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After cutting interest rates by a cumulative 75bp at its last two meetings, Bank Indonesia (BI) kept its key reference rate on hold today, as expected. However, with inflation continuing to fall and global demand set to weaken further next year, more rate …
8th December 2011
We broadly agree with the consensus view that most emerging economies will hold up well in 2012. But with the US set to slow and the euro-zone heading towards break-up, the path ahead is going to be bumpy. Here are five developments that emerging market …
7th December 2011
The Reserve Bank of Australia (RBA) lowered its cash rate by 25bp to 4.25% today. We see global growth slowing to a below-trend pace in 2012, which in turn should bring more policy loosening in Australia. We have pencilled in another 25bp cut at the RBA’s …
6th December 2011
The central bank in Vietnam (SBV) is coming under pressure from the government to cut interest rates amid signs of slowing economic growth. However, with inflation at just under 20% y/y in November, we think it is too soon for rates to be cut. … Vietnam's …
5th December 2011
Most Asian currencies looked weak even before the falls of the past few months. We expect them to fall further over the coming year as the euro-zone crisis intensifies. And even when global risk appetite does recover, Asian policymakers will remain wary …
Following changes to our assumption about the timing of an EMU break-up, we have revised down our forecasts for emerging Asia’s currency and equity markets for next year. However, we see both currencies and equities rebounding strongly in 2013. … What …
2nd December 2011
Purchasing Managers’ Indices (PMIs) released today for India, Korea, Taiwan and Australia confirm that manufacturing in these countries is weak. With fears for growth rising and inflation trending lower, these data provide further reason to expect policy …
1st December 2011
The Bank of Thailand (BoT) lowered its policy rate by 25bp to 3.25% today in a bid to lift confidence and activity following recent floods. The economy is almost certain to contract in Q4 and weak global demand is likely to limit the rebound in …
30th November 2011
GDP figures released today confirm that India’s economy slowed sharply in the third quarter of this year, even before the latest drop in business surveys and exports. With tight monetary policy beginning to bite and global demand slackening, activity is …
The Philippines reported weak Q3 GDP data today on the back of a slump in exports. Growth is likely to remain sluggish in the coming quarters. The poor state of the economy means the central bank is now likely to cut its policy rate at its monetary policy …
28th November 2011
Hopes that Asia had de-coupled from the rest of the world were dashed during the 2008-09 global crisis, as domestic demand fell almost as sharply as exports. However, there are good reasons to expect domestic demand in Asia to be more resilient in the …
Although Asia as a whole is not experiencing a property price bubble, we believe that prices in Hong Kong and Taipei are now in bubble territory. There is a growing risk of a sharp correction in these two markets. … Is emerging Asia experiencing a …
25th November 2011
The fall in the rupee is mainly a result of global factors and is likely to be reversed when global sentiment improves. However, with the euro crisis set to drag on, that may be several months away. … What next for the Indian …
23rd November 2011
Thailand’s Q3 GDP data show that the economy was struggling even before the flood situation worsened in late October. With activity weak, confidence flagging and fears for the global economy intensifying, we think that Thailand’s central bank will opt to …
21st November 2011
Vietnam’s fiscal position has deteriorated in recent years. Debt levels would be even higher if contingent liabilities of the banking sector and state-owned enterprises are included. The biggest risk to the outlook is a sharp slowdown in GDP growth, which …
The goal of the Association of South East Asian Nations (ASEAN) of establishing a fully-integrated economic community by 2015, with complete free flow of goods, services and investment, is likely to remain out of reach. What’s more, we are sceptical that …
With the exception of Indonesia, Q3 GDP figures published across emerging Asia so far have been weak. Exports have been hit by low demand from the West, and growing fears for the global outlook are undermining confidence at home. Accordingly, …
17th November 2011
Wholesale price data for October, released today, suggest India’s inflation rate is still not at a turning point. Meanwhile, recent evidence shows economic activity has slowed more steeply than expected, increasing the risk that GDP growth will fall short …
14th November 2011
Concern is growing that the ongoing debt problems in the euro-zone could lead to another global financial and economic crisis. Remittances should provide a relatively stable source of income, providing some support for the region’s economies. During …
Policy rates were left unchanged in Korea and Malaysia today, but both central banks are becoming increasingly concerned about the downside risks for exports. We expect policymakers in both countries to shift their focus away from tackling inflation …
11th November 2011
Bank Indonesia (BI) unexpectedly cut its policy rate today by 50bp to 6.0%. Following a 25bp cut last month, strong third quarter GDP growth and continued rapid credit expansion, we think the central bank is loosening monetary policy too aggressively. … …
10th November 2011
Indonesia’s economy continued to grow strongly in the third quarter amid buoyant domestic demand and booming exports. Although global demand looks unlikely to remain so supportive for long, Indonesia should remain one of the best performing economies in …
7th November 2011
We have below-consensus forecasts for interest rates and GDP growth in emerging Asia next year. The main reason for the difference relates to our views on growth in the developed world and commodity prices, which we see falling more sharply than most …
Thailand’s flood situation deteriorated in early November, with water breaking through defences and flowing further into Bangkok and its surrounding provinces. Agriculture, manufacturing and tourism have all been badly affected. With …
