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The Reserve Bank of New Zealand (RBNZ) kept its policy rate at 3.5% today for the second meeting in a row. Subdued inflation, slowing growth and the strength of the New Zealand dollar all suggest that it will be a while before the central bank resumes its …
30th October 2014
Economic growth in Emerging Asia is showing no sign of improvement. Our GDP tracker is pointing to growth of around 4.5% in the third quarter, which is roughly unchanged from the previous quarter and around two percentage points slower than in the period …
28th October 2014
Declines in commodity prices have helped push down inflation across Emerging Asia in recent months. We expect inflation to remain low over the next year, which will leave room for central banks to keep monetary policy relatively loose. … Falling …
24th October 2014
GDP growth in Korea picked up in the third quarter, thanks mainly to improving domestic demand. Looking ahead, we think the economy should gather more momentum in the coming quarters helped by a combination of low interest rates and stronger export …
The decision to leave interest rates in the Philippines on hold at 4.0% today reflects a recent easing of inflationary pressures. Nevertheless, with credit still growing at an unsustainable pace and inflation above target, we think the central bank (BSP) …
23rd October 2014
Indian consumer price inflation fell to its slowest pace on record in September. With the latest data also pointing to continued weakness in the industrial sector, we remain of the view that interest rates are likely to be cut a lot earlier than most seem …
20th October 2014
Joko Widodo , the outgoing mayor of Jakarta, who takes over as Indonesia’s president on Monday, is seen by some as the man to turn the country’s fortunes around. But while he has attracted plenty of plaudits for his clean style of government, he is …
17th October 2014
Today’s 25 basis point interest rate cut by the Bank of Korea (BoK) takes the main policy rate back to the all-time low last seen during the global financial crisis. But with growth set to accelerate in the coming quarters on the back of faster government …
15th October 2014
Today’s GDP data showed that Singapore's economy recorded a small expansion in Q3, as manufacturing output stabilised. As long as the recovery in the global economy does not falter, Singapore's growth should pick up over coming quarters. Meanwhile, the …
14th October 2014
13th October 2014
Malaysia's 2015 budget contained no major surprises and marked another step towards fiscal consolidation following fuel subsidy cuts earlier in the month. While the net impact of the Goods and Services Tax (GST) may be fairly neutral in the early years of …
In this Weekly we look at how our GDP forecasts differ from consensus and those recently released by the IMF. In most countries our 2015 growth forecasts are not far out of line, but there are four key economies, Indonesia, India, Thailand and …
10th October 2014
A fall in employment in September, along with revisions to previous months, has left Australia's labour market looking weak, undermining hopes that stronger consumer spending can help compensate for the end of the mining investment boom. … Australia's …
9th October 2014
Most economies in Emerging Asia are likely to see growth accelerate gradually over the next year, helped by a combination of stronger demand from advanced economies and relatively loose monetary policy. The main exception is China, where the authorities …
8th October 2014
Today’s decision by Bank Indonesia (BI) to leave interest rates on hold despite the slowing economy reflects continued unease over the size of the current account deficit. With the deficit likely to fall back only gradually over the next couple of years, …
7th October 2014
The Reserve Bank of Australia (RBA) kept its main policy rate on hold at 2.50% today, and again signalled that it is not planning any change in monetary policy in the near-term. Although most analysts think interest rates will be hiked in 2015, we expect …
The Monetary Authority of Singapore (MAS) is expected to keep its exchange rate policy on hold at its upcoming bi-annual policy meeting. In any case, the most important changes to monetary conditions in Singapore will be determined not by the MAS, but by …
3rd October 2014
The September PMIs for Emerging Asia were generally disappointing. With new orders also lacklustre, the manufacturing recovery is likely to remain uneven and slow-going. … Manufacturing recovery losing …
1st October 2014
The Reserve Bank of India (RBI) left its policy rates on hold today but, given the weakness of recent activity data and the fact that inflation has fallen below the central bank’s near-term target, we think that modest policy loosening will come onto the …
30th September 2014
Asia’s financial markets performed poorly in September, largely reflecting concerns about the outlook for US monetary policy. The New Zealand and Australian dollars were the worst performers, but Indonesia’s vulnerabilities have also been dragged back …
Lower oil prices should provide a boost to the economies of Emerging Asia. However, some countries are likely to benefit more than others. Indonesia and Thailand stand to gain the most, while Malaysia, which is the region’s only net oil exporter, will be …
26th September 2014
Today’s GDP data show that Vietnam’s economy is showing gradual signs of a recovery from the financial crisis that erupted more than three years ago. Looking ahead, the government is making some progress in cleaning up the banks, but more resources are …
Malaysia’s government finances have traditionally stood out as a potential threat to its economic stability, but there have been notable improvements in recent years. The 2015 budget is expected to continue on the path of fiscal reform, but is unlikely to …
24th September 2014
Sizeable falls in a number of Asian currencies against the US dollar over the past month have rekindled unwelcome memories of last summer’s “Taper Tantrum”. As was the case during last year’s sell-off, the Indonesian rupiah, has been one of the hardest …
23rd September 2014
Following last week's strong GDP figures, the central bank of Sri Lanka (CBSL) kept its deposit and lending rates on hold at 6.5% and 8.0%, respectively, today. But with credit growth staying sluggish, the CBSL moved to limit access to its deposit …
