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Zero-COVID to hold back tourism recovery China’s 20 th Party Congress gets underway on 16 th October. With General Secretary Xi’s continued dominance in little doubt, it is unlikely to result in any substantial change in policy direction. This …
14th October 2022
The Monetary Authority of Singapore (MAS) tightened policy today, in an attempt to contain elevated price pressures, but with inflation likely to fall in the coming quarters and the economy set to struggle, we expect this move to have marked an end to the …
The decision by the Bank of Korea to raise its policy rate by a further 50bp (to 3.0%) indicates the central bank’s near-term focus will remain on combating inflation. But with growth slowing and price pressures already having peaked, we think the …
12th October 2022
BoK hikes rates again, but tightening cycle drawing to a close The decision by the Bank of Korea to raise its policy rate by a further 50bp (to 3.0%) suggests the central bank’s near-term focus will remain on combating inflation. But with growth set to …
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
BoK to take cautious approach The consensus is expecting the Bank of Korea (BoK) to increase its policy rate by 50bp at its scheduled meeting on Wednesday. But with the economy slowing sharply, we think a 25bp hike is more likely. A weakening currency …
7th October 2022
Continued worries about inflation mean the central bank (BoK) in Korea still has further work to do, and we are sticking with our view that the BoK will raise interest rates by at least 50bp between now and the end of the year. But with inflation likely …
5th October 2022
Asian manufacturing to remain weak Manufacturing PMIs across the region were downbeat in September, as new export orders declined again. We expect conditions to remain subdued, as weaker global demand, high inflation and tighter monetary policy continues …
3rd October 2022
Ugly trade data, about to get worse The most recent trade data out of Asia have been very weak, and with the global economy heading for recession, we think the worst is still to come. There has been no shortage of bad news recently for the region’s …
30th September 2022
Bank Indonesia (BI) has been stepping up its efforts to support the rupiah in recent weeks, and we think further FX intervention and interest rate hikes are likely over the coming months as the central bank continues to try and defend the currency. …
29th September 2022
Economy resilient but headwinds growing Vietnam recorded another quarter of strong growth last quarter, and while higher interest rates will act as a drag on demand, strong export demand should ensure the economy continues to outperform. Vietnam’s …
The Bank of Thailand (BoT) hiked interest rates today by a further 25bp (to 1.0%) and appears committed to raising interest rates gradually over the coming months. But with inflation elevated and the currency coming under further downward pressure against …
28th September 2022
Thailand: central bank may need to accelerate the pace of tightening The Bank of Thailand hiked interest rates today by 25bp (to 1.0%), but with inflation elevated and the currency coming under further downward pressure, we think the central bank will …
A strong US dollar is a threat to countries with lots of foreign currency debt and/or inflation problems, and is putting pressure on central banks across the region to raise interest rates more aggressively. We recently changed our policy rate …
27th September 2022
Inflation and currency key concerns for SBV Central banks stepped up tightening cycles across the region this week, with hikes in the Philippines, Indonesia (both 50bp) and Taiwan (12.5bp). There was also an unscheduled move from the central bank …
23rd September 2022
Taiwan’s central bank (CBC) today raised its main policy rate by 12.5bp (to 1.625%), and with inflation easing and growth set to struggle, further tightening is likely to be gradual. Today’s move came as little surprise and was predicted by 16 of 22 …
22nd September 2022
Bank Indonesia (BI) today raised interest rates by a further 50bp (to 4.25%) and signalled that more tightening was likely as it aims to support the currency and clamp down on rising inflation. We are changing our policy rate forecasts, and now …
Further tightening to be gradual Taiwan’s central bank (CBC) today raised its main policy rate by 12.5bp (to 1.625%), and with inflation easing and growth set to struggle, further tightening is likely to be gradual. Today’s move came as little surprise …
The central bank of the Philippines (BSP) today raised its main policy rate by another 50bp (to 4.25%), and signalled that more hikes were likely in the near term. While further tightening is likely over the coming months, with inflation having peaked …
New interest rate forecasts for Indonesia Bank Indonesia (BI) today raised interest rates by a further 50bp (to 4.25%) and signalled that further tightening was likely as it aims to clamp down on rising inflation. While a rate hike today was never in …
Further hikes likely in the near term, but tightening cycle to be over by end-2022 The central bank of the Philippines (BSP) today raised its main policy rate by a further 50bp (to 4.25%), and signalled that further hikes were likely in the near term. The …
Policymakers worried by falling won The Korean won has continued to fall against the US dollar over the past week and is now at its lowest rate against the greenback since the 2008-09 Global Financial Crisis. It has fallen by 15% against the dollar since …
16th September 2022
Monetary policy makers across Emerging Asia remain in hawkish mode – every central bank in the region with the exceptions of China and Vietnam has now raised interest rates this year – and further hikes are likely over the next couple of months. …
15th September 2022
Inflation to reach 7% later this year We are adjusting our inflation and policy rate forecasts for Indonesia in response to the recent fuel price hikes. The 30% increase in the price of gasoline and diesel that was announced earlier in the week is aimed …
9th September 2022
Malaysia’s central bank (BNM) today raised its main policy rate by 25bp (to 2.5%), and signalled that further hikes were likely over the coming months. However, with inflation set to fall back later in the year, we think the tightening cycle will be …
8th September 2022
Further tightening to be “measured and gradual” Malaysia’s central bank (BNM) today raised its main policy rate by 25bp (to 2.5%), and with inflation likely to remain elevated, further hikes are likely. Today’s move came as little surprise and was …
Inflation concerns easing Inflation and activity data published over the past few days have surprised to the downside, supporting our view that Korea’s tightening cycle will finish by the end of the year. Headline inflation in Korea fell back from 6.3% …
2nd September 2022
Today’s announcement of a deal between the IMF and Sri Lanka brings some long overdue good news and provides a potential route out of the crisis. But the economy is not out of the woods yet. The money may not actually be dispersed for many months, and …
1st September 2022
Regional manufacturing weakens again Manufacturing PMIs across Asia fell back again in August, with the readings for Taiwan and Korea especially weak. We are not expecting any improvement over the coming months, with weaker global demand, high commodity …
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
