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Strong baht not to blame for weak exports Policymakers and exporters in Thailand are once again voicing concern about the strength of the baht, which has appreciated again this week and is now approaching a six-year high against the US dollar. Since the …
13th September 2019
The dovish statement which accompanied today’s decision by Bank Negara Malaysia (BNM) to leave its policy rate on hold at 3.00% suggests that the central bank is leaving the door open to further easing. We are sticking with our forecast that the Bank will …
12th September 2019
Deflation fears in Korea overblown Despite headline inflation in Korea (just) dropping into negative territory in August, we don’t think there is much risk of a prolonged period of deflation. Headline inflation fell to minus 0.04% last month – the first …
6th September 2019
Yesterday’s announcement by Hong Kong Chief Executive Carrie Lam that the government will withdraw the controversial extradition bill that sparked the current political crisis has raised hopes that tensions in the territory will start to subside. But …
5th September 2019
Few signs of green shoots so far in Q3 Weak trade data for Korea and the weakness of regional manufacturing PMIs in August suggest that economic conditions failed to improve in the middle of this quarter. While we suspect that regional GDP growth has …
2nd September 2019
Korea 2020 budget boost Korea’s proposed budget for 2020 includes a large fiscal boost, which should partially offset the external headwinds facing the economy. The draft budget will be submitted to the National Assembly next week and envisages an …
30th August 2019
The Bank of Korea sounded more bearish on the outlook for the economy even as it left rates on hold today. As such, we continue to expect more easing this year, with another 25bps cut in October. Today’s decision followed the first rate cut in three years …
Despite the poor global outlook, GDP growth across Emerging Asia actually picked up slightly in the second quarter, and our forecast is for a further gradual recovery over the remainder of the year and into 2020. (See here .) One of the key risks facing …
26th August 2019
Philippines budget: three key takeaways Earlier this week the government in the Philippines unveiled its budget plans for next year. There are three key points worth highlighting. First, while the government has been touting the boost to economic growth …
23rd August 2019
The Central Bank of Sri Lanka (CBSL) cut rates today, but given our view that the rupee will come under pressure again this year, we think this will probably mark the last cut in 2019. Today’s decision by the CBSL to cut both its deposit and lending rate …
Despite the recent weakness of the rupiah, Bank Indonesia (BI) today cut its benchmark interest rate for the second consecutive month to 5.50% and hinted that further easing is on the horizon. But the uncertain outlook for the currency means any further …
22nd August 2019
For all the bad news on the global economy recently, it looks as if GDP growth across Emerging Asia held broadly stable last quarter. Although growth is likely to remain fairly weak over the coming year, with fiscal and monetary policy being loosened, we …
21st August 2019
Weak growth to continue GDP figures released today for the second quarter show that growth in Thailand slowed sharply to an almost five-year low. With weak global demand and a downturn in the tourism sector likely to drag on growth prospects over the …
19th August 2019
Global recession fears Weak data earlier this week from China and Europe, the worsening political crisis in Hong Kong and the fall in long term bond yields in the US have all helped raise fears of a sharp slowdown in global economic growth. While we think …
16th August 2019
Weakness to follow after resilient first half GDP growth in Malaysia picked up in Q2, but we doubt this is the start of a sustained rebound. We are forecasting a renewed slowdown in the second half of this year, driven by weaker consumer spending and a …
Emerging Asia has not only been the fastest growing region since the global financial crisis, it has also been the most stable. Regional growth has also been less volatile compared with the period before the financial crisis. This “great moderation” is …
14th August 2019
An official from the Monetary Authority of Singapore (MAS) today confirmed that it is not considering an unscheduled policy adjustment, but given the poor outlook for the economy loosening in October is still very likely. Singapore’s Ministry of Trade and …
13th August 2019
Today’s 25bp cut from the central bank in the Philippines (BSP) came as no surprise, and with inflation set to fall back further and growth only likely to stage a moderate recovery over the coming months, we expect another 25bp cut before the year is …
8th August 2019
New currency forecasts In response to the renewed falls in Asian financial markets over the past week and the further escalation of the trade war between the US and China, we are revising some of our currency forecasts for this year. The drop in the …
Weak growth to prompt more aggressive policy easing The continued weakness of growth means that the central bank will likely opt for a more aggressive 50bp policy rate cut this afternoon. And while growth should recover from here, don’t expect a strong …
The fall in Pakistan’s stock market today is the first sign that investors are starting to become concerned about the escalating crisis in Kashmir. The most likely outcome is that tensions are dialled back over the coming days, but even a period of …
7th August 2019
Weak growth and a strong currency were the main factors behind today’s surprise rate cut in Thailand. With the economy likely to slow further and the currency likely to continue to strengthen over the coming months, we think the central bank will cut …
Currencies from the rest of Asia have fallen back sharply following today’s drop in the renminbi to below 7.0 against the US dollar, and are likely to weaken further over the coming months. While weaker currencies are unlikely to stop central banks from …
5th August 2019
Growth to remain weaker than the official figures show GDP growth in Indonesia has been suspiciously stable at around 5% over the past five years, and it was no surprise that it recorded another quarter of growth at close to this rate in the second …
Japan’s decision to remove Korea from its list of trusted trading partners looks set to cause significant short-term disruption to Korea’s economy, and is likely to prompt the Bank of Korea (BoK) to cut interest rates sooner than we had previously …