We have been arguing for some time that Emerging Asia’s credit binge is unsustainable, and that credit growth will need to slow for a crisis to be avoided. While there are encouraging signs that credit is starting to slow in some economies, notably China …
19th September 2014
Although the Malaysian central bank (BNM) kept its policy rate on hold at 3.25% today, we continue to see scope for at least another 25bp hike in the coming quarters. … Rate pause in Malaysia likely to prove …
18th September 2014
New Zealand’s economy slowed in Q2, but that wasn't necessarily a bad thing after several quarters of breakneck growth. Indeed, the central bank has tightened monetary policy over the last year in an effort to prevent the economy from overheating. Even …
With the economy showing signs of the improvement, the Bank of Thailand (BoT) unsurprisingly held its policy rate at 2.0% at its meeting today. Nonetheless, the economy is still some way away from full health and the BoT is unlikely to be comfortable with …
17th September 2014
Sri Lanka's economy continued to impress in the first half of 2014, and looks set to remain one of Asia's fastest growing economies. … Sri Lanka to remain one of Asia's star …
16th September 2014
Weak Chinese demand for exports from Emerging Asia in recent months has led some commentators to worry that China’s move up the value chain is having unwelcome knock-on effects for the rest of the region. But this isn’t a new development, and it doesn’t …
Today’s industrial production data for India have dampened hopes that the sector is on the cusp of a sustained recovery. But the good news is that inflation has also slowed, which could open up the possibility of interest rate cuts in order to support the …
12th September 2014
Data released last week showed that Australia added more jobs in August than in any other month on record. But the jump does not change the broader picture of labour market weakness, and it does not mean that Australia’s economy is over the worst of its …
Interest rates in Korea, which were left on hold today, are likely to rise from next year as economic growth picks up. However, with inflation likely to remain fairly subdued, the pace of tightening looks set to be fairly gradual. … Bank of Korea set to …
Despite recent sharp falls in inflation and worries about the slowing economy, Bank Indonesia (BI) today left interest rates on hold amid concerns about the current account position. We expect interest rates will remain on hold until at least the end of …
11th September 2014
The central bank in the Philippines (BSP) today hiked two key policy rates against a backdrop of increasing risks in the financial sector and rising inflationary pressures. We expect to see further tightening before the end of the year. … Further …
The Reserve Bank of New Zealand (RBNZ) kept its policy rate at 3.5% at its meeting today, pausing a hiking cycle that began in March. The RBNZ will wait to see the effects of previous hikes, but we still see scope for another rate increase in early 2015. …
Thailand's economy is showing signs of improvement going into the second half of 2014 amid reduced political uncertainty. However, it continues to face headwinds that will restrain the pace of its recovery. … Thailand's recovery will be …
10th September 2014
There are signs property prices are coming off the boil in Hong Kong, Taiwan and Singapore. That said, prices in these three economies still look significantly overvalued, and a slump in prices remains one of the key risks facing these economies over the …
5th September 2014
Australia’s economy slowed sharply in Q2, as the surge in net exports at the start of the year gave way to a sharp fall. The more general picture is one of an economy struggling to adjust to a slowdown in mining investment. We think growth is likely to …
3rd September 2014
The Reserve Bank of Australia (RBA) kept its policy rate on hold at 2.5% at its meeting today, as widely expected. With recent data weak, most analysts have reined in their expectations for policy tightening but the consensus is still that the RBA will …
2nd September 2014
While the region's manufacturing sector recovery remains intact, the August PMIs for Emerging Asia are a reminder that a strong and sustainable pick-up is still some way away. … Manufacturing recovery intact, but headwinds …
1st September 2014
Emerging Asia's GDP data for the second quarter proved to be a mixed bag, with most economies in South East Asia picking up, but the Newly Industrialised Economies having some problems. We expect some improvement over the coming quarters, as global demand …
Today’s Q2 GDP data for India, which show that the economy grew at its fastest pace since Q1 2012, come as welcome news. But we suspect that this might be as good as it gets for some time. Both fiscal and monetary policy look set to remain tight, while …
29th August 2014
Most of Asia’s stock markets and currencies strengthened in August. The key exception is Pakistan, where political uncertainty has returned to the fore. … Asian financial markets higher, but political risks weigh on …
28th August 2014
GDP growth in the Philippines accelerated in the second quarter of the year, due to a strong contribution from net exports. Looking ahead, prospects for both exports and domestic demand look healthy, and we expect the economy to gain more momentum in the …
The region's exporters are still struggling. Although exports from Emerging Asia as a whole expanded at their fastest pace all year in June, this was mostly due to a recovery in China's exports, which have been distorted by over-invoicing in early 2013. …
27th August 2014
India’s Prime Minister Narendra Modi is approaching the end of his first hundred days in office on 3rd September with a worrying sense of drift rather than direction. Hopes that he would make a concerted early push on economic policy reform have been …
22nd August 2014
The trend over the past year in most of Emerging Asia has been towards bigger current account surpluses or smaller deficits. This should make their currencies less vulnerable to any negative shifts in investor sentiment when the Fed eventually starts to …
21st August 2014
Thailand's economic performance improved in the second quarter, following the military coup in late May that has helped calm political unrest and boosted confidence in the economy. Growth is set to pick up further in the coming quarters, but it will take …
18th August 2014
