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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
The Bank of Thailand left interest rates unchanged today, but hawkish comments from the central bank suggest that rates will be raised sooner than we had previously expected. Today’s decision was a close call, with the monetary policy committee voting 4-3 …
8th June 2022
Thailand: rates unchanged on Wednesday GDP figures published from across Asia over the past few weeks confirm that Thailand’s recovery from the pandemic has been the slowest in the region. (See Chart 1.) A steady increase in tourism arrivals should …
2nd June 2022
Cost pressures remain high, signs of easing disruption in China Manufacturing PMIs for May suggest that cost pressures remain high, but there were more encouraging signs on the external front, with new export orders showing signs of stabilising. …
1st June 2022
Talks between Pakistan and the IMF ended last week without agreement, but the subsequent decision by the government to cut back fuel subsidies has cleared one of the major hurdles towards a deal being agreed. Financial markets in the country reacted well …
30th May 2022
Singapore inflation climbs higher Rising inflation and a strong economy have fuelled talk that monetary policy in Singapore will need to be tightened further. But we think the backdrop will have changed by the time the Monetary Authority of Singapore …
27th May 2022
The decision by the Bank of Korea (BoK) to hike its policy rate by 25bps, to 1.75%, is likely to be followed by more hikes to tackle elevated inflation. But the Bank is set to turn more dovish further ahead. Today’s unanimous move was no surprise, with …
26th May 2022
The decent upwards revision to Q1 GDP data reveals that the economy gained more momentum at the end of the quarter, a trend which is likely to carry on throughout Q2. The second estimate of Q1 GDP shows that output grew by 0.7% q/q after a 2.3% rise in Q …
25th May 2022
Bank Indonesia (BI) left interest rates unchanged today and the dovish tone from the press conference suggests the central bank is in no rush to tighten policy. We are maintaining our view the central bank will raise interest rates by just 25bps this …
24th May 2022
High inflation and the fall in the currency were the two key factors behind the State Bank of Pakistan’s (SBP) decision to raise interest rates by a further 150bp today. More tightening looks inevitable, and much will depend on whether the government can …
23rd May 2022
China the exception China today cut interest rates, but the notable recent shift across the rest of the region has been an embrace of rate hikes. Central banks in India , the Philippines and Malaysia have all hiked for the first time this cycle in recent …
20th May 2022
The central bank in the Philippines (BSP) started raising interest rates today, but with inflation set to slow later in the year and the economic recovery likely to weaken, the tightening cycle is set to be gradual and relatively short. We were among 14 …
19th May 2022
Despite surging global food and fuel prices, inflation across most of Emerging Asia looks set to remain relatively low. This is the key reason why tightening cycles in the region will be much more gradual than elsewhere. Inflation has risen across …
17th May 2022
Following continued growth in the first quarter, the pace of the recovery will largely depend on how quickly tourists return now that the country has fully reopened to foreign visitors. GDP grew by 1.1% q/q in Q1, down from the 1.8% expansion recorded in …
Encouraging Q1 data, but headwinds growing The past week has brought a flurry of GDP releases, with most countries in Asia now having reported GDP data for the first quarter. (See here .) The figures have been encouraging. Despite a surge in virus cases …
13th May 2022
Strong first quarter will be followed by continued recovery Malaysia’s economy continued to rebound strongly at the start of this year and should grow at a decent pace throughout the rest of 2022. That said, there is still a long way for the recovery to …
Growth strong, for now The Philippines economy beat expectations again in Q1 and should have gained further momentum in recent months. But we suspect the strength of the recovery will begin to wane soon. GDP grew by 1.9% in seasonally-adjusted q/q terms, …
12th May 2022
Bank Negara Malaysia (BNM) raised its main policy rate earlier than many had expected today, but given low inflation and a continued need to support the recovery, we still think that the tightening cycle will be much more gradual than markets expect. …
11th May 2022
The resignation yesterday of the prime minister, the postponement of talks with the IMF, surging inflation and the collapse of the currency are just some of the many problems facing Sri Lanka. In this Update , we answer five key questions about the …
10th May 2022
Ferdinand “Bongbong” Marcos Jr. is eager to resume the “Build Build Build” infrastructure programme of his predecessor and pursue closer ties with China. Extra spending on infrastructure would be welcome and could provide an important boost to the …
9th May 2022
