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With this week’s flash PMIs from major economies signalling that demand is tailing off rapidly, the upcoming August trade data from Korea, due Thursday, will give a timely signal of how Asian exporters are faring. We had expected evidence of fading …
26th August 2022
The Bank of Korea today raised its main policy rate by 25bp (to 2.5%) and signaled further hikes in the months ahead. However, with the central bank becoming more concerned about economic growth and inflation set to drop back, we think the tightening …
25th August 2022
BoK hikes rates, tightening cycle to finish by year-end The Bank of Korea today raised its main policy rate by 25bp (to 2.5%), and further hikes are likely over the next few months. However, with economic growth set to slow in the second half of the year …
Bank Indonesia (BI) hiked interest rates by 25bp to 3.75% today, and the hawkish commentary from the press conference increases the risk that the Bank will tighten policy further this year. Today’s decision came as a surprise. Of the 27 analysts …
23rd August 2022
Bank will tighten policy further Bank Indonesia (BI) hiked interest rates by 25bp to 3.75% today, and the hawkish commentary from the press conference suggests that the Bank will tighten policy further over the coming months. Today’s decision came as a …
A hike on Thursday due to inflation worries With inflation at a 24-year high, the Bank of Korea (BoK) looks certain to raise interest rates again at its meeting on Thursday. We have pencilled in another 25bp hike, which would take the policy rate to …
19th August 2022
The central bank in the Philippines (BSP) today raised its policy rate by a further 50bps to 3.75%, and gave a strong indication that more rate hikes are likely over the coming months. That said, with inflation set to peak soon and headwinds to the …
18th August 2022
Thailand’s economy rebounded strongly in the first quarter of the year on the back of a strong reopening boost. Although higher commodity prices will drag on the recovery, with the tourism sector enjoying a decent rebound, we expect the recovery to …
15th August 2022
A very weak Q2 Most countries in the region have now published second quarter growth figures for 2022, and the numbers have been generally disappointing. (See here .) In q/q terms, GDP contracted in the Philippines, China, Taiwan and Singapore. Korea and …
12th August 2022
GDP growth in Malaysia edged down in q/q terms last quarter, and we expect a further slowdown over the coming quarters as commodity prices drop back and the boost from reopening fades. Figures released today show the pace of growth in Malaysia slowed from …
The Bank of Thailand hiked interest rates today by 25bp (to 0.75%), but reiterated that the tightening cycle will be gradual. We are sticking with our view that the policy rate will peak at 1.5% next year. Today’s decision came as no surprise and was …
10th August 2022
The extent to which neighbouring countries would be affected by an escalation of tensions between China and Taiwan would depend both on which sides they take and on the nature of restrictions imposed by the West and China. ASEAN countries are most reliant …
Economic growth in the Philippines unexpectedly slowed in Q2 and we expect growth to remain subdued in the second half of 2022 as high commodity prices, rising interest rates and weaker global demand drag on the economy. Today’s figures show that the …
9th August 2022
Taiwan matters far more to the world economy than its 1% share of global GDP would indicate. A further escalation in cross-strait tensions that cut Taiwan’s export off from the rest of the world would lead to renewed shortages in the automotive and …
8th August 2022
Inflation the main concern for Thai policymakers Thailand is one of the few countries in the region not to have raised interest rates this year, but that looks set to change on Wednesday. We, along with the majority of other analysts, are expecting a 25bp …
5th August 2022
Economic growth in Indonesia remained strong in Q2, but we expect the economy to slow in the second half of the year as the jump in commodity prices goes into reverse and the boost from reopening fades. Today’s figures show that Indonesia grew by 5.4% y/y …
The trade sanctions introduced by China on Taiwan in retaliation for the visit of Nancy Pelosi are small in scope rather than serious efforts to force Taipei to shift course. China is constrained in the economic pressure it can exert unless it is willing …
3rd August 2022
China’s leadership has options other than invasion to coerce Taiwan to submit to its political control. The immediate economic and financial ramifications would differ in each case. But any scenario that upset the existing cross-Strait balance would come …
2nd August 2022
Consumer price inflation in Korea increased to a new 24-year high last month, but we think it has now peaked. With headwinds to the economy mounting, we believe that the central bank’s tightening cycle will come to a finish before the end of the year. …
Weak exports weigh on industrial demand Manufacturing PMIs for July fell back amid further signs that global demand is weakening. With global growth set to slow further and domestic interest rates set to continue rising, the region’s industrial sectors …
1st August 2022
New president backs “Build, Build, Build” In his first State of the Nation address, the president of the Philippines, Ferdinand “Bongbong” Marcos Jr., this week pledged to resume the “Build, Build, Build” infrastructure programme of his predecessor, …
29th July 2022
GDP in Taiwan contracted last quarter as a surge in COVID-19 cases weighed heavily on consumer-facing sectors and exports slowed. Although consumption should bounce back now that virus cases are falling and mobility is rebounding, the worsening prospects …
GDP figures for Korea released earlier today showed economic growth accelerated in the second quarter thanks to a strong rebound in private consumption as the economy enjoyed a reopening bounce. This follows the scrapping of most of the remaining COVID-19 …
26th July 2022
As good as it gets Korean GDP growth picked up slightly in the first quarter, but this is likely to be as good as it gets for the economy. We expect growth to slow in the second half of 2022 as rising interest rates, higher commodity prices and weaker …
