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Thailand’s current account has slipped from surplus into deficit in the last couple of years. We expect the deficit to stabilise over the coming year and think the chances of a balance of payments crisis are remote. But, as long as a deficit remains, …
11th October 2013
In its latest World Economic Outlook (WEO), the IMF has cut its growth forecasts for most Emerging Asian economies, bringing them more or less into line with our own. However, there are three key economies where we take strongly different views to the …
10th October 2013
The Bank of Korea’s kept interest rates on hold today amid signs that the economy is slowly improving. Looking ahead, low inflationary pressures mean the central bank will be in no hurry to tighten policy. We believe that interest rates will be kept on …
GDP growth in Emerging Asia over the next couple of years is likely to remain lacklustre by recent historical standards. The main reason for the subdued outlook is poor growth prospects in the region’s two biggest economies: China and India. The rest of …
8th October 2013
The decision by India’s central bank to cut the interest rate on its Marginal Standing Facility (MSF), which it describes as a “calibrated withdrawal of exceptional measures”, equates to a further loosening of policy. … India cuts effective policy …
7th October 2013
As improvements in technology have made it easier to trade services, some commentators are suggesting that services-led growth provides an alternative development path for emerging economies. The Philippines and India have been among the most successful …
The September PMIs for Emerging Asia show that manufacturing conditions have improved, with the headline number increasing in all six economies. Moreover, a broad-based rise in the new orders component points to a more promising outlook in the months …
1st October 2013
The Reserve Bank of Australia (RBA) kept its policy rate on hold at 2.5% today. However, we still expect further loosening over the coming months, and think that rates will remain very low in 2014. … Australia’s central bank still likely to cut …
Since the global financial crisis many economies in Asia have seen big increases in property prices. However, it is only in Hong Kong and parts of Taiwan that prices look to be in bubble territory and in danger of sharp falls. A slump in property prices …
30th September 2013
Taiwan’s central bank left interest rates on hold today amid signs of a gradual improvement in the economy. Looking ahead, with inflation set to remain subdued, the CBC has scope to keep interest rates low for some time. … No rush to hike rates in …
26th September 2013
GDP data released today show that Vietnam’s economy remains weak in the wake of a banking crisis, which has led to a credit crunch. The woes of the financial sector look set to weigh on the economy over the next couple of years, and growth is likely to …
25th September 2013
Last week’s surprise decision by the US Fed to delay tapering of its QE programme provided an immediate boost to currencies and equity markets across Asia, including those in two of the region’s most troubled economies, India and Indonesia. The Reserve …
24th September 2013
Asian currencies and equity markets have rebounded strongly over the past month. The biggest gains have been in those countries that were hardest hit by the sell-off in August. Bond yields have fallen but still remain above the level of a few months ago. …
The new governor of the Reserve Bank of India has attempted a deft trick at his first policy meeting: hiking the most closely-watched policy rate to signal his inflation fighting intentions while actually loosening monetary conditions. … India’s …
20th September 2013
New Zealand’s economy slowed in Q2, as drought hit agricultural and manufacturing production. However, there were encouraging signs of improvement in other areas of the economy, which bodes well for recovery over the coming quarters. … New Zealand set for …
19th September 2013
Thailand’s economic growth since the global financial crisis has been supported by an unsustainable surge in credit. Cooling this credit boom is essential to avoid a future crisis but, as this happens, one likely result is that GDP growth will fall well …
India’s most closely-watched inflation measure rose further in August, underlining the challenges faced by the Reserve Bank’s (RBI) new governor, Raghuram Rajan, when the economy is obviously struggling. Mr. Rajan’s first rate decision is due on Friday. …
16th September 2013
It is five years since the collapse of Lehman Brothers. Asia has been able to grow rapidly in the years since, but with monetary policy both at home and abroad likely to be less supportive in the coming years, the region is once again at a turning point. …
13th September 2013
GDP growth in Sri Lanka accelerated in y/y terms in the second quarter due mainly to a surge in construction spending. We expect the economy to continue to grow strongly for the rest of the year, helped by loose monetary policy … GDP growth to remain …
Bank Indonesia (BI) today unexpectedly hiked interest rates in response to continued weakness in the rupiah. Looking ahead, even if the currency starts to recover soon, monetary policy will still need to remain tight in order to keep a lid on inflation. …
12th September 2013
With no sign that strong economic growth is feeding through into higher consumer price inflation, the central bank in the Philippines (BSP), as expected, opted to keep interest rates unchanged today. Looking ahead, monetary policy is likely to remain …
The Bank of Korea (BoK) kept interest rates on hold today amid signs that the economy is starting to recover. Looking ahead, with inflation set to remain subdued, we think the central bank will keep rates on hold not just for the remainder of this year, …
The Reserve Bank of New Zealand (RBNZ) kept its policy rate unchanged at 2.5% today. A rate hike is likely in 2014, but tightening is unlikely to be aggressive. … New Zealand rate hike still looks some way …
11th September 2013
Current account deficits in India and Indonesia have rightly caused some concern, but elsewhere in Asia the trend towards smaller current account surpluses should be welcomed. … Falling current account surpluses are not to be …
9th September 2013
Malaysia’s central bank (BNM) kept its policy rate unchanged at 3.0% at its meeting today. We expect the BNM to keep rates on hold for the rest of the year before hiking by 25bp as it looks to reduce risks in the financial sector. … Central bank in …
