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February PMIs for Asia were positive, boosting hopes that the region’s industrial sector is now on the road to recovery. However, with global growth likely to disappoint this year, any rebound in manufacturing activity is likely to be limited. … …
2nd March 2012
The Philippines central bank (BSP) cut its policy rate by a further 25bp to 4.0% today, taking the overnight rate back to the trough of the previous cycle. Lower interest rates are needed to support the economy, which has been hit by a slump in exports, …
1st March 2012
Data published today reveal a further drop in India’s GDP growth in the last quarter of 2011. Moreover investment has stalled, setting back hopes that trend growth will rise towards Chinese levels. … India’s growth rate slows, recovery likely to be …
29th February 2012
The return of global risk appetite has helped to push up asset prices across Asia. If we are correct that the crisis in the euro-zone will worsen again later this year, global risk appetite is likely to reverse. However, in the event the euro-zone …
28th February 2012
Recent oil price increases are not a big threat to emerging Asia. The inflationary impact will be small even if prices remain at current levels. Asian economies are relatively oil-dependent but their stronger fundamentals mean they can withstand high …
Falling inflation gives the State Bank of Vietnam (SBV) scope to cut interest rates to support growth. However, large cuts could end up destabilising the fragile economy. The SBV will need to be careful how it treads. … Rate cuts are coming in …
27th February 2012
Almost all countries in emerging Asia have now released their Q4 GDP figures. Growth slowed across most of the region, mainly due to weakness in external demand. The recent improvement in the US, a pick-up in Asia’s PMIs, and the easing of supply-chain …
23rd February 2012
The major impact of euro-zone break-up on emerging Asia would come from the resulting weakness of export demand. If the break-up was relatively smooth and the US continued to grow, as we think is possible, most Asian policymakers have the capacity to …
Economic growth in the final quarter of last year was disappointing for most economies in emerging Asia. Although risks to growth are generally on the downside, a closer look at Q4 GDP data suggests that the headline figures understate the true strength …
22nd February 2012
Today’s Q4 GDP data show that, due to widespread floods, Thailand’s economy suffered a bigger quarterly contraction in late-2011 than it did in either the 2008-09 global crisis or the Asian Financial Crisis of the late-1990s. Domestic demand should …
20th February 2012
Singapore’s FY2012 budget, released on Friday, focused on medium-term issues rather than providing a near-term boost for the economy. The outlook for Singapore’s export-oriented economy is not as bad as it was ahead of the 2008-09 crisis, especially in …
Malaysia’s economy grew at a slower pace in Q4 than it did in Q3, in line with the regional trend. We expect Malaysia to suffer a double hit from softer exports and lower commodity prices this year, while risks to domestic demand are also skewed to the …
15th February 2012
The provisional Q4 euro-zone GDP figures confirmed that the economy contracted at the end of last year, albeit by a bit less than had been feared. The 0.3% quarterly fall was slightly better than the consensus forecast of -0.4%, but the first decline in …
The drop in inflation to 6.6% y/y in January results primarily from base effects and falling food prices. Nevertheless, there is sufficient evidence that underlying inflationary pressure has eased for the Reserve Bank of India (RBI) to cut the repo rate …
14th February 2012
Asia’s rapid economic rebound following the 2008-09 global crisis has led to sharp falls in unemployment over the past couple of years. This has raised hopes that robust household spending will support the region’s economies in the event that global …
13th February 2012
The Bank of Korea (BoK) kept its policy rate at 3.25% today, as expected. Our view is that Korea’s policymakers are likely to shift their focus away from tackling inflation towards supporting growth this year. The upshot is that, in contrast to the view …
9th February 2012
Bank Indonesia (BI) cut its reference rate again today by 25bp. The decision was somewhat unexpected. The central bank had already cut rates by a cumulative 75bp in the final quarter of last year and there is a growing risk that inflation will rebound …
Exports from Asia have weakened significantly in recent months. Not only are they contracting in y/y terms in many countries, but they have slowed much more sharply compared with other emerging regions. Weak export demand will cause growth to slow to …
8th February 2012
The Reserve Bank of Australia (RBA) unexpectedly kept its cash rate at 4.25% today. Nonetheless, we continue to expect conditions outside of the resources sector to remain weak and, despite the recent improvement in global data, we think euro-zone …
7th February 2012
The economies of Asia and Latin America should be able to weather any financial contagion stemming from Europe’s debt crisis. But the economies of emerging Europe – notably Hungary, Turkey and the Balkan countries – look far more vulnerable to possible …
6th February 2012
Indonesia’s economy continued to grow strongly in the fourth quarter of last year. Underlining the economy’s resilience, household consumption and investment growth actually accelerated despite a slowdown in export demand. Economic growth is likely to …
Inflation has been falling across Asia, and the Q4 GDP data released so far show that growth is slowing too. For the most part, we expect these trends to continue. But Indonesia is an important exception. This week’s figures are likely to show that growth …
Purchasing Managers’ Indices (PMIs) improved for four out of the five economies in Asia (outside Japan and China) for which they were released today. This suggests that the slowdown in industrial activity has bottomed out in the region. However, weak …
1st February 2012
Bank Negara Malaysia (BNM) kept its overnight rate at 3.0% today, as was widely anticipated. Looking ahead, we think that Malaysia’s exports will struggle and that inflation is likely to fall further. Risks to domestic demand are also skewed to the …
31st January 2012
