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Singapore budget to focus on revenue raising The focus of Singapore’s 2022 budget next Friday will be on steps to raise revenues to help deal with a rapidly ageing population. The government is set to confirm a delayed hike in the Goods and Services Tax …
11th February 2022
Recovery to continue after strong Q4, but policy rate hikes still unlikely Malaysia’s economy rebounded strongly last quarter and, despite headwinds from Omicron, should continue to recover throughout 2022. The 6.6% q/q expansion in Q4 more than reversed …
Bank Indonesia (BI) left interest rates unchanged at 3.5% at its meeting today, and the weakness of inflation means the tightening cycle is likely to be very gradual. The decision to leave rates on hold came as little surprise and was predicted by all 31 …
10th February 2022
The Bank of Thailand (BoT) left its policy rate unchanged today at 0.5%, and despite the recent rebound in inflation, we expect interest rates will remain on hold for some time to come. The decision was unanimous, and the outcome was correctly predicted …
9th February 2022
Inflation is a growing concern for policymakers in South Asia and means interest rates are likely to rise further this year. Elsewhere in Asia, inflation remains low and is likely to fall back over the coming months, supporting our view that policymakers …
8th February 2022
Indonesia’s economy rebounded strongly in the final quarter of last year, but the recovery is now entering a more difficult phase. Omicron will act as a small obstacle in the first quarter. But a bigger drag will come from falling commodity prices and …
7th February 2022
Omicron impact likely to be mild The Philippines has been hit harder than any other country in the region by the pandemic, but the past week has at least brought some good news. The country was the first in Asia to bit hit by an Omicron wave. But daily …
4th February 2022
Industry will be kept busy by order backlogs January Manufacturing PMIs suggest that regional industry remains in rude health after a very strong end to last year. While there are signs that producers are having some success in tackling large backlogs of …
3rd February 2022
Korea learning to live with COVID-19 A successful vaccination campaign means that, despite a surge in COVID cases, Korea is sticking with its plans to reopen the economy. Chart 1: Daily New Cases of COVID-19 in Korea Source: JHU Korea recorded a record …
28th January 2022
The Omicron variant is spreading quickly across Asia. Daily virus numbers are now at record levels in Korea, Singapore and the Philippines. However, the economic impact of Omicron is shaping up to be much smaller than previous virus waves. Restrictions, …
27th January 2022
GDP growth in Taiwan rebounded last quarter on the back of a recovery in consumer spending, and we estimate the economy ended the year around 4% above its pre-virus trend. Growth is set to slow over the coming quarters on the back of weaker exports, while …
Fast growth won’t persuade central bank to start tightening While an Omicron wave means the economy’s continued strong performance in Q4 is unlikely to be repeated this quarter, we think growth will pick up again before long. That said, the overall …
Overview – Omicron should prove no more than a small stumbling block for Asia. Our forecasts are for above-trend and above-consensus growth in most countries this year. India, Indonesia and Korea are likely to raise interest rates in 2022, but with …
25th January 2022
The Monetary Authority of Singapore’s (MAS) surprise move to tighten policy today, ahead of its usual April meeting, probably won’t be its last. We think the added uplift to inflation from a domestic outbreak of Omicron will force the MAS to tighten again …
While Omicron means that the strong GDP growth recorded in Q4 2021 is unlikely to be repeated this quarter, the recovery should be back on track before long. With the economic outlook still upbeat, the Bank of Korea is set to continue tightening over the …
The State Bank of Pakistan (SBP) left interest rates on hold today at 9.75% and indicated that further modest tightening is likely later in the year. We think the central bank will take a breather over the next few months, but we doubt today’s meeting …
24th January 2022
Thai tourism to support the baht Better times lie head for Thailand’s tourism industry after the government this week announced it would resume its quarantine-free travel scheme from 1 st February. The scheme was suspended late last year due to fears …
21st January 2022
Bank Indonesia (BI) left interest rates unchanged at 3.5% at its meeting today, but the decision to raise the reserve requirement ratio (RRR) from March suggests that rate hikes will come sooner than we had previously expected. The decision to leave rates …
20th January 2022
The dovish tone of Bank Negara Malaysia (BNM) as it left rates on hold today only strengthens our non-consensus view that policy will be left on hold this year to support the recovery. In contrast, the analyst consensus is for 50bps of tightening, while …
The 50bp rate hike made by the Central Bank of Sri Lanka (CBSL) today – after it stood pat for two meetings as foreign currency dried up and inflation soared – is likely to prove too little too late. The CBSL today raised its deposit and lending rates by …
Employment back above pre-crisis levels At face value, the Korean labour market figures for December (published earlier this week) paint an encouraging picture, with total employment rising to a record high. (See Chart 1.) Chart 1: Korea Total Employment …
14th January 2022
The Bank of Korea (BoK) is far from done, after making its first back-to-back rate hike since 2007 today. We now expect a total of four 25bp hikes in 2022, taking the policy rate to 2.00%. Today’s decision to raise the policy rate from 1.00% to 1.25%, …
Asia will be – contrary to consensus expectations for widespread hikes – the only EM region in which the median central bank isn’t tightening this year. 2021 was a year of hits and misses in terms of our forecasts . We correctly forecast that most central …
10th January 2022
Korea, the Philippines and India are each holding elections this year that will play a role in setting fiscal and structural reform priorities, including the possible introduction of a universal basic income in Korea. And China looks set to tear up the …
Philippines won’t start tightening this year Falling inflation and an increasingly uncertain economic outlook add weight to our non-consensus view that the central bank in the Philippines (BSP) will not start tightening in 2022. Figures released earlier …
