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In a bid to revive investment, the State Bank of Pakistan (SBP) cut its policy rate for the second successive meeting on Friday. The SBP is likely to loosen monetary policy further, even at the risk of stoking already-high inflationary pressures. … …
8th October 2012
The Reserve Bank of Australia (RBA) cut its policy rate by 25bp to 3.25% today. We think this will mark the end of its loosening cycle, with rates set to remain on hold until late 2013. … Australia finished cutting …
2nd October 2012
Rapid economic growth, coupled with strong credit expansion and a worsening current account have led to fears among some commentators that Indonesia’s economy is overheating, and that the central bank will be forced to hike rates soon. We disagree. … Is …
1st October 2012
The September PMIs signal that manufacturing remains weak in Asia. We think that global growth will continue to struggle over the coming year or so and that, against this backdrop, manufacturing output in Asia is unlikely to rebound strongly anytime soon. …
If implemented, the recommendations of the Kelkar Commission would put India’s public finances on a far more stable footing. However, the government is unlikely to be able to adopt them in full. … India's latest fiscal plan likely to be only partly …
Last year we identified Hong Kong, Vietnam, Singapore and Taiwan as places where property markets were showing signs of overheating. This Weekly examines how property prices in the region have fared since then. … Property prices in Asia - an …
India‘s current account deficit fell in the second quarter of the year, but only slightly. The deficit remains high and India is still dependent on fragile portfolio investment. In these circumstances, any deterioration in investor risk appetite is likely …
28th September 2012
Vietnam looks on course to report its weakest pace of full-year growth in over a decade after figures released today showed the economy is continuing to struggle. Problems in the banking sector, which are the main reason for the poor performance, will …
27th September 2012
A third round of quantitative easing in the US and policy actions in other major economies have boosted risk appetite and lifted equities in Asia. But the region’s equity markets are still on course to underperform developed market equities for a second …
21st September 2012
Today’s GDP data show that New Zealand’s economy lost momentum in Q2, as was expected after a strong start to the year. We expect growth to settle at close to its trend rate over the coming quarters. We still have a rate cut pencilled in over the next few …
20th September 2012
Economic data in Asia have continued to be soft, mainly due to weakness in exports. Asset prices across the region have nonetheless been boosted by policy actions in the US and other major economies, which have lifted global risk appetite. The MSCI …
19th September 2012
Friday’s decision to liberalise foreign investment goes some way to dispel the impression of policy paralysis in Delhi. However, implementation of these reforms will be slow, and further measures are needed. What’s more, fears over inflation will limit …
17th September 2012
High-profile arrests related to one of Vietnam’s biggest banks have brought problems in the country’s banking sector to the fore. This week’s lead article considers three scenarios for how Vietnam’s policymakers might respond, along with the implications …
Today’s announcement that inflation rose to 7.6% in August eliminates any residual chance that India’s central bank will cut rates on Monday. Indeed, we now expect monetary policy to remain on hold until next year. … Jump in Indian inflation pushes back …
14th September 2012
The newly appointed Finance Minister has promised to get the public finances onto a more stable footing. But he has been slow to act and in the mean time the deficit has continued to widen. … Still waiting for budget reforms in …
13th September 2012
The Bank of Korea (BoK) unexpectedly held its policy rate at 3% today. Nevertheless, we still believe that global growth will continue to disappoint and that more policy stimulus will be needed to support Korea’s economy. The upshot is that we have …
The Reserve Bank of New Zealand (RBNZ) kept its policy rate at 2.5% today, as was widely anticipated. Most analysts expect the Bank to embark on significant policy tightening next year. In contrast, we still expect the cash rate to be cut in the next few …
Headline inflation rates across emerging Asia, which had been trending lower this year, look set to pick up in coming months. Nonetheless, inflation in the region is unlikely to rise sharply and should not be an obstacle to further policy loosening in …
11th September 2012
All five 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 Korea do we expect a policy rate cut over the next few days, but, given our view that …
7th September 2012
Bank Negara Malaysia (BNM) kept its policy rate on hold today at 3%, as was widely expected. The economy has shaken off the global slowdown better than almost any in Asia, meaning there is little urgency for a rate cut. We expect rates to be held until …
6th September 2012
The Bank of Thailand (BoT) kept its policy rate at 3.0% today, as was widely expected. Healthy domestic demand is cushioning the blow from soft exports, but we think persistent global weakness will prompt the BoT to loosen its policy settings ahead. We …
5th September 2012
Australia’s economy slowed to close to its trend rate in the second quarter, after an unsustainable surge in mining investment drove strong growth in Q1. Although growth is likely to weaken again in the second half, Australia will remain a strong …
Demographic trends are turning much less favourable in many countries across Asia. Nevertheless, this is unlikely to be the end of the region’s growth miracle that many commentators have claimed it will be. We expect emerging Asia will continue to enjoy …
3rd September 2012
The August PMIs showed that Asia’s manufacturers are continuing to struggle. With global demand set to remain weak, we see little prospect of a strong recovery. However, policy loosening should prevent conditions from getting much worse. … Regional …
We expect global demand to stay weak in coming quarters and for labour markets and consumer confidence in Asia to soften as a result. Central banks in the region are likely to ease further, which should prevent a sharp fall in credit and economic growth. …
31st August 2012
