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Indonesia has seen a dramatic improvement in its economic performance over the past decade, thanks mainly to rapid investment growth. The government is trying to raise the economy’s potential growth rate to 8% from around 6-6.5% at present. Achieving this …
7th January 2013
In this first Weekly of 2013, we take our usual look at the important elections that are set to take place in Asia over the coming year, assessing the implications for policymaking and the region’s economies. … Elections in 2013 – what they mean for …
The Bank of Korea (BoK) kept its policy rate at 2.75% today, as was widely expected. Korea’s economic slowdown has bottomed out, but we think growth is unlikely to rebound strongly and that inflation will remain low. The upshot is that we expect the BoK …
2nd January 2013
The December PMIs showed further signs of improvement for Asia’s manufacturers. However, conditions overall remain weak. An improvement in global sentiment should give a boost to manufacturing sectors in most countries in the coming months but a strong …
Emerging Asia will remain a bright spot in the global economy in 2013. Weak external demand from the developed world will hamper Asia’s exports, but subdued inflation will provide room for more policy rate cuts to support domestic demand. Within the …
24th December 2012
New Zealand’s economy grew at a very slow pace in Q3. Reconstruction spending should lend some support next year, but a robust pick-up is unlikely. … New Zealand still waiting on reconstruction …
20th December 2012
Taiwan’s central bank (CBC) kept its policy rate at 1.875% today, as was widely expected. The economy’s dependence on export-led growth means that the state of external demand will remain the key consideration for local policymakers. Given our downbeat …
19th December 2012
GDP growth in Sri Lanka weakened in the third quarter to its slowest pace in three years. However, the economy is likely to pick up slightly in 2013 as a result of looser monetary policy. … GDP growth to regain momentum in Sri …
Data for the past couple of months suggest that GDP growth has picked up slightly in the fourth quarter. Nevertheless, growth still remains weak by historical standards. Subdued global demand will continue to weigh on Asia next year, with most countries …
The Reserve Bank of India had already flagged that it was likely to leave rates unchanged today, at 8.0%. Of more interest was the accompanying statement which points to a rate cut in early 2013 and raises the prospect of interest rates being cut further …
18th December 2012
The nightmare scenario of the US Congress failing to reach a deal on the fiscal cliff would see growth in Asia’s most trade-dependent countries slow by up to 1 percentage point in 2013. … The US fiscal cliff: implications for …
17th December 2012
A presidential election will take place in Korea on Wednesday. Despite the political differences between the two frontrunners, their economic policies have much in common. As such, we think the election result will matter relatively little for the …
The State Bank of Pakistan (SBP) cut its discount rate by 50bp to 9.5% today. We think monetary policy is likely to be loosened further in a bid to revive private sector credit growth, although rate cuts in 2013 are unlikely to be as aggressive as this …
14th December 2012
The Bank of Korea (BoK) kept its policy rate at 2.75% today, as was widely expected. Korea’s economic slowdown has bottomed out, but we think growth is unlikely to rebound strongly and that inflation will remain low. Accordingly, we expect the BoK to cut …
13th December 2012
A combination of rapid economic growth and low bond yields has resulted in a gradual decline in India’s public debt ratio since 2003. But the debt ratio will rise again in the coming years if the government does not take steps to raise the growth rate and …
We believe today’s unexpected rate cut by the Central Bank of Sri Lanka (CBSL) is premature in light of the large external problems still facing the economy. Given the CBSL’s current dovish stance, we expect further rate cuts next year. However, the large …
12th December 2012
Vietnam’s central bank has been the most aggressive rate-cutter in Asia this year, slashing its policy rate by a cumulative 500bp to 10%. Although inflation has picked up in recent months, we think price pressures are unlikely to become a major concern …
10th December 2012
Today’s GDP data showed that Australia, unusually for a developed economy, is continuing to grow at speed. But its mining boom is nearing its peak. In the short term, this means that growth will slow. More worrying though is that the mining boom may have …
5th December 2012
The Reserve Bank of Australia (RBA) cut its cash rate by 25bp to 3.0% today. We expect the RBA to cut again in early 2013 to support the economy through a cooling of the mining boom. … Australia's central bank likely to cut …
4th December 2012
Today’s PMIs suggest that conditions within most of Asia’s manufacturing sectors either stabilised or strengthened in November. While conditions could improve further over the next few months, we think a strong and sustained recovery is unlikely in 2013. …
3rd December 2012
Most currencies in Asia look undervalued. However, it would be wrong to conclude that Asia’s currencies are set for rapid appreciation. In 2013, we think an escalation in the euro-zone crisis will dull investors’ appetite for risk, which will put downward …
It may be something of a relief that India’s third quarter GDP figures were no worse than expected. But while growth may have stabilised, we are sceptical that it will pick up in 2013. … Indian growth unlikely to pick up next …
30th November 2012
Economic growth in the Philippines accelerated in the third quarter, boosted by strong domestic demand. Exports have also proved surprisingly resilient. However, with the crisis in the euro-zone set to weigh further on exports, we expect the economy to …
28th November 2012
A combination of favourable demographics, rising investment rates and an improving business environment mean growth in ASEAN should accelerate over the next decade. In contrast, growth in the rest of Asia is likely to weaken. … ASEAN to outperform over …
26th November 2012
Q3 GDP figures out so far show that growth has held up better in South East Asia than elsewhere in the region thanks to the strength of domestic demand. Nonetheless, economic growth remains below-trend almost everywhere. Given our non-consensus view that …
