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Vietnam’s decision to cut interest rates today risks fuelling a further surge in credit growth, increasing the risk of a sharp rise in non-performing loans further down the line. We think the rate cut will have to be reversed over the coming years. … …
7th July 2017
The “devaluation” of the Pakistani rupee earlier in the week is a reminder of the country’s precarious balance of payments position. Pakistan will soon be forced to either let the currency fall much further, tighten monetary policy aggressively, or make …
A pick-up in exports will lift growth in Emerging Asia to a five-year high in 2017, but mounting domestic headwinds means that this is unlikely to be sustained. We expect growth to slow in 201819. Having peaked at the start of the year, inflation has …
6th July 2017
A pick-up in exports should help lift growth in Emerging Asia (excluding China and India) to a seven-year high this year, but mounting domestic headwinds mean growth is likely to slow in 2018. … Domestic problems start to …
5th July 2017
The Bank of Thailand (BoT) left interest rates on hold today and the accompanying monetary policy statement suggests the central bank is in no rush to adjust rates any time soon. We are maintaining our view that the BoT will keep interest rates unchanged …
The June PMIs for Emerging Asia suggest that the region’s manufacturing sectors remained in decent health. The pick up in the PMI readings in Taiwan and Korea – the two economies where the PMIs most closely track the hard data – is particularly …
3rd July 2017
There are more differences than similarities between the situation now and the position many Asian countries found themselves in on the eve of the Asian financial crisis 20 years ago. But there is no room for complacency. For many countries in Emerging …
30th June 2017
Asian equity markets have continued to rally, with stock markets in Taiwan, Korea, India and Indonesia all recently hitting new record highs. … Asian equities continue to …
29th June 2017
Vietnam’s economy is regaining momentum, helped by a recovery in the agriculture sector. Looking ahead, with exports likely to remain strong and private sector credit still expanding at a rapid clip, the economy should continue to recover throughout the …
One year since coming to power, President Duterte of the Philippines has not been the disaster for the economy that some feared. His wisest move has been to hand over responsibility for economic management to his respected finance minister, Carlos …
23rd June 2017
Sri Lanka’s central bank left interest rates on hold today, and the less hawkish tone of the statement suggests the central bank’s tightening cycle may be nearing an end. We are changing our forecast for this year, and now expect policy rates to rise by …
With the economy experiencing a steady recovery and inflationary pressures still very subdued, it was no surprise that Taiwan’s central bank (CBC) decided to keep its policy rate on hold today at 1.375%. The dovish tone of the CBC’s accompanying statement …
22nd June 2017
Today’s decision by the central bank in the Philippines (BSP) to keep its main policy rate on hold at 3.0% was widely expected. But while the consensus among analysts is that the BSP will hike rates twice this year, we continue to think that rates will be …
The recent acceleration in credit growth in the Philippines is unlikely to lead the central bank (BSP) to hike interest rates at its meeting on Thursday. However, it could prompt the BSP to introduce more measures to clamp down on lending to the property …
16th June 2017
Despite the poor growth outlook, Bank Indonesia left its policy rate on hold today at 4.75%. With inflation set to remain elevated over the coming months, the central bank is likely to be in little hurry to cut interest rates any further. … Inflation and …
15th June 2017
GDP growth in Sri Lanka slowed last quarter according to the official figures, and is likely to remain weak throughout 2017 as fiscal and monetary policy are tightened. … Sri Lanka GDP …
The US Fed looks almost certain to raise interest rates at its meeting later today. For most of Emerging Asia, higher rates in the US do not pose a major threat, even if the US Fed ends up hiking rates more aggressively than is generally expected over the …
14th June 2017
Many of the risks facing Emerging Asia’s economies have receded in recent months. The key exception is the continued rapid build-up of debt in China. A bursting of China’s credit bubble would have serious implications for the rest of the region. … China …
9th June 2017
The fall in Philippines inflation from 3.4% y/y in April to 3.1% y/y in May adds weight to our view that it is now past its peak. The modest decline was a touch lower than our forecast of 3.2% (Bloomberg consensus: 3.3%). … Philippines and Taiwan Consumer …
6th June 2017
South Korea’s new government today announced plans for a supplementary budget worth 11.2trn won (0.7% of GDP). But with parliament approval by no means guaranteed, we are not raising our growth forecasts just yet. … What to make of Korea’s supplementary …
5th June 2017
The region’s rate cutting cycle has come to an end, but with inflation set to remain fairly subdued, interest rates are likely to remain low for some time yet. … Policy rates to remain low for longer than consensus …
2nd June 2017
Most of Emerging Asia’s manufacturing PMIs slipped in May, but we doubt this marks the start of a significant downturn in Asian manufacturing. … Manufacturing PMIs …
1st June 2017
Asian equity markets have outperformed other EM markets over the past month, with bourses in Korea, India, Pakistan and Indonesia all reaching record highs in May. We are revising our equity forecasts to reflect this recent strength. … Asian equities …
31st May 2017
We have been arguing for some time that Emerging Asia’s current credit binge is unsustainable, and that credit growth in a number of countries will need to slow for a crisis to be avoided. Encouragingly, credit growth has started to decline in Thailand …
26th May 2017
The Bank of Korea (BoK) left interest rates on hold today and the governor’s accompanying press conference makes clear the central bank is in little hurry to adjust rates anytime soon. We continue to expect the policy rate to be kept at 1.25% not just for …
