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Industry conditions unlikely to improve much soon The manufacturing PMIs for Asia sank sharply in April and are unlikely to have bottomed out yet in many places. Any recovery in industry thereafter is set to be very slow going. PMIs for April were …
4th May 2020
Slumping external demand taking its toll Korean export values fell sharply in April and with global demand collapsing, trade is likely to remain very weak. Indeed, we wouldn’t be surprised if the May data worsened further still. Korean trade data provide …
1st May 2020
Philippines: how bad will it get? Next Thursday’s Q1 GDP figures for the Philippines are likely to show that the economy grew at its slowest rate in over 10 years last quarter. But worse is still to come. The initial economic hit from the coronavirus was …
30th April 2020
GDP contracts in Q1, much worse to come in Q2 Taiwan’s economy contracted by 1.5% q/q in the first quarter of the year, and things are likely to get much worse before they get better. Despite containing the virus at home, a slump in global growth will …
We remain deeply concerned about the rapidly rising number of cases of coronavirus across South Asia as well as Indonesia. A failure to contain the virus would have significant economic consequences for these places. (See here .) More encouragingly, there …
27th April 2020
Singapore lockdown extended, growth forecast cut The decision by Singapore’s government to extend and toughen its lockdown will further reduce economic output this year. We are cutting our GDP forecast again. The lockdown was due to come to an end on 4 th …
24th April 2020
Vietnam has started to lift some of the shutdown measures that were introduced to slow the spread of the coronavirus, but this won’t prevent the export-dependent economy from slowing sharply this year. The decision to relax some restrictions on the …
Most countries in Emerging Asia are net importers of oil, so would usually stand to gain from a big drop in prices. But that benefit won’t materialise until consumer spending recovers. For Malaysia, which is the region’s only major net oil exporter, the …
23rd April 2020
Economy slumps, worse to come Economic activity in Korea fell by the most since 2008 last quarter and unfortunately there is much worse to come. With the external environment weighing heavily on export demand, a much deeper contraction is likely this …
Taiwan’s success at containing the coronavirus outbreak at home will not prevent the economy from falling into a huge recession this year. We think the economy will shrink by 5% this year, which would be by far the biggest contraction on record. Taiwan …
22nd April 2020
The impracticality of social distancing for many will make it hard for countries in South Asia to contain the coronavirus. Failure to contain the disease would have dreadful humanitarian consequences and would also lead to much slower economic recoveries …
Trade data beginning to reflect gloomy outlook Korean trade data for the first 20 days of April suggest that slumping external demand is now weighing heavily on Korean exports. The timely nature of the Korean trade data makes them a good bellwether for …
21st April 2020
Output should start rising again in most countries in Asia in the third quarter of the year as lockdown measures are eased. But economic recoveries will soon run into constraints resulting from subdued demand and impaired balance sheets. A full recovery …
20th April 2020
Over the Moon in Korea With all the votes from Korea’s parliamentary election now counted, it has been confirmed that President Moon’s Democratic Party (DP) and its affiliate party won 180 of the 300 seats in the National Assembly Seats. That gives the DP …
17th April 2020
The central bank in the Philippines (BSP) today cut its policy rate by 50bp at an emergence meeting, and with economic activity in the country collapsing, we doubt this will be the last move from the Bank. Today’s decision came unannounced, but it was no …
16th April 2020
The scale of job losses and falls in incomes caused by coronavirus containment measures across the world – but particularly in the US and the Gulf – is likely to weigh heavily on remittance inflows into Asia. A drop in remittances would increase the risk …
Adept handling of the current crisis has helped President Moon’s party to emerge from today’s National Assembly election with a majority, which should help breathe new life into his reform agenda. While the near-term economic outlook will depend on how …
15th April 2020
Overview – With exports collapsing and countries across the region implementing draconian restrictions on travel and commerce, economic activity in Emerging Asia will contract sharply this year. Parts of South East Asia and Hong Kong are likely to be the …
Bank Indonesia (BI) today left interest rates unchanged at 4.5%, but the cut to the reserve requirement ratio (RRR) and dovish comments in the press conference suggest that further rate cuts are likely. The decision was a surprise. Having cut rates at its …
14th April 2020
Bank Indonesia gets space it needs to cut The value of the rupiah will be at the forefront of Bank Indonesia (BI) policymakers’ minds when they meet on Tuesday. Data published earlier this week show that foreign exchange reserves fell by almost 8% in …
9th April 2020
The Bank of Korea’ (BoK) left rates on hold at 0.75% today and announced plans to purchase government bonds. There is scope for quantitative easing to have an impact, but there are limits to how effective it can be. As such, the role of supporting the …
Singapore shutdown Singapore today become the latest country in Asia to announce strict new social distancing rules to slow the spread of the coronavirus. All non-essential services will be closed for a minimum of a month. Singapore has been doing a much …
3rd April 2020
In recent days several governments from across the region have announced shutdowns or tightened measures already in place. The economic impact of these measures will be huge, with service sectors set to bear the brunt. We think shutdowns will lower GDP in …
1st April 2020
Korean export resilience won’t last Korean trade figures held up surprising well in March but given collapsing global demand this is unlikely to continue. We expect a sharp contraction in export values in the next few months. Korean trade data provide a …
Industry conditions set to deteriorate further The manufacturing PMIs for Asia suggest that industry has been hit hard by the coronavirus, and we suspect the readings will deteriorate much further in the next couple of months. PMIs for March were released …