Taiwan’s economy contracted for a second successive quarter at the end of 2011 due not only to weak exports but to lacklustre domestic demand too. The central bank is soon likely to join the regional trend by starting to cut interest rates. … Taiwan …
The Philippines recorded another quarter of weak growth in Q4 due to continued weak export demand. Although the resilience of domestic demand is encouraging, sluggish global demand is likely to weigh on the economy in the coming quarters, and we expect …
30th January 2012
Most Asian currencies have risen strongly so far this year amid a recovery in global risk appetite. However, the rebound is unlikely to last long. We are of the opinion that the euro-zone will slip into recession this year, which is likely to lead to a …
Today’s Q4 GDP data from Korea show that the economy ended 2011 on a very weak note. Growth is likely to be sluggish at best over the next few quarters amid soft global demand, while Korea’s inflation should fall back into its target range this quarter. …
26th January 2012
The Reserve Bank of New Zealand (RBNZ) kept its policy rate at 2.5% today, as was widely anticipated. Most analysts expect policy to be tightened significantly over the next two years. In contrast, we still expect New Zealand’s cash rate to be unchanged …
The Bank of Thailand (BoT) lowered its policy rate by 25bp to 3.0% today, as expected. Thailand’s economy has been hit hard by floods and weak global demand is likely to limit the rebound in manufacturing and exports. The upshot is that we expect …
25th January 2012
The Reserve Bank of India (RBI) cut its cash reserve requirement today but left the repo rate on hold. The hawkish tone of the policy statement suggests that, although rate cuts are surely coming later this year, there is a growing risk that they will be …
24th January 2012
Emerging Asia’s equities have risen by more than the global average so far this year, but we do not expect the outperformance to last. Stock markets in Asia typically underperform developed markets during bad times and the coming year is likely to be …
23rd January 2012
Inflation rose sharply in 2011 as a whole relative to 2010 across the region. However, we expect below-trend growth and lower commodity prices to pull down inflation significantly this year. With price pressures likely to be low and growth set to be …
The Philippines’ central bank (BSP) cut its overnight rate by 25bp to 4.25% today, as expected. Exports have slumped and are unlikely to pick up much this year, while inflation is set to fall towards the lower end of the BSP’s target range. With this …
19th January 2012
Data released today show a big drop in headline inflation, to 7.5% y/y in December. But the key measure of core inflation fell only slightly. Consequently, the Reserve Bank of India is likely to wait until its March policy-setting meeting before cutting …
16th January 2012
The Bank of Korea (BoK) has become increasingly worried about the growth outlook, but lingering inflation concerns are dissuading the central bank from loosening policy. We believe that inflation is likely to fall faster than the BoK currently expects, …
The ongoing debt crisis in the euro-zone is likely to weigh on growth in Asia in 2012-13. Although the region’s most open economies are set to slow quite sharply, we forecast that growth in the region as a whole will ease to only a little below trend this …
12th January 2012
Bank Indonesia (BI), kept its reference rate on hold today, as expected, after cutting rates by a cumulative 75bp in the final quarter of 2011. Despite the likelihood that inflation will accelerate sharply in the second half of this year, more cuts this …
A number of important elections and leadership changes are due to take place across emerging Asia over the next 12 months. The outcomes will have implications for economic policymaking and growth across the region. … Elections in Asia - what they mean for …
9th January 2012
December PMIs for Asia paint a mixed picture. The surveys suggest manufacturing output returned to growth in Australia, while in contrast to the weakness of recent data, factory output rebounded strongly in India. However, production looks to have …
4th January 2012
India’s economy has slowed abruptly in the past few months and now faces a downturn comparable to that of 2008-09. However, a big difference is that the authorities now have much less scope for policy stimulus. … How bad is the outlook for Indian …
26th December 2011
Sri Lanka’s GDP grew strongly in the third quarter of 2011, following a rapid expansion in all of the main sectors of the economy. Rapid growth reduces the immediate urgency for interest rate cuts. But with inflation continuing to trend downwards, and …
21st December 2011
Given the lack of transparency in North Korea, it would be unwise to leap to any conclusions following news of Kim Jong-il’s death. Our best guess is that the uncomfortable status quo will continue. In the event that the North Korean regime collapses, the …
19th December 2011
In a good week for Indonesia, Fitch upgraded the country’s long-term sovereign debt rating to investment grade on Thursday and parliament passed a long-awaited land acquisition bill on Friday. Both developments reinforce our belief that Indonesia’s …
Although it left its repo rate unchanged at today’s meeting, the Reserve Bank of India (RBI) signalled that it is preparing the ground to loosen policy earlier than previously expected. We now think the first 25bp rate cut is likely to come in the first …
16th December 2011
Exports from the region have been weak due to lower demand from the West. However, domestic demand has so far remained fairly resilient across the region. Central banks in Australia and Thailand have recently cut policy rates. With inflation set to fall …
15th December 2011
The impact on emerging Asia of a fall in lending by euro-zone banks to the region would be small. However, Asia would be vulnerable if the crisis in the euro-zone caused global credit markets to freeze, particularly if this led to a re-run of the …
The government in Vietnam has moved to restructure some of the country’s banks. This comes after a surge in lending in recent years, which has contributed to a rise in bad debt. The non-performing loan (NPL) ratio could easily surpass 15%, causing major …
13th December 2011
The main cause of its weak performance has been low investment. Demographic factors should push the savings rate higher over the next decade, which should in turn support stronger investment and faster economic growth. However, the Philippines is unlikely …
12th December 2011
8th December 2011
