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Bank Negara Malaysia (BNM) left its policy rate unchanged at 3% today, as expected. There have been signs of a slowdown in the economy in early 2012, and low inflation gives BNM room to cut. We still expect BNM to loosen policy later in the year as the …
11th May 2012
The Bank of Korea (BoK) kept its policy rate at 3.25% today, as expected. Given that inflation is in retreat and concerns for the global economy are on the rise, we think the BoK’s stance will soon shift towards supporting growth. The upshot is that, in …
10th May 2012
Australia’s government retained its target of returning to a small budget surplus in 2012-13 in today’s federal budget. Solid economic growth and public spending restraint should help the government to achieve its goal. There is scope for the government …
8th May 2012
Indonesia recorded another quarter of strong economic growth in Q1, with the economy slowing only slightly compared with the previous quarter. Even after allowing for the likelihood of weak global growth, we still expect Indonesia's economy to expand 6% …
7th May 2012
Recent developments in Latin America have raised concerns in some quarters that the region could be set for another wave of nationalisations. The level of protection offered to foreign investors is generally better in Asia than in Latin America, but …
The Bank of Thailand (BoT) kept its policy rate at 3.0% today, as was widely expected. The economy looks to have grown strongly in Q1, following floods that brought a slump in GDP late last year. Domestic demand should strengthen further, but below-trend …
2nd May 2012
April PMIs for Asia were generally disappointing, and in Australia in particular the index was outright alarming. The weak numbers reinforce our belief that the region’s industrial sector is set for a bumpy ride this year. … April PMIs suggest Asia’s …
The Malaysian government used Labour Day to announce the introduction of the country’s first minimum wage. The policy should help to reduce poverty, but it will also squeeze businesses’ profit margins and put upward pressure on inflation. … What is the …
1st May 2012
The Reserve Bank of Australia (RBA) cut its cash rate by a larger-than-expected 50bp to 3.75% today. We continue to expect conditions outside of the resources sector to be sluggish, as the currency remains high, fiscal policy is being tightened and the …
Emerging Asia’s economies fared better in Q1 than Q4. Both Singapore and Taiwan returned to quarterly growth, while Korea’s economy grew at a faster q/q rate. Business and consumer surveys show an improvement in confidence, which bodes well for this …
30th April 2012
After a large devaluation early last year, the Vietnamese dong has been stable against the US dollar for the past 15 months. The fall in the trade deficit and easing inflation mean the currency is under less downward pressure. We believe the dong peg will …
Taiwan’s economy returned to growth in Q1, after two consecutive quarters of falling output at the end of last year. Nevertheless, growth remained lacklustre and given the economy’s export dependence, weakness overseas could easily derail the recovery. …
The past 15 years has seen a surge in the number of mainland Chinese travelling overseas. Although Chinese tourists are becoming increasingly adventurous and travelling further afield, the vast majority of overseas trips are to other countries in Asia, …
Today’s GDP data from Korea show that quarterly growth picked up in Q1. Nonetheless, the economy has expanded at a sub-trend pace over the past year and growth is unlikely to pick up strongly amid soft global demand. Consensus forecasts for 2013 in …
26th April 2012
Singapore’s economy is showing early signs of overheating. A global downturn would have a cooling effect, but tighter macroprudential controls could be needed. … Is Singapore …
23rd April 2012
Ties between India and Pakistan have warmed in recent months, raising hopes of a normalisation of trade relations. While this would have the potential to boost bilateral trade, we have doubts over how big the actual effect would be. Not only would a …
Asia is well placed to withstand the impact of any major shocks to the global economy. The health of economic fundamentals and policymakers’ room for stimulus should enable the region to grow by just below trend this year, even though global growth looks …
19th April 2012
The Philippines central bank (BSP) left its main policy rate on hold today at 4.0%, as expected. However, with inflationary pressures likely to remain moderate and global growth set to disappoint this year, we expect another rate cut before the end of the …
Growth has weakened significantly in both Vietnam and India over the past 12 months. In the next couple of years, neither economy looks like recapturing the impressive growth rates that were recorded before the global financial crisis. … India and …
18th April 2012
The Reserve Bank of India cut its key policy rate by 50bp today in response to slower growth and a fall in underlying inflation. We suspect it will deliver a further 50bp of rate cuts by year-end as it shifts its emphasis towards supporting growth and as …
17th April 2012
While the world’s eyes were fixed on the North Korean rocket launch, last week’s election in the South brought into focus some of the challenges its policymakers face, in addition to dealing with their neighbour. … Challenges for South …
16th April 2012
The Monetary Authority of Singapore (MAS) unexpectedly tightened its policy stance today. The move was partly in response to Q1 GDP figures, also released today, which showed that the economy returned to strong growth. However, we believe the global …
13th April 2012
Having cut rates by a cumulative 100bp since October, Bank Indonesia (BI) left its main policy rate on hold at a record low level for the second consecutive month today, as widely expected. Although fuel price hikes now look unlikely, inflation still …
12th April 2012
The State Bank of Vietnam (SBV) today announced that it would be cutting interest rates by a further 100bp on Wednesday. The cut in interest rates, the second in as many months, comes amid recent falls in inflation and a sharp slowdown in economic growth …
10th April 2012
The recent increase in oil prices is putting the budgets of countries that operate fuel subsidy regimes under strain. Nevertheless, any meaningful reform of subsidy programmes across Asia looks unlikely. … Asia’s costly fuel subsidies to remain in …
9th April 2012
