Indonesia GDP (Q3 2024) Growth has been accelerating, not stable as the figures suggest Official figures released today suggest that economic growth in Indonesia was virtually unchanged again last quarter, but we don’t have much faith in the official …
Dovish central bank hints at further rate cuts The State Bank of Pakistan (SBP) lowered its policy rate today by a further 250bps (to 15.0%) and sounded more dovish than it has done in previous meetings. Today’s cut marks the fourth consecutive meeting …
4th November 2024
Risks from North Korea on the rise North Korea’s relations with South Korea and its allies have taken a marked turn for the worse over the past month. This week’s test of an intercontinental ballistic missile has prompted South Korea and the US to conduct …
1st 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 …
Growth rebounds in Q3, exports and investment to drive economy over coming year Taiwan’s economy rebounded in Q3, and we expect GDP growth to remain fairly strong over the coming quarters, helped by robust export demand. The advance estimate of GDP …
31st October 2024
Asia Chart Pack (October 2024) …
29th October 2024
Weak GDP data may give BoK second thoughts National accounts data published on Thursday showed that Korea only narrowly avoided a technical recession, with GDP expanding by just 0.1% q/q in Q3 after a 0.2% decline in Q2. The main drag came from exports, …
25th October 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 …
The latest GDP figures showed a tepid rebound in Q3, following the contraction in Q2 and we expect Korea’s economic growth to remain below trend for the next few quarters. The advance estimate of GDP released today show that the economy expanded by just …
