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The prices of many agricultural commodities have risen strongly over the past couple of months, raising fears of a sharp rise in inflation across the region. However, we believe the recent spike in global food prices will be temporary and will not lead to …
27th July 2012
Today’s GDP data from Korea show that the economy grew at a sub-trend pace in the second quarter. Given that tackling inflation is no longer policymakers’ top priority, more stimulus measures are likely to be introduced soon in an effort to revive growth. …
26th July 2012
The Philippines’ central bank (BSP) today cut its policy rate by 25bp to 3.75%. With inflationary pressures set to remain low and global demand likely to disappoint this year, we expect further policy loosening before the end of the year. … Rate cut in …
Compared with other emerging regions, Asia is relatively well placed to withstand sluggish global growth. For one thing, policymakers have the ability and willingness to significantly loosen monetary and fiscal policy. Although we expect most countries to …
Political tensions have intensified in Thailand due to the government’s efforts to amend the constitution. There is a significant chance that the proposed reforms could trigger a political deadlock and economic disruption, although any fallout for local …
20th July 2012
There has been no let-up in the bad news from India. Economic activity remained very weak in the second quarter of the year while inflation is still above 7%. This combination is set to persist in the coming months, leaving room for only 50bp of rate cuts …
Asian sovereign bonds have performed well in the years since the 2008-09 global crisis, offering investors reasonable yields without excessive risk. But some may still face sell-offs if global conditions take a turn for the worse, as we think they will. … …
19th July 2012
Figures released on Friday showed that China’s economy grew by just 7.6% y/y in the second quarter, the weakest pace since the first quarter of 2009. The lead article this week examines the effect of the Chinese slowdown on the rest of the region so far. …
13th July 2012
Today’s GDP data show that Singapore's economy contracted in Q2, as manufacturers struggled. The figures back up our view that this will be a lacklustre year for the Singapore economy, and we retain our view that the central bank will loosen policy at its …
The Bank of Korea (BoK) cut its policy rate to 3% today. It was a surprise that the move came at this meeting, but we have long held the view that rates would need to be cut this year to support the economy. Indeed, with inflation subdued and conditions …
12th July 2012
Bank Indonesia (BI) today left its main policy rate unchanged at a record low of 5.75%. Although inflation is likely to rise sharply in the second half of the year, with global demand set to remain weak we expect interest rates to remain on hold for the …
The Philippines looks increasingly likely to be awarded investment grade status sometime in the next couple of years. A major improvement in the country’s fiscal position and much better macro-fundamentals mean an upgrade would be well deserved. … The …
9th July 2012
Bank Negara Malaysia (BNM) left its policy rate unchanged at 3% today. This came as no surprise. Resilient domestic demand is for now compensating for an export slowdown. Nevertheless, we still expect BNM to loosen policy later in the year as the global …
5th July 2012
The Reserve Bank of Australia (RBA) held its cash rate at 3.5% today, but the RBA's loosening cycle is still not over. Weakening external demand and recent falls in commodity prices will slow the economy during the rest of the year. We have pencilled in …
3rd July 2012
The June PMIs for Asia were disappointing. With global growth set to remain weak and the situation in the euro-zone likely to worsen, we expect conditions in Asia’s manufacturing sector to remain subdued for the rest of the year. … Latest PMIs suggest …
2nd July 2012
Monday 2nd July marks the 15-year anniversary of the start of the Asian Financial Crisis. In retrospect, the region weathered the crisis and its aftermath well. However, trend growth has slowed sharply in the four countries worst affected by the crisis. … …
29th June 2012
Economic growth in Vietnam in the second quarter of this year remained weak. Easing inflation and looser monetary policy will help, but growth will be held back by ongoing problems in the banking sector and weaker exports. Accordingly, we think Vietnam’s …
The recent collapse in oil prices will help most Asian economies, with oil-intensive Thailand and India benefiting the most. The trouble though is that oil prices are falling because the global economy is getting weaker. Given Asia’s reliance on …
27th June 2012
India’s economic troubles are mostly self-inflicted and result from policy paralysis and opposition to reforms. That is unlikely to change until the 2014 general elections at the earliest … What’s gone wrong in …
26th June 2012
Exports from Asia have been weak so far in Q2 but domestic demand has held up reasonably well. Nonetheless, we doubt that growth in Asia’s trade-dependent economies would remain so resilient if global demand were to weaken significantly further. Headline …
Sharp falls in commodity prices over recent weeks have raised questions over the sustainability of Australia’s mining investment boom. On the plus side, the struggling non-mining parts of the economy would stand to benefit if further commodity price falls …
25th June 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 global outlook will remain the key consideration for local policymakers. Given our view that the world …
21st June 2012
Today’s GDP data show that New Zealand’s economy grew at its fastest pace since 2007 in Q1. We have raised our 2012 growth forecast in response. However, the strong Q1 performance does not change our view that New Zealand’s cash rate is unlikely to be …
GDP growth in Sri Lanka weakened in the first quarter to its slowest pace in two years. Growth is likely to slow further over the rest of the year due to a combination of tight monetary policy and subdued global demand. … Growth slows in Sri Lanka, …
18th June 2012
The Reserve Bank of India (RBI) unexpectedly left its repo rate at 8.0% today. Nonetheless, we expect it to cut rates by 50bp by the end of this year as its focus is likely to shift back towards supporting growth rather than curbing inflation. … Reserve …