After decades as an international pariah, Burma is catching the eye of investors. Recent market-friendly reforms, an abundance of natural resources, and proximity to China and India are some of the country’s big attractions. However, Burma faces …
Events over the past year have taken the shine off India’s economy as the growth rate has slowed, reform efforts have been blocked and slow and opaque decision-making has undermined investor confidence. Unfortunately, this is unlikely to change before the …
4th April 2012
In the event of a hard landing in China, Australia would suffer a sharp fall in exports to its biggest trading partner. Global commodity prices would tumble given China’s importance for commodity markets, which would risk stunting Australia’s investment …
3rd April 2012
March PMIs for Asia suggested that a pick-up in trade is giving a boost to the region’s manufacturers. However, problems in the euro zone mean that the improvement could be short-lived. … March PMIs point to continued manufacturing …
Indonesia’s stock market and currency have been among the worst performing assets in Asia so far this year. The poor performance reflects worries over proposed cuts to fuel subsidies, which will increase inflation, renewed unease over corruption and …
2nd April 2012
As China develops, its manufacturing firms are moving into higher-value sectors. While this is a boon for low-wage Asian economies that represent a good alternative for low-end producers, manufacturers in middle-income countries will face sterner …
29th March 2012
After years of strong growth, China’s textile and apparel exports are now losing market share abroad. Indeed, high and rising labour costs in China mean the migration of low-end manufacturing out of China is likely to continue. Vietnam looks set to be the …
28th March 2012
GDP in Vietnam grew by just 4.0% y/y in the first quarter of 2012 – the weakest rate of expansion since the first quarter of 2009. The economy faces a difficult year in 2012 due to a combination of high inflation, problems in the banking sector, and …
26th March 2012
Australia stands out as one of the economies in Asia that might be most vulnerable to a renewed global banking crisis. Its high external debt and current account deficit make it reliant on foreign funding. However, the strength of the banks that undertake …
The pick-up in oil prices in recent weeks has caused some to fear that inflation in Asia will soon rise sharply. These fears are over-blown. Even if oil prices stayed at current levels, inflation would continue to ease across the region. … High oil prices …
Today’s GDP data show that New Zealand’s economy grew at a sluggish pace in Q4. Growth is likely to be weak in the near term as the temporary boost from the Rugby World Cup unwinds, but post-earthquake rebuilding should support the economy later this …
22nd March 2012
The Bank of Thailand (BoT) kept its policy rate at 3.0% today, as expected. The speed of the local recovery from last year’s floods and global developments will determine monetary policy decisions in coming months. We expect domestic demand to strengthen …
21st March 2012
Growth in emerging Asia looks to have picked up in Q1. Strength in the US is helping to offset weakness in Europe for Asia’s exporters. There are encouraging signs of domestic demand improving early in 2012, even in many of Asia’s most trade-reliant …
20th March 2012
The recent run of improved data from the US has led us to raise our US GDP growth forecasts for 2012 and 2013. But we believe that improved prospects for the US will make little difference to emerging Asia. Global growth is still likely to be below trend …
19th March 2012
The Indian budget for 2012/13, presented to parliament today, incorporates some significant tax hikes and should be viewed positively by the markets and the central bank. The main concern, though, is that it does nothing to tackle subsidy costs. … India …
16th March 2012
The Reserve Bank of India (RBI) left its repo rate unchanged at today’s meeting and took a hawkish tone in its policy statement. Given that measures of activity have picked up recently and inflation is set to fall only gradually in the coming months, we …
15th March 2012
The central bank of Sri Lanka (CBSL) left its repurchase rate on hold at 7.5% today. With the central bank still assessing the impact of a number of major policy changes introduced last month, the decision was expected by all seven analysts in the …
14th March 2012
Asia was hit by several natural disasters in 2011, most notably the tsunami that struck Japan in mid- March. These events were foremost human tragedies, but they also had an economic impact. While Thailand’s economy was worst affected, it is already on …
12th March 2012
After a dismal year for fiscal policy, India’s Finance Minister Pranab Mukherjee will try to reestablish his credentials for sound fiscal management when he presents the budget to parliament on Friday 16th. But we fear that the budget will be longer on …
Bank Negara Malaysia (BNM) held its policy rate at 3% today, as was expected. Inflation has eased in the last four months, but a general improvement in economic data both at home and abroad has reduced the urgency for rate cuts. We still expect BNM to …
9th March 2012
The Bank of Korea (BoK) kept its policy rate at 3.25% today, as expected. The central bank is weighing downside risks to growth against the threat of higher oil prices pushing up inflation. Our view is that Korea’s growth will be sluggish this year and …
8th March 2012
Having cut interest rates by a cumulative 100bp over the past six months, Bank Indonesia (BI) left rates on hold today, as expected. With upcoming cuts to fuel price subsidies likely to push inflation to around 7% y/y by end-2012, we now believe BI’s …
Today’s GDP data show that Australia’s economy grew by less than expected in Q4. Nonetheless, Australia outpaced the US, euro-zone and UK over 2011 as a whole. While we expect the global economy to falter later this year, there is plenty of scope for …
7th March 2012
The State Bank of Vietnam (SBV) today announced that it would be reducing its key policy rate “over the next few days”. The cut comes after sharp falls in inflation over the past six months and is designed to boost both the slowing economy, and a …
6th March 2012
The trend in Asia has been towards loosening policy recently. However, signs of stronger global growth and the pick-up in oil prices are likely to persuade central banks across the region to keep their interest rates on hold this week. We expect the …
5th March 2012