Inflation will fall sharply across the region over the coming months as the effect of currency falls and supply-side disruptions are outweighed by the impact of falling oil prices and a slump in demand. A few countries are likely to experience deflation, …
31st March 2020
The Monetary Authority of Singapore (MAS) loosened policy today by reducing the slope of its policy band, and even though the outlook for growth and inflation is very downbeat, we don’t expect further loosening in the months ahead, given the limitations …
30th March 2020
First quarter data point to sharp slowdown GDP figures for Vietnam and Singapore for the first quarter of the year show growth slowing sharply. The worst is yet to come. Figures published yesterday show that Singapore’s economy contracted by 10.6% q/q on …
27th March 2020
Today’s massive fiscal stimulus package won’t prevent Singapore from falling into a deep recession in the first half of the year, but it should ensure that the economy is well-placed to bounce back strongly when the global economy starts to return to …
26th March 2020
With economic growth across the region collapsing, policy support is being ramped up aggressively. Having slashed interest rates over the past couple of weeks, central banks have begun to unveil a series of unconventional policy measures to support …
The worst is yet to come The sharp contraction in Singapore’s economy in Q1 was deeper than expected, and with global growth collapsing, the worst is yet to come. Given today’s outturn, we are lowering our 2020 GDP growth forecast from -3.0% to -3.5%. …
The slump in the rupiah poses a major threat to Indonesia because of the country’s high level of foreign currency debt. So far, the response of the central bank has been to step up its intervention in foreign exchange markets, but if the decline in the …
24th March 2020
Trade resilience unlikely to last There are signs that trade has recovered somewhat from the shock of Chinese factory shutdowns, with both exports and imports bouncing back over the first 20 days of March. But with the world economy set to contract …
23rd March 2020
With the growth outlook deteriorating rapidly, the Bank of Thailand today became the sixth central bank in the region to cut interest rates this week. The 25bp emergency rate cut takes the policy rate to a new all-time low of just 0.75%. The decision to …
20th March 2020
Should we be worried about currency falls? Asian currencies have dropped back sharply in recent days, and with no end in sight to the crisis, further sharp falls are likely. The Indonesian rupiah has been the worst performer and is now down over 12% since …
Bank Indonesia cut interest rates today, but the slump in the rupiah in recent days means policymakers in the country will need to act more cautiously than other central banks in the region over the coming weeks and months. Today’s 25bp rate cut takes the …
19th March 2020
In response to the rapidly worsening outlook for the economy, Taiwan’s central bank (CBC) today cut its key policy rate today by 25bps to 1.125% and announced other measures to support the economy. However, with growth slowing sharply, further rate cuts …
South East Asia and China are likely to be the worst affected countries by the current crisis, with some places likely to see GDP contract by up to 5% this year. Only a few economies in the region will record positive GDP growth in 2020. The outlook for …
The central bank in the Philippines is likely to ease further in the months ahead after opting to cut its main policy rate by 50bps today. The BSP has not yet introduced loan programmes or targeted support for financial institutions and businesses …
In response to the rapidly worsening outlook for the economy, Pakistan’s central bank (SBP) today slashed its key policy rate by 75bp to 12.5%. With growth likely to slow sharply this year and inflation set to fall back further, more rate cuts are likely. …
17th March 2020
The Bank of Korea today finally responded to the coronavirus outbreak by cutting the policy rate by 50bp and introducing a number of other measures to ease financing constraints. Further measures, including the adoption of quantitative easing, are now …
16th March 2020
Good news… Despite the turmoil in regional financial markets over the past week, there has been some good news to report from Asia. New cases of the coronavirus in China have continued to fall sharply, with the country reporting just eight new cases …
13th March 2020
The new restrictions on economic activity in Manila will further weigh on the country’s outlook and mean the central bank (BSP) will almost certainly cut interest rates again at its meeting on Thursday, if not before. President Rodrigo Duterte on Thursday …
12th March 2020
Some countries have managed to control the new coronavirus without large-scale quarantines or economic shutdowns. But they have achieved this by preventing the virus from spreading within the community in the first place. The only places that have so far …
11th March 2020
The rising number of new coronavirus infections in Asia beyond China has largely been confined to Korea and Japan. But poor healthcare provision, the density of population and high levels of internal migration in the early stages of the monsoon season …
Some signs that China disruption is easing Korean trade data for the first 10 days of March suggest that the disruption from factory closures in China to regional industry eased recently, although both imports and exports remain depressed. The timely …
Malaysia’s new finance minister, Tengku Zafrul, faces the unenviable challenge of dealing with a rapidly deteriorating fiscal position at the same time as the economy is slowing sharply. While the budget deficit is likely to widen significantly this year, …
10th March 2020
There is a huge amount of uncertainty over how things will play out over the coming weeks as the coronavirus crisis continues to unfold, and any forecasts should be taken with more than the usual pinch of salt. We are pulling down our forecasts again for …
Most countries in Emerging Asia are net importers of oil, so would usually stand to gain from a big drop in prices. But with the coronavirus continuing to spread and people increasingly avoiding public spaces, the windfall from lower oil prices is more …
9th March 2020
Korea’s position as a key supplier of high-tech intermediate goods means it plays an important role in regional supply chains. Extended factory closures due to the spread of the coronavirus would cause significant disruption to the global electronics …