Today’s GDP data from India show that although the y/y rate of growth increased, the economy remains very weak. India’s economic troubles are mostly self-inflicted and result from policy paralysis. Unfortunately, the situation is unlikely to improve …
The arrest last week of two well-connected businessmen has helped to highlight the worsening problems in Vietnam’s banking sector, which has seen a sharp rise in non-performing loans and a slump in credit growth. Until these problems are fixed and credit …
30th August 2012
GDP growth in the Philippines remained strong in Q2, with the pace of expansion slowing only slightly compared with Q1. Both domestic demand and exports continued to grow at a healthy pace. But with the crisis in the euro-zone set to weigh on exports, we …
Indonesia has seen a sharp deterioration of its current account position over the past year. Large inflows of foreign direct investment mean the country should have few problems sustaining the deficit over the medium term. However, the worsening current …
29th August 2012
Malaysia’s government is hoping that its Economic Transformation Programme (ETP) will take the country to high-income status by the end of this decade. Structural problems and sluggish global growth will probably cause it to miss this target, but there is …
The minutes of the US Federal Reserve’s August meeting strongly suggested that the Fed will embark on a third round of quantitative easing (QE3) in September. This week’s lead article assesses the likely impact of QE3 on equities, growth and inflation in …
24th August 2012
Over the past few weeks, Indonesia, Malaysia and Thailand all reported GDP data that were better than the consensus expected, reflecting strong domestic demand helping to offset export weakness. However, domestic demand in Asia is unlikely to stay as …
22nd August 2012
Thanks mainly to strong domestic demand, economic growth in ASEAN has held up much better than in the rest of Asia so far this year. Although weaker exports will weigh on demand in the coming quarters, ASEAN should continue to outperform the rest of Asia …
21st August 2012
Today’s Q2 GDP figures from Thailand were better than the consensus had expected. Nonetheless, we still think that growth will be sluggish over the next few quarters and that the Bank of Thailand (BoT) is likely to cut its policy rate by year-end. … …
20th August 2012
Asia’s export weakness is showing no signs of abating. Indeed, the July trade data reported so far across the region suggest that the export slowdown has deepened. … Asia’s exports make a poor start to …
17th August 2012
Efforts by policymakers in Taiwan and China to strengthen their economic ties have had a negligible impact on Taiwan’s merchandise exports to the mainland, although Taiwan has benefitted in some other ways. Further measures are likely to be announced in …
16th August 2012
Today’s GDP data show that Malaysia’s growth unexpectedly increased in Q2, with strong domestic demand more than offsetting export weakness. We are raising our 2012 growth forecast and no longer expect an interest rate cut this year. Nonetheless, a …
15th August 2012
The latest output and inflation data suggest India is now suffering from stagflation. Industrial production has stopped growing while inflation is stuck at around 7%. What’s more, there is little reason to expect an improvement on either front any time …
14th August 2012
Asia’s strong rebound from the 2008-09 global financial crisis took many by surprise. Despite the policy easing now underway in Asia, the region’s recovery from the current global crisis is unlikely to be as dramatic. … Emerging Asia set for weak recovery …
13th August 2012
The State Bank of Pakistan (SBP) cut its discount rate by 150bp to 10.5% today. Monetary policy is likely to be loosened further in an effort to revive growth, even at the risk of stoking already-high inflationary pressures. We have pencilled in another …
Ahead of last Thursday’s National Day holiday in Singapore, a music video urged patriotic citizens to “celebrate National Night by giving the country the population spurt it so desperately needs”. The tongue-in-cheek marketing campaign picked up on a …
10th August 2012
The Bank of Korea (BoK) held its policy rate at 3.0% today. Nonetheless, we believe that global growth will continue to disappoint and that more policy stimulus will be needed soon to support Korea’s economy. The upshot is that we have pencilled in a 25bp …
9th August 2012
The Reserve Bank of Australia (RBA) held its policy rate at 3.5% today. It probably won't be long until the RBA cuts again, but it is nearing the end of its loosening cycle. … Australia pauses, but one more rate cut is on the …
7th August 2012
Indonesia’s economy picked up slightly in the second quarter, despite weaker export demand. Indonesia is weathering the global slowdown well compared with other countries in the region. We expect GDP growth to average 6.0% this year and next. … Indonesia …
6th August 2012
India attracted international headlines for all the wrong reasons (again) following massive power cuts that left half of its population without electricity for two days. Power cuts are alsoa big issue in Pakistan. Unfortunately, both countries are likely …
3rd August 2012
The July PMIs showed that conditions within Asia’s manufacturing sectors are getting worse. A silver lining is that price pressures continue to ease, which should make more policymakers comfortable about introducing stimulus. … Manufacturing deteriorates …
1st August 2012
Central banks in the Philippines, Korea and Vietnam have cut their policy rates over the past month in response to the deterioration in global demand. Q2 GDP data out so far in Asia have been soft, mainly due to weakness in exports. Given our view that …
31st July 2012
Taiwan’s export-oriented economy is struggling amid the global slowdown. We expect the global backdrop to remain difficult, while local inflation should stay among the lowest in Asia. Accordingly, we think Taiwan’s policymakers will soon step up their …
While today’s decision to leave interest rates unchanged was expected, the accompanying statement is a bit more newsworthy. It makes gloomy reading. The central bank cut its growth forecast, increased its inflation forecast and gave no hint that it will …
India is less vulnerable to a failed monsoon than it was a decade ago. But, if it persists, this year’s disappointing rainfall may still have a significant negative impact on output, inflation and the budget. … What will be the effect of India’s …
30th July 2012