2nd August 2019
Mixed Q2 GDP figures, signs of export revival Second quarter GDP figures will be coming in thick and fast over the next few weeks. For the countries that have reported already, the numbers have been a mixed bag. In q/q terms, growth slowed in Hong Kong …
July PMIs give slightly better news, but still point to weakness PMI readings for Emerging Asia were slightly more positive at the start of Q3, but the big picture is that they remain low by past standards and there are few signs of a meaningful …
1st August 2019
No sign of a turnaround Korea’s trade data suggest that a meaningful recovery in the external environment remained elusive at the start to the second half of the year, with weakness in the technology sector and slowing demand from China continuing to …
Q2 unlikely to mark the start of a strong recovery GDP growth in Taiwan rebounded strongly last quarter, thanks mainly to a surprise acceleration in export growth. But with headwinds to the economy mounting, we don’t expect the recovery to last. Figures …
31st July 2019
MAS to loosen sooner rather than later The recent deterioration in the economic data from Singapore adds weight to our view that monetary policy will be loosened before the central bank’s (MAS) next scheduled meeting in mid-October. The advanced Q2 GDP …
26th July 2019
Growth unlikely to carry on climbing after Q2’s rebound The strength of growth in Q2 more than offset the contraction in Q1, but with the economy still likely to face large external headwinds in the second half of this year, a sustained upturn is …
25th July 2019
The jump in the headline rate of inflation in Malaysia last month to 1.5% y/y from 0.2% in May, is unlikely to trouble the central bank (BNM). The rise was due to the effects of the elimination of the Goods and Services Tax (GST) in June 2018 dropping out …
24th July 2019
Plans for further big minimum wage hike scrapped President Moon was elected in 2017 on a pledge to raise household incomes and reduce inequality. The cornerstone of his strategy was to raise the hourly minimum wage to 10,000 won (US$8.50) by 2020, which …
19th July 2019
Bank Indonesia (BI) today cut its benchmark interest rate from 6.0% to 5.75% and hinted that further easing is on the horizon. But the uncertain outlook for the currency means that this is unlikely to be the beginning of a prolonged easing cycle. Today’s …
18th July 2019
The Bank of Korea (BoK) today cut interest rates by 25bp to 1.50% and signalled that further easing is on the way. Given the poor outlook for growth and the change in sentiment by the central bank, we now think interest rates will be cut a further two …
Early indicators suggest that GDP growth slowed sharply across Emerging Asia in the second quarter. Although most countries should stage a gradual recovery over the coming year, growth is likely to remain much weaker than the consensus and the IMF expect. …
17th July 2019
Pakistan’s central bank (SBP) today raised its benchmark interest rates by a further 100bp amid continued concerns about high inflation and the country’s current account deficit. With inflation set to rise further over the coming months and the external …
16th July 2019
How will policymakers respond to a strong baht? Policymakers and exporters in Thailand are once again voicing concern about the strength of the baht, which has appreciated by over 5% against the US dollar since January and is up by just under 9% against …
12th July 2019
Slowest growth in a decade The advanced estimate of Singapore’s GDP suggest the economy performed very poorly last quarter. Although the economy should start to pick up a little over the coming quarters, helped by looser fiscal and monetary policy, growth …
Overview – We expect economic growth across Emerging Asia to remain weak this year, with many countries set to grow at their slowest pace in a decade. China’s economy has stabilised in recent months thanks in large part to a resilient property sector. But …
11th July 2019
Bank Negara Malaysia’s (BNM) left interest rates unchanged at 3.0% today, but kept the door open to further easing. With growth set to slow in the second half of the year, we think the central bank will cut interest rates again soon. Today’s decision came …
9th July 2019
Korea-Japan spat – should we be concerned? The restrictions that Japan has announced on the sale of certain technology products to Korea could, if fully implemented, have a significant effect on Korea’s economy. However, past experience suggests that it …
5th July 2019
Renewed drop in inflation to continue The renewed drop in inflation in June is likely to continue as the headline rate is dragged down by falling food and fuel price inflation, providing a green light for the central bank to cut rates in August. Today’s …
The policy tightening and structural reforms that Pakistan has agreed to as the price of a deal with the IMF are likely to lead to a sharp slowdown in economic growth in the near-term but should also help to put the economy on a more secure footing. The …
4th July 2019
June data point to a weak end to Q2 Very weak trade data for Korea and the fall in the manufacturing PMIs in June suggest that economic conditions deteriorated at the end of last quarter. After a weak Q1, GDP growth looks unlikely to have improved much, …
1st July 2019
Vietnam in Trump’s crosshairs Vietnam has emerged as the biggest winner of the US-China trade war. Vietnam’s exports to the US have shot up by around 50% since the middle of last year as US demand has shifted away from China towards alternative suppliers. …
28th June 2019
Strong exports supporting growth Vietnam’s economy grew strongly in the second quarter of the year and the economy is likely to perform well over the coming year, helped by booming exports to the US. We have reservations about the reliability of Vietnam’s …
A rebound in government spending is likely to provide a boost to GDP growth in the Philippines over the next few quarters. Fiscal data published earlier this week from the Bureau of the Treasury show that government spending is starting to recover. In May …
27th June 2019
The trade war between the US and China so far appears to have had a small negative impact on most of the region, although some countries, most notably Vietnam, look to be benefiting as US demand has shifted away from China towards alternative …
26th June 2019
The Bank of Thailand (BoT) left interest rates unchanged today and gave little hint that it was preparing to follow other central banks in the region by loosening monetary policy. We expect interest rates to be left unchanged at 1.75% throughout 2019. …