25th May 2017
Today’s revised estimate of Singapore’s first quarter GDP showed that the economy fared better than previously estimated in Q1. Looking ahead, we expect healthy export demand will continue to support Singapore’s economy this year. … Singapore GDP (Q1 …
With the economy gaining momentum and price pressure benign, it was no surprise that the Bank of Thailand (BoT) left its policy rate on hold at 1.50% today. Looking ahead, we expect the BoT to keep interest rates unchanged for the rest of this year and …
24th May 2017
The decision on Friday by the rating agency, S&P, to upgrade Indonesia to investment grade rating was long overdue. At under 30% of GDP, Indonesia has one of the lowest levels of government debt in the region. Last year the government demonstrated its …
19th May 2017
Economic growth in Emerging Asia picked up again in the first quarter of the year, thanks largely to stronger export demand. The slowdown that now appears to be underway in China is unlikely to derail the recovery, and we expect growth in the rest of the …
Figures released today show that Malaysia’s economy gained strong momentum in Q1. Robust global demand, loose monetary policy and a recovery in energy prices should continue to support growth in Malaysia over the coming quarters, and we are raising our …
With inflationary pressures rising, Bank Indonesia’s (BI) decision to leave interest rates on hold today came as no surprise. The central bank’s accompanying statement struck a fairly cautious tone, supporting our view that interest rates will remain on …
18th May 2017
The Philippines recorded another quarter of solid growth in Q1 and should continue to grow reasonably strongly over the near term, supported by a decent recovery in exports and healthy domestic demand. … Philippines GDP …
The most important impact of a full-scale conflict on the Korean peninsula would be a massive loss of life. But there would also be significant economic consequences. In this Focus we discuss the consequences of a war on the Korean economy, as well as the …
17th May 2017
Figures released today show Thailand’s economy started 2017 on a solid note. We expect growth to pick up a little further in the coming quarters, helped by robust external demand, supportive fiscal and monetary policies, and the current state of relative …
15th May 2017
One of the biggest challenges facing South Korea’s newly elected president, Moon Jae-in, is the country’s dreadful demographic outlook. Although there are steps the new government could take to boost fertility rates and encourage more women into the …
12th May 2017
Despite the recent spike in inflation, it was no surprise that Malaysia’s central bank (BNM) kept its policy rate unchanged at 3.0% today. Looking ahead, we expect BNM to keep interest rates steady for the rest of 2017. … Interest rates in Malaysia to …
Today’s decision by the central bank in the Philippines (BSP) to keep its main policy rate on hold at 3.0% had been widely expected. But while the consensus among analysts is that the BSP will hike rates twice this year, we continue to think that rates …
11th May 2017
The election of Moon Jae-in as South Korea’s next president is unlikely to have a major impact on the country’s economic outlook. Moon’s Democratic Party not only lacks a majority in parliament, but his policy proposals are nowhere near bold enough to …
9th May 2017
The central bank in Sri Lanka (CBSL) today left interest rates on hold, but a combination of rapid credit growth, high inflation and a weak currency suggests further tightening is only a matter of time. … Sri Lanka holds rates, pause unlikely to …
Even without the US, the Trans-Pacific Partnership (TPP) could still provide a decent boost to the four countries from Emerging Asia included in the deal. The risk is that without the carrot of access to the large US market, countries will row back on …
5th May 2017
Indonesia recorded another quarter of disappointing growth in the first quarter of this year, with GDP expanding by 5.0% y/y. Looking ahead, with commodity prices likely to stay relatively depressed and credit growth set to remain weak, we expect GDP …
In addition to the growing geopolitical crisis on the Korean Peninsula, South Korea’s next president, who will be elected on 9 th May, will face a mounting number of economic challenges, including worsening demographics, rising household debt and growing …
4th May 2017
The April PMIs for Emerging Asia suggest that the region’s manufacturing recovery remained intact. Focusing on the two economies where the PMIs most closely track the hard data, Taiwan’s manufacturing sector remains in good health, while Korea’s is …
2nd May 2017
Chinese trade restrictions and mounting tensions with North Korea have failed to dent the rally in South Korea’s equity market, which is nearing a record high. … Korean equities reach a six-year …
28th April 2017
A combination of loose monetary policy and increased infrastructure spending related to the China Pakistan Economic Corridor (CPEC) should push up growth in Pakistan to its fastest pace in over a decade this year. But further ahead, a lack of progress on …
Taiwan’s economy slowed slightly in the first quarter of the year, but given the improving prospects for the global economy and supportive domestic monetary and fiscal policies, we expect growth to pick up in the coming quarters. … Taiwan GDP (Q1 …
Korea’s economy began 2017 on a strong note, and while we expect growth to hold up reasonably well in the near term, we doubt the Q1 outturn marks the start of a sustained recovery. … Korea GDP (Q1 …
27th April 2017
A sharp fall in the Philippines’ current account surplus is fueling fears that the economy is overheating. We think such fears are overdone. … Philippines – current account deficit no cause for …
21st April 2017
Despite the relatively poor growth outlook, Bank Indonesia (BI) left its key policy rate on hold at 4.75% today. With inflation set to rise over the coming months and the rupiah vulnerable to sudden shifts in investor risk appetite, we expect rates will …
20th April 2017
Consumer price inflation in Malaysia accelerated to a new eight-year high in March, but we see little prospect of a rate hike any time soon. … Malaysia in no rush to hike rates despite further rise in …
19th April 2017
