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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 …
15th April 2020
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 …
Bank of Korea complacent in face of virus threat There has been some better news from Korea over the last few days, with the country reporting a drop in the number of new infections. (See Chart 1.) The government has enacted a rapid ramp-up in screening, …
6th March 2020
The Central Bank of Sri Lanka (CBSL) left interest rates unchanged today, and while it kept the door open to loosening, high inflation and the CBSL’s concern over the rupee limits the scope for further cuts. Having cut rates three times since last May, …
5th March 2020
Bank Negara Malaysia (BNM) today cut its policy rate from 2.75% to 2.50%, and with headwinds to growth worsening, we think the central bank will ease policy again at its next policy meeting in May. 15 of the 24 analysts polled by Bloomberg, including …
3rd March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
The coronavirus itself may not trigger a wholesale reorganisation of supply chains, but it strengthens the argument for companies to reduce associated risks. One response might be to introduce more redundancy into supply chains to lessen reliance on …
PMIs likely understate weakness of industry PMI readings for Asia are likely to have understated the disruption to industry from factory shutdowns in China, and the recent rise in coronavirus cases outside of China means that worse may be yet to come. …
Korean trade data may get worse before they get better Growth in Korean trade in February masks underlying weakness. Trade with China shrank sharply due to disruption from the coronavirus, and there were few signs of strength elsewhere. Korean trade data …
Malaysia unveils fiscal response to virus The political wrangling that has been taking place since Malaysia’s Prime Minister Mahathir Mohamad unexpectedly resigned on Monday, did not prevent him from unveiling a stimulus package of 20bn ringgit (1.3% of …
28th February 2020
The Bank of Korea (BoK) unexpectedly left its main policy rate on hold at 1.25% today. But with the economic cost of the coronavirus mounting, policy support will have to be ramped up soon – we are forecasting a cut in April. Today’s decision was the …
27th February 2020
We still don’t have much in the way of hard data, but the figures that have been published so far suggest the coronavirus and the measures that China has taken to contain it, are having a severe economic impact. Tourist arrivals into Thailand have fallen …
25th February 2020
The political turmoil that has engulfed Malaysia is likely to undermine the government’s response to the coronavirus crisis and could also set back the progress the country has made in tackling corruption. Malaysia’s politics was thrown into turmoil …
24th February 2020
More countries considering fiscal response to virus Bank Indonesia this week became the latest central bank in the region to cut interest rates in response to the coronavirus outbreak (see here ), and we expect further easing over the coming week with the …
21st February 2020
Further signs that coronavirus is hitting industry Korean trade data for the first 20 days of February add to the evidence that factory closures in China are disrupting local industry. The timely nature of the Korean trade data makes them a good …
With the number of confirmed coronavirus cases in Korea jumping sharply over the past few days, the Bank of Korea is almost certain to cut interest rates at its meeting next week. The number of confirmed cases of the coronavirus in Korea doubled on …
20th February 2020
Bank Indonesia (BI) today cut its main policy rate by 25bp to 4.75%, but we doubt this will be the start of a prolonged easing cycle given the country’s relatively limited exposure to the slowdown in China and the central bank’s concern over the rupiah. …
With the economic cost of the coronavirus mounting, Singapore’s government opted to loosen policy significantly in its 2020 budget today. Growth is still likely to slow sharply, but the strong fiscal response means that the economy should be able to …
18th February 2020
Coronavirus to cause sharp slowdown in Thailand Figures published today reveal that Thailand’s economy was in a poor state, even before the coronavirus hit. With tourist arrivals collapsing and the disruption from factory closures in China likely to …
17th February 2020