20th November 2012
Thailand’s Q3 GDP figures show that the economy’s post-flood recovery has succumbed to weak global demand. We expect the global economy to continue to struggle, which in turn should prompt the Bank of Thailand (BoT) to loosen its policy settings again by …
19th November 2012
Unemployment rates across Asia remain very low, but household spending has weakened all the same in response to flat or falling wages. The apparent health of Asia’s job markets should not be a reason to expect strength in domestic demand. … Low …
Today’s GDP data show that Malaysia’s economy grew faster than expected in Q3. While Malaysia has performed well through the recent trade downturn, its economy is nonetheless set to slow next year as the global economy fails to enter a meaningful …
16th November 2012
Today’s GDP data show that Singapore's economy contracted more sharply than was previously estimated in Q3. With meaningful recovery in the global economy still some way off, we expect next year to be another sub-par one for Singapore. We retain our view …
An unexpected drop in industrial production in September, and a further fall in exports in October, underline the weakness of the Indian economy. The government continues to forecast an upturn in the coming six months, but we are sceptical. … Stagnation …
12th November 2012
The Korean won has been one of Asia’s strongest-performing currencies this year, which has prompted speculation of a shift in Korea’s exchange rate policy and worries that currency appreciation is adversely affecting local exporters. However, we think …
Bank Negara Malaysia (BNM) kept its policy rate on hold today at 3.0%, as was widely expected. The economy has performed well amid the global slowdown and so there is little need for the central bank to provide support in the near term. Nonetheless, in …
8th November 2012
Indonesia’s central bank (BI) kept its reference rate at 5.75% today, as expected. With inflation relatively low and economic growth remaining strong, we expect BI to remain on hold for the remainder of 2012 and throughout next year. … Interest rates in …
The Reserve Bank of Australia (RBA) left its cash rate at 3.25% today. Unless global conditions take a sharp turn for the worse, we now expect the RBA to remain on hold for the next year or so. We have penciled in a rate hike in late 2013. … Australian …
6th November 2012
Indonesia recorded another quarter of strong growth in Q3, with the pace of expansion down only slightly compared with the previous quarter. Weak exports will act as a drag on growth over the next year. However, as a domestically-driven economy, Indonesia …
5th November 2012
All four central banks which announce their policy rate decisions this week are likely to signal that global worries are a key downside risk for local growth. Only in Australia do we expect a rate cut over the next few days, but, given our view that hopes …
For emerging Asia as a whole, private sector credit as a share of GDP has surged over the past few years and is now at an all-time high, leading some commentators to suggest that the region could be planting the seeds of the next financial crisis. We are …
1st November 2012
Today’s PMI data for Asia showed some small signs of improvement but overall conditions within the region’s manufacturing sectors are still very weak. The likelihood that global demand will remain soft over the next year means that a strong rebound looks …
Today’s GDP data from Taiwan show that the economy returned to y/y growth in Q3. However, we think growth is unlikely to pick up strongly in the coming quarters. Given our view that the global economy will slow next year, consensus forecasts for Taiwan’s …
31st October 2012
The Reserve Bank of India (RBI) kept its key policy rate unchanged today in the face of government pressure on it to cut. With inflation likely to remain high, we suspect the RBI will continue to disappoint those hoping that significant monetary policy …
30th October 2012
Most Asian economies have either seen their current account surpluses decline or their deficits increase in recent quarters, which has raised fears that the region is vulnerable to a balance of payments crisis. We think these concerns are overdone. Asia’s …
29th October 2012
The central bank in the Philippines (BSP) cut its key policy rate by 25bp today, as expected. The benign outlook for inflation and worries over growth prospects were the main factors behind the decision. With global demand likely to remain weak, we expect …
25th October 2012
The September trade data reported so far in Asia were generally much better than the consensus had expected. Nonetheless, we think a sustained rebound in Asia’s exports is unlikely anytime soon. … Have Asia’s exports turned a …
22nd October 2012
Over the past month, central banks in South Korea, Thailand, Australia and Pakistan have all cut their policy rates. The moves come in response to continued weakness in exports, which has caused GDP growth to slow across most of the region. High food …
19th October 2012
The Bank of Thailand (BoT) cut its repo rate by 25bp to 2.75% today. We think persistent global weakness will prompt the central bank to loosen its policy settings further. … Thailand likely to loosen monetary policy …
17th October 2012
The increase in India’s headline inflation rate, to 7.8% in September, reinforces our view that the central bank is unlikely to cut interest rates again this year. … Indian inflation pushed up by diesel price …
15th October 2012
The Monetary Authority of Singapore (MAS) left its policy settings unchanged on Friday, as inflation fears outweighed concerns over growth. However, we think inflation worries will dissipate over the coming months, which should pave the way for policy …
The Bank of Korea (BoK) cut its policy rate by 25bp to 2.75% today, as expected. Growth has slowed sharply and is unlikely to rebound strongly anytime soon. With inflation set to remain low, there is scope for more policy stimulus to support growth. We …
11th October 2012
The recent burst of reforms has buoyed India’s equity and currency markets, and some further measures are possible in the coming weeks. However, the country’s fundamental outlook has not improved significantly, suggesting Indian assets are unlikely to …
Although Asia will not be immune from the continuing crisis in the euro-zone and weak global demand, healthy fundamentals and plenty of scope for policy easing mean growth should hold up relatively well over the next couple of years. Nevertheless, the …
10th October 2012
