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Singapore to produce strong fiscal response to virus Singapore’s very strong fiscal position (it has fiscal reserves equivalent to 100% of GDP) mean it could afford a significant loosening of fiscal policy when it unveils its 2020 budget on Tuesday to …
14th February 2020
Factory shutdowns in China are starting to have significant knock-on effects on the rest of the region as companies struggle to source intermediate goods. The garment and electronics sectors are likely to experience the worst of the disruption, while …
13th February 2020
Given the rising economic toll from the coronavirus, worries about rising property prices and high levels of household debt are unlikely to stop the Bank of Korea (BoK) from cutting interest rates at the end of the month. With the economic costs of the …
12th February 2020
Worse to come GDP growth in Malaysia slowed again in Q4 and the disruption to trade and tourism flows from the coronavirus outbreak is likely to cause a much sharper downturn this quarter. The Prime Minister’s recent pronouncement that the economy will …
Some signs that coronavirus is hitting industry Korean trade data serve as a good bellwether for the rest of the region and figures for the first 10 days of February suggest that factory closures in China are disrupting regional industry. The timely …
11th February 2020
New GDP growth forecasts With the coronavirus continuing to spread, the economic costs to the rest of the region are starting to mount. There is clearly a great deal of uncertainty over how long the crisis will last, but based on the assumption that the …
7th February 2020
The Philippines (BSP) cut its main policy rate by 25bp to 3.75% today and with growth likely to disappoint and inflation set to remain well within the BSP’s target, we expect more easing later this year. Today’s decision to cut was correctly predicted by …
6th February 2020
The Bank of Thailand (BoT) cut interest rates today, and with the economy being hit hard by a slump in tourist arrivals as well as disruption to its industrial sector as the coronavirus continues to spread, we think more easing is likely. We have …
5th February 2020
Indonesia’s direct ties to China are relatively small, which makes the economy less vulnerable to the spread of the coronavirus than other countries in Emerging Asia. The main channel through which Indonesia will be affected is falling commodity prices …
A period of prolonged factory closures in China as the authorities struggle to contain the coronavirus would cause significant disruption to the rest of the region and is another reason why growth in Emerging Asia looks set to slow sharply this quarter. A …
3rd February 2020
Timely data too early to show impact from coronavirus PMIs for Emerging Asia (ex. China) and Korean trade data were mostly unchanged in January, but neither give a good indication of how the coronavirus has hit the regional economy most recently. With the …
Vietnam: policy dilemma for central bank Inflation in Vietnam reached its highest rate since 2013 in January, but we doubt the central bank will respond by raising interest rates. The sharp rise in inflation from just 2.0% y/y in September to 6.4% in …
31st January 2020
Before the coronavirus hit, the latest data suggested the region’s economies had turned a corner. Our regional GDP Tracker nudged up slightly at the end of last year, while GDP figures for Taiwan, Korea, Singapore and the Philippines (the only four …
30th January 2020
The Central Bank of Sri Lanka (CBSL) unexpectedly cut interest rates today but given our view that the rupee will come under downward pressure again this year, the scope for further loosening is limited. The CBSL’s decision to cut both its deposit and …
A sharp fall in Chinese tourist arrivals will hit economic growth in Emerging Asia hard this quarter. The impact will be even more severe if the disruption spreads to the region’s industrial sectors. At least initially, the main channel through which the …
28th January 2020
Wuhan virus continues to spread With the number of new cases of the coronavirus continuing to increase, concern is rising across Asia over the potential economic impact. If the outbreak continues to spread, one of the main channels through which the …
24th January 2020
Bank Indonesia (BI) today left interest rates unchanged at 5.0% but kept the door open to further cuts. With the economy struggling, inflationary pressures low and the rupiah continuing to appreciate against the US dollar, we think further easing is …
23rd January 2020
Pick-up in growth unlikely to be sustained this year GDP growth picked up pace again in the final quarter of last year, but with the big boost from government spending likely to fade this year, we think this will be as good as it gets. Data published …
The legislation that President Joko Widodo has presented to parliament, which includes proposals to cut red tape, lower taxes and free up the labour market, would form the basis of any foreign investor’s wish list. However, with opposition to the reforms …
22nd January 2020
Bank Negara Malaysia (BNM) today cut its policy rate from 3.00% to 2.75%, and with growth set to slow further over the next couple of quarters, we think the central bank will ease policy again later this year. Only two of the 26 analysts polled by …
Gradual recovery to follow rebound in Q4 GDP growth rebounded more strongly than expected at the end of last year, and the economy should continue to stage a recovery over the coming quarters. The strong outturn in Q4 means we no longer think that the …
Fears are growing about the spread of a newly-identified coronavirus across Asia. In this Update we discuss the likely implications for the region’s economies. Stock markets across the region fell today as fears over the spread of the virus escalated. It …
21st January 2020
GDP growth in Taiwan continues to buck the regional trend Taiwan’s economy picked up steam again last quarter, and with the economy continuing to benefit from the trade war, we expect growth to remain strong throughout 2020. Data published today show that …
In this Update we take a look at the important elections and political events that are set to take place across Asia over the coming year, assessing the implications for policymaking and economic growth. One of the main political events of the year has …
20th January 2020
Strong rupiah gives space for BI to cut again Bank Indonesia is likely to leave interest rates unchanged at its meeting on Thursday, but the strong recent performance of the rupiah (see Chart 1) means further cuts are likely over the coming months. Chart …
17th January 2020