5th September 2013
The new governor of India’s central bank has arrived with a package of reforms that should settle the nerves of investors. However, the government has not been playing its part, making little progress with economic reform and introducing new measures that …
Australia’s GDP growth remained slightly below trend in Q2. We expect growth to slow further over the coming quarters as the economy struggles to cope with cooling mining investment. … Australia’s mining slowdown is …
4th September 2013
The recent sell-off in Asian currencies has sparked fears that the region is about to suffer a sharp spike in inflation. We think this is unlikely. While exchange rate depreciation can push up the cost of imports, it is fluctuations in global commodity …
3rd September 2013
The Reserve Bank of Australia (RBA) kept its policy rate on hold today, as expected. However, we still expect further loosening before the end of the year, and think that rates will remain very low in 2014. … Australia likely to cut rates before the …
The August PMIs for Emerging Asia show that, outside of China, the region’s manufacturers are continuing to struggle, with the headline numbers now below 50 across the region. … August PMIs show Asian manufacturing sectors still …
2nd September 2013
Today’s GDP figures underline that India’s economy was already fragile before the recent rout of the rupee. Given the ongoing turmoil, economic conditions look likely to get worse before they get any better. … Is India’s economy heading the way of its …
Asia has borne the brunt of the EM currency sell-off this month with the Indian rupee and Indonesian rupiah the worst performers in the emerging world. The currencies of Thailand and the Philippines have struggled too. But some Asian currencies have …
29th August 2013
The extent of the latest rout in emerging market currencies has prompted comparisons with previous crises, such as that in the autumn of 2008. But we suspect some recovery may be around the corner. After all, another financial collapse is unlikely and …
GDP growth in the Philippines remained strong in Q2, helped by buoyant domestic demand. The economy is well-placed to withstand recent turmoil in financial markets. Indeed, we still expect the Philippines to be one of Asia’s top performers over the next …
Financial markets in Asia have continued to suffer this week but we continue to believe that the region will weather the storm. Vulnerabilities are highest in India. Elsewhere though, even a large pull back of foreign capital should be manageable. … How …
Recent headlines have been dominated by a sharp shift in sentiment against EM assets. Asian economies have been hit harder than most in the sell-off. However, away from the financial markets, there are signs of improvement across much of Asia. Looking …
26th August 2013
The rupee continued to slide today, breaking through 65 to the US dollar for the first time. Newspaper headlines continue to talk of a crisis. In this Update we compare the current situation with previous crises in Asia to illustrate why, although India’s …
22nd August 2013
Asian currencies and equity markets have been hit hard by the recent sell-off inemerging market assets with India and Indonesia the worst affected in the region.Bond yields have risen, but remain low by historical standards. … Emerging Asia Markets …
21st August 2013
The Bank of Thailand kept its policy rate at 2.50% today. We continue to expect the central bank to keep rates low for the rest of 2013 before gradually tightening in 2014 as growth prospects improve. … Malaysia’s 2013 growth to …
The Bank of Thailand kept its policy rate at 2.50% today. We continue to expect the central bank to keep rates low for the rest of 2013 before gradually tightening in 2014 as growth prospects improve. … Thai rates to stay unchanged in …
The slide of the rupee has triggered speculation that India is heading toward a balance of payments crisis. We do not think a crisis is on the cards, but the outlook is downbeat and fraught with risks. … Is India heading toward …
20th August 2013
Thailand’s Q2 GDP data showed continued weakness in the economy, and we do not expect much of a rebound in the second half of the year. Given the central bank’s limited scope to aggressively loosen policy, the government will feel the pressure to support …
19th August 2013
Asia’s manufacturers have had a hard time since the global financial crisis, and are currentlystruggling through yet another weak patch. However, they have actually done much betterthan their peers in other emerging regions, and are also better placed to …
Bank Indonesia’s decision to leave interest rates on hold today does not mean the end of the tightening cycle. However, with the recent spike in inflation likely to prove temporary and the economy continuing to weaken, any future tightening is likely to …
15th August 2013
Thailand's private sector credit as a share of GDP has increased significantly in recent years, raising concerns about financial stability. Even if a crisis is avoided, current credit growth rates are unsustainable and will have to slow, which will act as …
India’s latest data releases underline the challenges faced by the country and its new central bank governor. Today’s inflation data show that wholesale price inflation accelerated and consumer price inflation remains high. Meanwhile, industrial …
14th August 2013
Last week India appointed Raghuram Rajan, a former chief economist at the IMF, as the new governor of the Reserve Bank (RBI). The new governor takes over at a tricky time, with India’s economy struggling with a range of problems. This Weekly looks at the …
12th August 2013
The Bank of Korea’s (BoK) decision to keep interest rates on hold today was no great surprise given continued low inflation and recent signs of a pick-up in GDP growth. We expect to see rates on hold not just for the rest of this year, but for the whole …
8th August 2013
The Reserve Bank of Australia (RBA) cut its cash rate by 25bp to 2.5% at its meeting today. It is likely to keep rates very low over the next two years to support the economy through a mining slowdown. … Australia to keep policy loose as mining boom …
6th August 2013
For all the hype about the rise of the Asian consumer, the recent performance of consumer spending in Asia has been disappointing. The weakness is largely explained by subdued spending in the region’s richer economies dragging down the overall figures. …
5th August 2013
