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While the spike in August inflation in the Philippines makes the central bank’s (BSP) policy decision this month an even closer call, the worsening outlook for the economy means we are sticking with our non-consensus view of a 25bp cut on 23 rd September. …
7th September 2021
Korea keeping fiscal policy supportive Korea’s proposed budget for 2022 indicates that fiscal policy will remain supportive. In nominal terms, expenditure in 2022 is set to be roughly in line with this year’s (which has been boosted by two stimulus …
3rd September 2021
Exports pushing upwards again but fresh surge unlikely Having flattened off in previous months, exports saw a renewed rise in August. While this is unlikely to mark the start of another surge, we still expect exports to remain elevated over the coming …
1st September 2021
Signs of virus disruption hitting production further afield Falling output indices in Korea and Taiwan suggest that the virus disruption in South East Asia is reverberating across the region. The end of supply chain shortages continues to slip further out …
Q2 GDP data released over the past month or so did not show a repeat of the across-the-board rises in exports seen in previous quarters, but the external sector still proved an important prop to GDP in many places. Thailand’s economy unexpectedly grew …
31st August 2021
South East Asia turning a corner? There are some signs that the Delta outbreak battering South East Asia is at least past its worst. But a rapid turnaround in the region’s economic fortunes looks unlikely. New cases have come down sharply in Indonesia and …
27th August 2021
We were among the first forecasters to call that the Bank of Korea (BoK) would begin tightening monetary policy this year and it duly delivered today, raising the policy rate by 25bps to 0.75%. Given the hawkish comments in the press conference, we now …
26th August 2021
Exports continue to hold up well, no clear signs of virus disruption to trade Korean export values look set to hold steady at elevated levels in August. With few signs of a drag from virus disruptions, the levelling off in exports probably instead …
23rd August 2021
There are growing signs that global demand for Asian consumer goods has peaked. Despite this, supply shortages look set to persist for some time amid growing evidence that surging virus cases across South East Asia are causing disruption to the region’s …
20th August 2021
Malaysia’s new prime minister, Ismail Sabri Yaakob, takes over an economy poised to rebound strongly from the COVID-19 pandemic. But the new government looks ill-equipped to deal with the many long-term challenges facing the country. Ismail was today …
Hike still on the cards With new cases of COVID-19 rising, most analysts expect the Bank of Korea (BoK) to leave rates unchanged on Thursday. While it is likely to be a close call, we are sticking with our view that the central bank will raise its main …
The Central Bank of Sri Lanka (CBSL) hiked interest rates today to help support the currency. With the rupee likely to remain under downward pressure over the coming months, further rate hikes are likely. The decision to raise the deposit and lending …
19th August 2021
Bank Indonesia left its main policy rate on hold at 3.50% today, and signalled that rates are likely to remain low for the foreseeable future. We think the policy rate will remain unchanged until at least the end of next year. The decision came as no …
Korea has performed relatively well through the pandemic, and we expect the economy to emerge from the crisis with little lasting damage. However, the long-run outlook is less promising. Although productivity growth is likely to accelerate, it will not do …
17th August 2021
Economy still on the rocks, despite surprise expansion in Q2 The surprise rise in Thai Q2 GDP is unlikely to be repeated this quarter as cases surge and the vaccine rollout makes only slow progress. The tourism sector is still on its knees, meaning any …
16th August 2021
Weakness to continue, but only in the short term Malaysia’s economy shrank by less than most had expected last quarter and while a further worsening in the virus situation means the immediate outlook is poor, rapid progress on vaccination has set the …
13th August 2021
Vaccine drives still moving too slowly With daily cases of COVID-19 reaching record levels in many countries, the region’s economic recovery has slipped in reverse, and vaccines look unlikely to steer a turnaround just yet. Widespread vaccination offers a …
The Philippines’ central bank (BSP) left its main policy rate on hold at 2.00% today, but with inflation fears receding, more rate cuts to support the beleaguered economy are likely soon. The BSP has kept the policy rate on hold so far this year after …
12th August 2021
Prospects for recovery diminishing after contraction in Q2 The Philippines’ chances of a strong economic rebound from the contraction recorded in Q2 are looking slim given the new surge in virus cases and the reimposition of containment measures. The …
10th August 2021
The worsening prospects for the Thai economy and the shift in the current account from a huge surplus to a sizeable deficit mean the Thai baht is likely to weaken further over the coming year. The baht has fallen again over the past week and is now down …
6th August 2021
Thailand and Philippines to cut rates soon Whereas several EM central banks are in the middle of aggressive tightening cycles, Thailand and the Philippines are likely to resume rate cutting soon. The Bank of Thailand left its policy rate unchanged at its …
Indonesia’s economy is struggling badly, with Q2 GDP data showing that the recovery lost some momentum even before the latest surge in virus cases, which will have thrown the economy back into contraction in Q3. GDP grew by 7.1% y/y last quarter, compared …
5th August 2021
After dropping back to just within the central bank’s target range for the first time this year, headline inflation in the Philippines is set to continue falling in the coming months. This will open the door for the Bank to loosen policy further to …
The Bank of Thailand (BoT) left its policy rate on hold at 0.5% today as expected. Given the deteriorating outlook for the economy and with two of the six MPC members voting for a rate cut, we now think the central bank will loosen policy further this …
4th August 2021
Exports are levelling off, but few signs of a pullback yet July data add to evidence that Korean exports are plateauing, after reaching very high levels. While we expect some softening ahead as final demand weakens a touch, a sharp pullback in exports is …