The Bank of Korea (BoK) left policy unchanged today, but with the economy struggling for momentum and price pressures set to remain weak, we expect the Bank to resume its easing cycle later this year. Today’s decision marks the second consecutive meeting …
Overview – Most countries in Emerging Asia should stage a gradual recovery over the coming year helped by continued policy support. Several have announced expansionary budgets or fiscal stimulus packages, while most central banks are likely to cut …
16th January 2020
The signing of the Phase One trade deal is unlikely to spell the end of the trade war, and the disruption it has caused to Asian supply chains looks set to continue. On the plus side, the deal reduces the chances of an escalation in the near term, and if …
The two key economic challenges facing Tsai Ing-wen in her second and final term as Taiwan’s president are the deteriorating demographic outlook and the long-term decline in productivity growth. A combination of the trade war, which is leading some …
13th January 2020
Taiwan heads to the polls Given her huge lead in the opinion polls, it will come as a major surprise if Tsai Ing-wen is not re-elected for a second and final term as Taiwan’s president on Saturday. Whether Tsai can get to grips with the main challenges …
10th January 2020
Oil price spike to have limited impact on inflation Oil prices have jumped following the killing of Qassem Soleimani, one of Iran’s most powerful generals, but they would need to rise much further before higher prices started to have a major impact on …
3rd January 2020
The initial estimate of Q4 GDP suggests Singapore’s economy remains in the doldrums. However, the numbers are based on preliminary data from only the first two months of the quarter and are not normally a good guide to the final reading. According to …
2nd January 2020
PMI show further signs of improvement PMIs for Emerging Asia (ex. China) improved slightly in December, which is consistent with our view that while regional growth remains weak, it has at least bottomed out. PMIs for December were released today for …
Bank of Korea minutes reveal dovishness Minutes from the Bank of Korea’s (BoK) November rate meeting reveal that while only one of the seven members of its Monetary Policy Board voted for a cut, other members also struck a dovish tone. The member who …
20th December 2019
Bank Indonesia (BI) today left interest rates unchanged at 5.0% but, with growth set to remain weak and the rupiah holding up well, we think further easing is likely in the new year. Having cut rates by a cumulative 100bp so far this year, the central …
19th December 2019
Growth in Emerging Asia has struggled over the past year. While most economies should stage a modest recovery over the coming quarters on the back of looser fiscal and monetary policy, with China likely to slow, aggregate growth in the region is set to …
The Bank of Thailand (BoT) left its policy rate unchanged today, but further rate cuts are likely next year. Having cut interest rates twice this year already (in August and November) today’s decision to leave rates unchanged at 1.25% came as no surprise, …
18th December 2019
Singapore’s economy appears to be benefitting from tourists and business travellers shunning Hong Kong. Since the Hong Kong protests intensified in July, tourist arrivals to Singapore have picked up. Meanwhile, hotel occupancy rates have jumped and were …
17th December 2019
Indonesia considers relaxing fiscal rule Adopting a more flexible fiscal target would give Indonesia’s government more room to support growth during periods of weak demand without threatening the country’s fiscal position. Under the current fiscal rule, …
13th December 2019
The Philippines (BSP) left its main policy rate at 4.00% today, but with growth likely to disappoint and inflation set to remain below the mid-point of the BSP’s target, we expect more easing next year. Today’s decision to leave the main policy rate on …
12th December 2019
The peso has rebounded over the past year due in large part to a sharp narrowing of the current account deficit. But with the deficit set to widen again next year as infrastructure spending picks up, the currency is likely to come under renewed downward …
9th December 2019
Trade war disruption US trade data released earlier this week for October reveal the extent to which the US-China trade war is disrupting regional supply chains. In the first 10 months of the year, US imports from China fell by 15% as tariffs caused US …
6th December 2019
Inflation in the Philippines rose last month for the first time since May and is set to climb higher over the coming year. However, with inflation set to remain low by past standards, we are sticking with our view that the central bank will loosen policy …
5th December 2019
Recently published figures showing a further fall in the fertility rate in Korea underline the seriousness of the demographic “time bomb” facing the country. The worsening demographic outlook is the key reason why we expect trend growth in Korea to slow …
2nd December 2019
Industry remains weak, but some signs of improvement PMIs for Emerging Asia (ex. China) were slightly more positive in November, suggesting that while industry remains weak it is starting to recover. The continued improvement in PMIs for China provides …
Export figures point to continued weakness in external demand Korean export growth in November was much weaker than expectations and suggests that external demand remains in the doldrums. Headline inflation was also weaker than expected last month. Korean …
VAT cut a risk to Sri Lanka’s fiscal health In his first major policy move since being elected Sri Lankan president earlier this month, Gotabaya Rajapaksa on Wednesday cut the rate of VAT from 15% to 8% (the cut will take effect on 1 st December). On the …
29th November 2019
The Bank of Korea (BoK) left rates on hold today but kept the door open to further easing. With growth set to stay subdued and inflation likely to remain weak, we have pencilled in one more 25bp rate cut for early 2020. Today’s decision to leave the main …
Looser monetary and fiscal policy should help to drive a modest recovery in Thailand over the coming quarters, and we are revising our GDP growth forecast for next year up slightly. Figures released earlier this month showed Thailand grew by just 2.4% y/y …
26th November 2019
A sharp rise in the US dollar assets of Taiwanese life insurance companies poses a major threat to the health of the country’s financial sector and could also have consequences for the stability of the global financial system. A key cause of previous …
25th November 2019
