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Recent data add weight to upbeat forecasts Activity data released today suggest that Korea’s economy ended last quarter on a strong note and that the provisional estimate of Q3 GDP is likely to be revised up. The first estimate of Q3 GDP – which is …
30th October 2020
Economy continues to outperform, raising our GDP forecast Taiwan’s economy continued to outperform much of the rest of the world in the third quarter, with GDP rising by 3.3% y/y. With the virus eliminated at home and exports rebounding strongly, the …
Asian exports have continued to defy gravity. Despite the biggest slump in the global economy since the Second World War, regional exports are already back to their pre-crisis level. The resilience of exports in much of Asia has helped offset some of the …
28th October 2020
The progress made towards the development of a vaccine against COVID-19 has been remarkable. Most experts now believe that a vaccine may be available by the end of this year or the first quarter of 2021. Although Asia has contained the coronavirus better …
27th October 2020
Korean GDP rebounded last quarter as exports bounced back strongly, and with the economic impact of the “second wave” fading and exports picking up further, the recovery is set to continue over the coming quarters. Data released today show GDP rose 1.9% …
Economies rebounding, but output remains weak National accounts data due to be published over the next few weeks will show that many economies experienced record-breaking rebounds in GDP in the third quarter as they reopened from strict lockdowns. (See …
23rd October 2020
The Central Bank of Sri Lanka (CBSL) left both its deposit and lending rate on hold at 4.50% and 5.50% respectively at its meeting today but, given the poor outlook for the economy, we think the easing cycle has further to run. The decision was correctly …
22nd October 2020
With the US election result unlikely to have immediate ramifications for US GDP, the main issue for much of Asia is how it affects trade policy. A Joe Biden presidency would be less confrontational towards Asian economies outside China. By contrast, a …
21st October 2020
Electronics-driven export rebound picking up speed Strong export growth in the first 20 days of October was driven by buoyant foreign demand for electronics, and exports now look likely to provide a boost to y/y growth this quarter. Timely Korean trade …
Political wrangling compounding COVID risks Malaysia’s economy has rebounded rapidly from the crisis. Second quarter national accounts data show that by the end of June the economy was just 3.2% smaller than it was a year ago. (See here .) Recent upbeat …
16th October 2020
The renewed risk of domestic political unrest in Thailand following the declaration of a “severe” state of emergency could act as a further drag on the already beleaguered economy. In response to student-led protests calling for Prime Minister Prayuth …
15th October 2020
The COVID-19 crisis has led to a ballooning of current account surpluses across Emerging Asia that is putting upward pressure on currencies. The shift to bigger external surpluses could also land the region in hot water with the US Treasury as it prepares …
14th October 2020
The Bank of Korea (BoK) left its main policy rate on hold at 0.50% today and, with the economic recovery holding up relatively well, further rate cuts seem unlikely. Instead the focus of the BoK is likely to shift to cushioning the impact of loose fiscal …
Economy recovering, monetary policy set to stay loose for an extended period The Monetary Authority of Singapore (MAS) left policy on hold today as advanced GDP data showed that the economy rebounded well in Q3. However, with GDP still well below its …
Bank Indonesia (BI) left interest rates on hold at 4.0% today, but it is too soon to call an end to the easing cycle. With the economy in need of further support, we think the central bank will resume its easing before the end of the year. BI left …
13th October 2020
Surge in Vietnam’s exports puts it in danger Vietnam has so far emerged as the biggest winner of the US-China trade war, as tariffs on goods from China have led US importers to switch suppliers. Vietnam’s exports to the US have doubled since the start of …
9th October 2020
Overview With the virus under control in most of the region, Emerging Asia is bouncing back from the crisis faster than other parts of the world. But the pace of recovery is uneven. China is leading the way. In the countries hit worst economically, the …
8th October 2020
The near-term outlook for Indonesia’s economy is dreadful. A failure to contain the virus means the country will experience one of the slowest recoveries in the region. But a series of landmark reforms passed by parliament yesterday could set the stage …
6th October 2020
Industry to maintain momentum PMI readings for Korea and Taiwan suggest industry in both countries picked up momentum last month, and we expect output to continue growing in the months ahead on the back of strong exports. PMIs for September were released …
5th October 2020
Fiscal policy to remain supportive in Indonesia Indonesia has signalled that fiscal policy will remain supportive of the economic recovery after it unveiled a budget for next year that envisages only a very small fall in the budget deficit. Earlier this …
2nd October 2020
The central bank in the Philippines (BSP) left its main policy rate on hold at 2.25% today for a second consecutive meeting, but with the economic recovery proving to be one of the slowest in the region, we doubt the Bank has finished easing yet. The …
1st October 2020
Export recovery to gradually continue Korean export values held steady in September at a touch below pre-crisis levels, and we expect gradual improvements in the months ahead. Korean trade data provide a good guide to the performance of exporters …
Korea looks to have contained its “second wave” of the virus with minimum cost to the economy. There were just 38 newly confirmed cases in Korea today, which was the lowest since early August and down from a peak of 441. With cases falling, the government …
29th September 2020
Regional outperformer Vietnam’s economy rebounded in the third quarter and should continue to perform strongly over the coming year. A surge in exports to the US, aggressive rate cuts by the central bank and the government’s success in containing the …
Lacklustre fiscal support in the Philippines Inadequate fiscal support is holding back growth in the Philippines and, unless this improves, the recovery will continue to underwhelm. August data show that fiscal spending remained subdued. It grew by just …