2nd August 2021
Increasingly fraught industry conditions The July PMIs for Emerging Asia point to sharp contractions in manufacturing in those places worst affected by the virus. With outbreaks likely to remain a key headwind for months to come, the rapid growth in …
Taiwan’s economy only contracted slightly last quarter despite a major COVID outbreak, as strong exports cushioned the blow. Large backlogs of orders should keep exports elevated which, alongside a recovery in private consumption, will set the scene for a …
30th July 2021
Disruption a key concern for global supply chains Industry in Malaysia and Vietnam was already feeling a pinch from restrictions and worker shortages brought about by a jump in COVID-19 cases, but the situation is deteriorating fast. Daily new cases in …
In a bold move that will be closely watched across the region, Singapore is set to drop its implicit target of pursuing zero local COVID-19 cases, with restrictions set to be eased gradually from August. In other words, Singapore will learn to live with …
28th July 2021
Korea’s recovery looks set to continue in the quarters ahead after GDP rose further above its pre-crisis level in Q2. Provided the economy proves relatively resilient to the latest wave of the virus, as we expect, a rate hike from the Bank of Korea is …
27th July 2021
US currency deal reduces risks for Vietnam The near-term outlook in Vietnam has taken a turn for the worse in recent weeks, with a surge in virus cases and the introduction of restrictions leading to a fall in economic activity. However, there has also …
23rd July 2021
Bank Indonesia (BI) left interest rates unchanged today at 3.5%, and despite the worsening near-term outlook caused by a surge in COVID-19 cases, the central bank made clear further cuts are unlikely. We expect interest rates to remain unchanged until the …
22nd July 2021
Exports flattening off at a high level July data add to evidence that Korean exports are starting to plateau, after reaching very high levels. We expect some softening ahead as supply chain shortages bite and final demand weakens a touch. The timely …
21st July 2021
Overview – Surging infections across South East Asia and the slow progress of vaccine rollouts mean that COVID-19 will continue to cause widespread economic disruption across large parts of the region until at least the end of the year. We have cut our …
20th July 2021
Virus cases surge in South East Asia The virus situation across South East Asia has gone from bad to worse over the past couple of weeks (see Chart 1), with Indonesia, Thailand, Malaysia and Vietnam all reporting a record high number of daily cases. The …
16th July 2021
The Bank of Korea (BoK) left its main policy rate on hold at 0.50% today and signalled that a rate hike is still very much on the table this year. While the worsening virus situation has made things more uncertain, comments from the press conference …
15th July 2021
Recovery to get quickly back on track The economy stumbled in Q2 after the government reimposed restrictions in response to a spike in virus cases, but with new infections down and the government rolling back containment measures, the recovery should …
14th July 2021
Singapore rebounding as restrictions are lifted The government in Singapore is starting to ease restrictions, and the success of the country’s vaccination programme will hopefully allow a rapid return to normality. This should set the stage for a decent …
9th July 2021
The fact that Bank Negara Malaysia (BNM) left its policy rate on hold at 1.75% today despite the poor economic outlook means any further loosening is unlikely. But with the recovery set to be slow and fitful, we think BNM will leave interest rates at …
8th July 2021
Thailand’s reopening Thailand’s tourism sector will remain heavily depressed despite this week’s reopening of Phuket to foreign tourists. Since Thursday, fully-vaccinated foreigners have been allowed to visit the island without needing to quarantine …
2nd July 2021
Exports strong but close to peak After a strong end to the month, Korean export values reached a fresh all-time high in June. But with some signs external demand is levelling off and semiconductor shortages are biting, we suspect goods export values are …
1st July 2021
Industry conditions looking less rosy The June PMIs dropped back as virus outbreaks and supply chains issues created mounting headwinds for industry. With neither issue likely to be resolved soon, the rapid growth in industry over the past few quarters …
The virus situation in Emerging Asia has improved compared with a month ago. Although cases are rising sharply in Indonesia, daily numbers have come down in Taiwan, Singapore, India and Malaysia, and appear to have stabilised in the Philippines. That …
30th June 2021
Virus outbreak taking its toll Looking past the jump in y/y growth due to a weak base for comparison, GDP data suggest that Vietnam is facing a heavy economic toll from its efforts to control the virus. With sporadic outbreaks continuing, the economy is …
29th June 2021
Korea to hike rates in August We were already more hawkish that the consensus in expecting a rate hike in Korea this year, but recent comments by the central bank and strong economic data mean we are shifting forward our forecast for the first hike to the …
25th June 2021
The central bank in the Philippines (BSP) left its main policy rate on hold at 2.00% today, but with inflation fears receding, more rate cuts to support the beleaguered economy are only a few months away. The BSP has been on hold so far this year after …
24th June 2021
The Bank of Thailand (BoT) today left interest rates unchanged at their all-time low of just 0.5%, dovish comments from the press conference support our view that rates will be on hold for a long time to come. Interest rates have now been left unchanged …
23rd June 2021
There are tentative signs that global demand for Asian consumer goods has peaked. But with demand for key components still running well ahead of supply, shortages are likely to persist for some time to come. Taiwan’s export orders deserve close attention …
21st June 2021
Exports close to their peak Korean export values look set to dip in June after a record high in May. We suspect goods export values have peaked. The timely nature of the Korean trade data makes them a good bellwether for the health of the export sector …
Bank of Korea closer to pulling the trigger Minutes from the Bank of Korea’s (BoK’s) May meeting, released on Tuesday, support our view that the central bank will tighten policy this year. The minutes were decidedly hawkish, with one of the seven members …
18th June 2021