Further tightening over the coming months We published our latest Emerging Asia Economic Outlook this week, which contains our detailed forecasts. Here are three key calls from the report. Key Call 1: Growth will slow GDP figures due over the coming …
22nd July 2022
Bank Indonesia (BI) left interest rates unchanged again today, and the dovish commentary from the press conference means we are pushing back the timing for the first hike from Q3 into Q4. With growth set to slow over the coming quarters and inflation to …
21st July 2022
Overview – Further interest rate hikes are likely across the region in the near term, and we have raised some of our year-end forecasts to reflect growing concern among the region’s policymakers about inflation. However, with economic growth likely to …
20th July 2022
Further tightening over the coming months Asian policymakers turned decidedly more hawkish this week, with the Bank of Korea raising interest rates by 50bp for the first time in its history on Wednesday. This was followed by unscheduled monetary …
15th July 2022
We held a Drop-In earlier today to discuss recent developments in Sri Lanka, where the economic and political crisis is going from bad to worse. This Update answers several of the questions that we received. How bad is the economic situation? In a …
14th July 2022
The resumption of the loan deal between Pakistan and the IMF should put the economy back on a more secure footing and limit the biggest downside risks. But the cuts to government spending that the deal requires, combined with hikes to interest rates, will …
The decision by the central bank in the Philippines to raise its benchmark policy rate by a further 75bp (to 3.25%) at an unscheduled meeting reflects mounting concerns about inflation. Further hikes seem likely, and we are changing our end-year forecast …
The city-state’s economy unexpectedly stagnated in the second quarter but this didn’t prevent the MAS from tightening monetary policy today in a bid to tackle high inflation. While we expect output to start rising again during the second half of the year, …
The Bank of Korea today raised its main policy rate by 50bp (to 2.25%), and further hikes are likely in the near term given worries about inflation. But with economic growth set to slow and inflation concerns likely to ease later in the year, we think the …
13th July 2022
25bp or 50bp? The Bank of Korea (BoK) has raised interest rates by 25bp five times so far this cycle, and further hikes looked nailed on for the central bank’s meeting on Wednesday. But whereas the consensus is expecting the BoK to step up the pace of …
8th July 2022
The State Bank of Pakistan (SBP) today raised its main policy rate by 125bps (to 15.0%), and made clear that fighting inflation would remain its priority. Given that inflation looks set to rise further in the near term and remain well above target …
7th July 2022
The central bank in Sri Lanka (CBSL) today raised its benchmark lending facility rate by a further 100bp (to 15.5%), and with inflation running at over 50%, more tightening seems likely. However, rate hikes on their own will not be enough to restore …
Bank Negara Malaysia (BNM) today raised its main policy rate by 25bps to 2.25% and reiterated that further tightening would be gradual. With the economy on the mend but inflation still low, we are sticking with our view that the policy rate will be raised …
6th July 2022
How will the BoK respond to the weaker won? The Korean won remains under downward pressure. The currency has fallen by 4.6% against the greenback over the past month alone, and is down 8.3% since the start of the year (see Chart 1), making it the worst …
1st July 2022
Further signs of weakness Manufacturing PMIs for June fell back mainly due to the weakness of external demand. We think weaker global growth will remain a drag on exports over the coming months and that the region’s industrial sectors face a tough year …
Economic growth in Vietnam accelerated in the second quarter of the year, thanks mainly to a reopening boost and continued strong export demand. We expect the recovery to continue over the coming months, but with inflationary pressures relatively low, we …
29th June 2022
After more than two years in the doldrums, Thailand’s tourism sector is finally showing signs of life. Arrivals in May reached 520,000 – a 77% increase from the previous month and 19% of the level reached in the same month of 2019. Spending by foreign …
27th June 2022
How will the MAS respond? There are growing signs that Singapore’s economy is overheating. Figures published this week put inflation at a 10-year high of 5.6% y/y in May. Food and fuel prices have been key factors behind the increase, but the strong …
24th June 2022
Bank Indonesia (BI) left interest rates unchanged again today, and the relative weakness of inflation means any tightening cycle is unlikely to be aggressive. We are maintaining our view the central bank will raise interest rates by just 25bps this year. …
23rd June 2022
The central bank in the Philippines today raised its policy rate by another 25bp (to 2.5%), and signalled that further tightening was likely. However, with inflation set to peak soon and headwinds to the recovery mounting, we think the tightening cycle …
Employment at record levels The Korean labour market is continuing to heat up, increasing the chances that the central bank (BoK) will tighten monetary policy further over the coming months. Data published on Wednesday show that total employment reached a …
17th June 2022
Taiwan’s central bank today raised interest rates by 12.5bp (to 1.50%) and appeared to indicate that rates would be raised further this year due to concerns about rising inflation. But we think the tightening cycle will be gradual. The central bank was …
16th June 2022
A strike by truck drivers in Korea is causing significant disruption. Prolonged industrial action could add to strains on global supply chains and would lower Korean GDP. Even if the strike ends soon, there could be lasting implications if it causes …
14th June 2022
New BSP governor signals further hikes The incoming central bank governor in the Philippines, Felipe Medalla, this week in a Bloomberg interview all but confirmed that interest rates would be raised at the central bank’s next two meetings in June and …
10th June 2022
The Bank of Korea (BoK) is almost certain to hike interest rates further this year, but with financial risks receding, economic growth likely to slow and inflation set to fall back to target by early next year, we think financial markets and the consensus …
9th June 2022