Despite a rise in headline inflation in May, we think the Reserve Bank of India is likely to cut the repo rate by 25bp at its rate-setting meeting on Monday. The underlying inflation rate has not risen and the central bank will want to respond to the …
14th June 2012
The Philippines central bank (BSP) today left its main policy rate on hold at 4%, as expected. Although interest rates are likely to remain on hold for the next few months, with the crisis in the euro-zone set to intensify and global demand likely to …
The Bank of Thailand (BoT) kept its policy rate at 3.0% today, as was widely expected. While Thailand’s economy bounced back strongly in Q1 from last year’s flood-induced slump, the focus has now switched to the deteriorating global outlook and rising …
13th June 2012
Our view that Asia is well-placed to withstand sluggish global growth and the crisis in the euro-zone is based on our belief that policymakers in the region have plenty of scope to cut interest rates and loosen fiscal policy. So far policymakers have been …
12th June 2012
Bank Indonesia (BI) today left its main policy rate on hold for the fourth consecutive month and we expect rates to remain at their current levels for the rest of the year. However, in contrast to the rest of the region, there is an outside chance of a …
The Bank of Korea (BoK) has become increasingly worried about the outlook for growth, but lingering inflation concerns are dissuading the central bank from loosening policy. We expect inflation to remain low in coming months and see inflation expectations …
11th June 2012
The central bank in Vietnam (SBV) today announced the fourth reduction in interest rates in as many months amid sharp falls in inflation, problems in the banking sector and weak economic growth. Further cuts are likely later this year. … Another rate cut …
8th June 2012
The Indonesian rupiah has been one of the worst performing currencies in emerging Asia so far this year. We think an intensification of the euro-zone crisis, a worsening of the trade balance, rising inflation and inconsistent policymaking will all weigh …
7th June 2012
Recent weak data from China has led to renewed fears of a hard landing in Asia’s biggest economy. The countries most exposed would be those for which China is an important export market such as Hong Kong and Singapore, as well as big commodity exporters …
6th June 2012
Australia’s economy grew far more quickly than expected in Q1. A global slowdown and a strong currency have taken its toll on exports, but the domestic economy is being bolstered by an investment boom in the mining sector that still has some way to run. …
The latest Purchasing Manager Indices suggest that Asia’s manufacturers are feeling the effects of turmoil in Europe and a slowdown in China. With the data also indicating that inflationary pressures are on the decline, the PMIs are further reason to …
4th June 2012
Following a strong start to the year, most Asian currencies and equities fell sharply in May. The main reason is that renewed concerns over the euro-zone’s future brought a return in global risk aversion, prompting outflows of capital from Asia and other …
31st May 2012
The sharp slowdown in India’s GDP growth in the first quarter means hopes for growth of 7% or more this calendar year are too optimistic. We are cutting our forecast to 6%. … India’s growth rate slows further, worse still to …
GDP growth in the Philippines rebounded strongly in the first quarter due to continued strong private consumption, a pick-up in government spending and a recovery in exports. However, with the crisis in the euro-zone likely to weigh on export demand, this …
The New Zealand dollar has been one of Asia’s worst-hit currencies since fears of a euro-zone breakup escalated. The currency has regained some ground in recent days and most analysts expect it to strengthen further over the rest of this year. In …
29th May 2012
We continue to expect central banks in Asia to cut their policy rates this year by more than the consensus anticipates. Vietnam is likely to cut most aggressively, as both growth and inflation there have fallen sharply in recent months. In most places, …
28th May 2012
India’s first quarter GDP data, due to be published on 31st May, are likely to show a further slowdown in activity compared to the last quarter of 2011. With no sign that growth is likely to pick up in the second quarter, this will only heighten concerns …
24th May 2012
Inflation in Vietnam fell in May for the ninth consecutive month, with the y/y rate dropping below 10% for the first time since late 2010. Weaker inflation should provide further support to the dong peg, and will give the central bank more room to cut …
Most of Asia reported weak GDP growth in the first quarter of this year, due mainly to weak export demand. The crisis in the euro-zone is likely to weigh heavily on Asia this year. However, the eurozone crisis is by no means the only worry for Asia. A …
23rd May 2012
Today’s GDP data show that Malaysia’s growth slowed in Q1, mainly due to weaker exports. With renewed concerns from the euro crisis weighing on global sentiment, exporters are likely to face an even harder time in the near term. The upshot is that we …
Today’s Q1 GDP data show that Thailand’s economy bounced back strongly from the flood-induced slump in Q4, as expected. Growth will inevitably slow sharply now that the easy gains have been achieved. More importantly, prospects for the rest of the year …
21st May 2012
Political deadlock in Greece has re-ignited market fears of euro-zone break-up. While Asia would not escape unscathed from turmoil associated with Greece’s departure from the currency union, the region’s healthy economic fundamentals and policymakers’ …
A rebalancing of China’s economy away from investment and towards consumption would be bad for the region’s capital goods and commodities exporters, with Korea, Indonesia and Australia likely to be worst hit. ASEAN countries, which are mostly big …
18th May 2012
We doubt that the Reserve Bank of India’s recent efforts to prop up the rupee will succeed. However, this may be a good thing, as India would benefit from a more competitive currency. … Will the Reserve Bank‘s support for the rupee …
14th May 2012
Fearing that the euro-zone crisis could lead to a sharp outflow of capital from Asia, policymakers have sought to strengthen the regional financial safety net. However, Asia is far less vulnerable to financial crisis today than ahead of the Asian …