7th January 2022
Manufacturing PMIs and timely trade data reveal that Asia’s export-focussed industry gained momentum at the turn of the year. While the Omicron variant presents a key threat to the outlook, it is unlikely to cause nearly as much disruption to industry as …
4th January 2022
Most countries in Emerging Asia have now recorded cases of Omicron, and the experience from elsewhere in the world suggests that it is only a matter of time before there is widespread community transmission of the new variant. Many places have already …
22nd December 2021
The Bank of Thailand (BoT) left interest rates on hold today at 0.5% and hinted in its statement that it was in little rush to tighten monetary policy. The setback to the tourism sector caused by the spread of Omicron means rates are likely to remain at …
Fed rate hikes pose little threat to Asia With the start of US monetary tightening drawing near, questions have been asked about whether Asia’s central banks will respond with tightening of their own. Hong Kong and Singapore will: their exchange rate …
17th December 2021
Taiwan’s central bank (CBC) today left interest rates unchanged at 1.125% and despite rising inflation, surging property prices and the strong economy, we don’t think policymakers will be in any rush to tighten policy. Today’s decision was unanimous and …
16th December 2021
Bank Indonesia (BI) left interest rates unchanged at 3.5% at its meeting today, and despite the prospect of the US Fed raising interest rates soon, we don’t think BI will be in any rush to tighten. The decision to leave rates unchanged came as no surprise …
The central bank in the Philippines (BSP) today left interest rates unchanged at 2.00%, and with inflation set to ease further over the coming months we think the central bank will keep monetary policy loose for the foreseeable future. Today’s decision …
The State Bank of Pakistan (SBP) today raised interest rates by a further 100bp, which came as little surprise. What was unexpected, however, was the sudden shift in tone in the statement. Despite the worsening inflation outlook and the widening external …
14th December 2021
Rates to stay on hold throughout most of next year The central bank of Taiwan (CBC) is likely to leave interest rates unchanged at its meeting on Thursday (both the consensus and ourselves expect no change), but with the economy operating well-above its …
10th December 2021
Inflationary pressures in the Philippines are easing sharply. This will allow the central bank to keep interest rates low to support the economic recovery. Inflation in the Philippines has been something of a regional outlier, having remained stubbornly …
7th December 2021
We expect the Bank of Korea to continue raising interest rates next year, but the worsening near-term prospects for growth mean the outlook for monetary policy has become less clear cut. Recent economic data from Korea make for disappointing reading. The …
6th December 2021
Rising inflation piles pressure on CBSL The economic situation in Sri Lanka is going from bad to worse, with a surge in inflation undermining the credibility of the central bank (CBSL) and making a debt default all the more likely. Data released earlier …
3rd December 2021
Asian economies, like those elsewhere, have adapted to living with COVID-19 restrictions so that the impact of any tightening would be smaller than it was last year. And unlike in many EMs, there is still room for fiscal and monetary policy to be …
2nd December 2021
Disruption to industrial activity across South East Asia has eased considerably in the past few weeks, helping to relax global supply constraints, especially in the automotive sector. However, a renewed surge in COVID infections in Vietnam deserves close …
1st December 2021
Another record month, exports to stay elevated in near term Korean export values surged to record highs in November helped by temporary factors but also strong underlying growth. Exports should remain elevated for at least the next few months, helped by a …
Post-Delta recovery has further to run November Manufacturing PMIs suggest that the rebound in industry from the Delta wave in South East Asia continued last month, and we suspect it has further to run. The November PMIs released today for eight economies …
Stop-start recovery to continue Korea’s economy is likely to have already rebounded from the downbeat October revealed in activity data today. But prospects for continued improvements have diminished, as a resurgence in virus cases pushes back the …
30th November 2021
Amid all the uncertainty caused by the arrival of Omicron (for our initial thoughts see this Global Update ), one thing we can say with some conviction is that the new variant is further bad news for the region’s beleaguered tourism industry. Up until …
29th November 2021
Recent hikes not the start of Asian tightening cycle Attention over the past week has been on the region’s more hawkish central banks, following rate hikes in Korea and Pakistan . Both countries, along with Sri Lanka (which unexpectedly left rates …
26th November 2021
Today’s move by the Bank of Korea is likely to mark the second hike of at least five, in a tightening cycle that began in August and will extend well into next year. The Bank of Korea’s (BoK) decision to hike its policy rate from 0.75% to 1.00% was well …
25th November 2021
Recovery to pick up pace again Revised Q3 GDP data show that Singapore’s economy grew more strongly than first thought last quarter, and while containment measures mean the recovery is unlikely to have gained much momentum so far this quarter, a gradual …
24th November 2021
Inflation hasn’t emerged as a concern across Emerging Asia in the same way it has in the rest of the emerging world, in part because food price inflation in Asia is much lower, but also because the region has experienced much less disruption from the …
22nd November 2021
Taiwan export orders dropped back in October, but the big picture is that they are down only slightly over the past few months and remain at an elevated level. Looking ahead, we expect demand to weaken, but a backlog of unmet orders means shortages will …
Exports set to see a strong end to the year Korean export values saw continued strength in the first 20 days of November and should remain elevated in the coming months as exporters work through large backlogs of unmet orders. The timely nature of the …
Pakistan’s central bank (SBP) today raised interest rates by an aggressive 150bp and with inflation set to remain above target and the currency likely to come under further downward pressure, further hikes are likely over the coming months. While the …
19th November 2021