25th September 2020
Continued trade tensions between the US and China are providing a significant boost to economic prospects in Taiwan and Vietnam. Having also successfully contained the virus without significant economic damage, Taiwan and Vietnam are likely to be the only …
Asian central banks have taken their foot off the gas in recent months – no central bank in the region has cut rates since July. But we think this represents a pause rather than an end to the easing cycle. With GDP still well below pre-crisis levels in …
24th September 2020
The Bank of Thailand’s (BoT) decision to leave interest rates unchanged at 0.5% came as no surprise, and rates look set to remain unchanged for some time to come. The central bank hinted at further measures to support demand, but the onus will be on the …
23rd September 2020
Success in bringing the COVID-19 outbreak under control in Pakistan, Sri Lanka and to a lesser extent Bangladesh has enabled activity in these places to rebound much faster than in India, where new infections continue to surge. This supports our view that …
22nd September 2020
Pakistan’s central bank (SBP) left interest rate unchanged today at 7.0% and appeared to signal the end of its recent easing cycle. With the economy recovering well from the coronavirus crisis and inflation concerns increasing, we expect rates to remain …
21st September 2020
Recovery in external sector picks up pace Exports rebounded to pre-crisis levels for the first time in the first 20 days of September and, while we don’t necessarily think export values will keep going from strength to strength, today’s data add weight to …
Peso to hold up in months ahead The Philippine peso has been the best performing currency in Emerging Asia so far this year (see Chart 1.) and is now at its highest level against the US dollar since late 2016. We expect the peso to strengthen further over …
18th September 2020
Bank Indonesia’s (BI) decision to leave interest rates unchanged today at 4.0% shows that it is prioritising financial stability over supporting the economy. Further easing is possible later in the year if the currency stabilises, but the pace of rate …
17th September 2020
With the economy holding up relatively well, the decision by Taiwan’s central bank (CBC) to leave interest rates on hold came as no surprise. Further rate cuts are unlikely, and we expect interest rates to remain on hold for the foreseeable future. The …
Second wave fears ease The recent jump in coronavirus cases in Korea, Hong Kong and Vietnam had a negative impact on each economy, with hospitality sectors bearing the brunt of the damage. But with infection numbers now falling again and restrictions …
11th September 2020
Slow export recovery continues Korean exports rose in levels terms in the first 10 days of September and, with trading-partner economies still getting back on their feet, we expect further gradual improvements in external demand. The timely nature of the …
Bank Negara Malaysia (BNM) left its main policy rate on hold at 1.75% today, but with the economy likely to remain weak for some time to come, we doubt this marks the end of the Bank’s easing cycle. Today’s meeting was always likely to be a close call. …
10th September 2020
Despite Thailand’s success in containing the coronavirus, the country is likely to record one of the biggest falls in GDP in the region this year. A collapse in tourism and a slump in automotive demand are the two main factors holding back the economy. …
7th September 2020
Slow recovery in the Philippines A long and strict lockdown meant the Philippines suffered one of the biggest falls in GDP in the region in the second quarter. (See here .) The most recent data suggest that it is also experiencing one of the slowest …
4th September 2020
Proposed changes to Bank Indonesia’s mandate, which include a shift to focus more on growth and unemployment, could lead to major changes in how the central bank operates. However, given the country’s high level of foreign currency debt, policymakers …
2nd September 2020
The recent spike in coronavirus cases in Vietnam has had only a small negative impact on the economy. With the virus now seemingly under control again, Vietnam is still likely to be one of the few countries in the world to grow this year. Having gone 99 …
Gradual export recovery to continue Korean export values rose again in August and we expect a continued recovery in external demand to drive further small improvements in the months ahead. Korean trade data provide a good guide to the performance of …
1st September 2020
Manufacturing sector improving, continued slow recovery ahead PMI readings suggest that manufacturing conditions generally improved in Asia last month, and we expect more gradual improvements as the external environment slowly recovers. PMIs for August …
QE is edging closer The Bank of Korea (BoK) surprised no one by keeping rates on hold at 0.5% this week. (See here .) Less expected was Governor Lee’s assertion that the Bank has “room for a rate cut”. We’ve now pencilled in a further 25bp cut to 0.25% in …
28th August 2020
Both Korea and Japan are experiencing second waves, but a stronger shift in consumer behaviour in Korea means the outbreak there is likely to have a larger impact on growth. As such, we’ve revised down our GDP forecast for Korea but kept it the same for …
27th August 2020
The Bank of Korea (BoK) left its policy rate on hold at 0.50% today but gave hints at the press conference that fresh rate cuts were on the table. We have pencilled in a cut in Q3 as a result and are sticking with our view that the BoK will expand …
Having been among the fastest in the world at controlling the initial outbreak, Hong Kong, Vietnam and Korea are all at different stages of a second wave of infections. With new infections in Hong Kong down from three-figures at their recent peak in late …
26th August 2020
Lowering our GDP forecasts for Korea A growing second wave of infections in Korea is likely to slow the economic recovery. Korea reported 324 new cases a day on Friday, the highest since early March. (See Chart 1.) Newly confirmed infections have now been …
21st August 2020
Gradual recovery continues While exports dropped back a little in the first 20 days of August, we suspect this was mainly due to the impact of widespread flooding at the start of the month. Looking at the data more recently, they suggest a continued …
The central bank of the Philippines (BSP) left its main policy rate on hold at 2.25% today, but with the pandemic weighing heavily on the economy, we doubt the Bank has finished easing. Today’s decision to hold follows a 50bp cut at the BSP’s last meeting …
20th August 2020