The Reserve Bank of Australia (RBA) lowered its cash rate by 25bp to 4.5% today,moving its policy settings towards a more neutral rather than restrictive stance. We expect conditions outside of the resources sector to remain weak and see fears for the …
1st November 2011
October manufacturing PMIs for Taiwan, Singapore, Australia, Korea and India released today remained weak, and are at or around their lowest levels since the 2008-09 global financial crisis. With global demand set to disappoint next year, growth in …
Taiwan always struggles when global demand slows and the coming year will be no exception. But the relative weakness of Taiwan’s labour market is a second reason to think that GDP growth in 2012 will come in well-below most expectations. … Export weakness …
31st October 2011
Despite the deal agreed by European leaders last week, we are far from sanguine about prospects for the euro-zone and expect further turmoil in global financial markets. In the event of another financial crisis, Asia’s currencies and equities would fall …
Today’s Q3 GDP data from Korea confirm that the economy grew at a sub-trend pace in the third quarter. Growth is unlikely to pick up sharply over the next few quarters amid weak global conditions, while Korea’s inflation should fall back into its target …
28th October 2011
The Reserve Bank of New Zealand (RBNZ) kept its cash rate at 2.5% today, as was widely anticipated. Post-earthquake rebuilding over the next few years will lift local price pressures and so the RBNZ still expects to hike once external economic and …
We have cut our growth forecast for Vietnamese GDP next year to a below-consensus 5%. The cut is due to a combination of persistently high inflation, continued monetary policy tightening, mounting problems in the banking sector, and weaker export demand. …
27th October 2011
While the Reserve Bank of India’s (RBI) decision to hike its repo rate by a further 25bp today was widely expected, what is more surprising is how explicitly it signalled that this is likely to be the last hike of the cycle. In fact, we expect slower …
26th October 2011
In the event of a global financial crisis stemming from the sovereign debt problems in Europe, there will be major concerns over Indonesia’s exposure to volatile capital flows, its vulnerability to lower commodity prices and the impact on the country’s …
25th October 2011
Supply-chain disruptions and weak demand for electronics had pulled down export growth in emerging Asia even before worries about the global outlook intensified recently. But exports have fared well in several countries, particularly India, Indonesia and …
As fears mount over the outlook for the global economy and inflationary pressures continue to ease, policymakers across the region are increasingly looking to support demand. Over the past month, governments in the Philippines and Malaysia have announced …
22nd October 2011
Emerging markets are not immune from the deepening debt crisis in the developed world, but most are well-placed to deal with the fallout. China faces a difficult structural transition of its own but, along with the rest of emerging Asia, has policy …
21st October 2011
The central bank in the Philippines (BSP) left its policy rate on hold at 4.5% today, as expected. However, with inflation set to fall over the coming year, economic activity weak and fears intensifying over the global outlook, it will not be long before …
The Bank of Thailand (BoT) kept its one-day repo rate at 3.5% today, as expected. The BoT’s concerns are rightly shifting from tackling inflation to supporting growth. Most analysts predict that the policy rate will be kept on hold throughout next year. …
20th October 2011
Governments in Malaysia and the Philippines have recently announced big increases in spending to support their economies. But in the event that the developed world slips back into recession, not every country in the region will be as willing or able to …
18th October 2011
Wholesale price inflation data for India, released today, suggest the Reserve Bank of India (RBI) is likely to go ahead and raise its repo rate by a further 25bp, to 8.5%, at its next rate-setting meeting on 25th October. This is despite mounting evidence …
15th October 2011
The Monetary Authority of Singapore (MAS) loosened its policy settings today by targeting a slower pace of currency appreciation. Q3 GDP figures, also released today, show that the economy had little momentum going into the final quarter of the year. We …
The Bank of Korea (BoK) kept its base rate at 3.25% today, as expected. The BoK’s commentary suggests it still expects to resume rate increases once concerns over the outlook for the global economy abate. We think the chances of that happening are low. …
14th October 2011
Bank Indonesia (BI) unexpectedly cut its reference rate by 25bp to 6.5% today. We expect difficult economic conditions in the developed economies and falling inflation in Indonesia to bring more policy loosening next year. Much of the rest of emerging …
12th October 2011
Inflation appears to have peaked in most of emerging Asia, opening the door for rate cuts across much of the region next year. In this week’s key events, policy rate decisions from Sri Lanka, Indonesia and Korea will illustrate how the balance of concern …
11th October 2011
A slowdown in developed economies in 2012-13 is set to pull down growth in emerging Asia to a below-trend pace. However, the region’s healthy fundamentals mean that emerging Asia should once again be the fastest growing area of the world economy. …
6th October 2011
September PMIs for Asia released over the past couple of days remained weak. Although Asia is relatively well-placed to withstand weaker global demand, the recent PMIs reinforce our view that Asian growth will slow to below trend next year. … Asia …
5th October 2011
The Reserve Bank of Australia (RBA) held its cash rate at 4.75% today, as was widely anticipated. But given the shift in the tone of the RBA’s commentary and our recent downgrades to global growth forecasts, we have revised our view and no longer see …
Private sector credit growth across emerging Asia has accelerated sharply since the economic recovery began in mid-2009. With domestic private sector credit as a share of GDP in emerging Asia at an all-time high, there are growing concerns that at least …
4th October 2011
Asia’s currencies have fallen sharply against the US dollar this month and we expect the downward pressure to continue in the near term. However, once the global financial situation starts to stabilise and risk appetite recovers, Asia’s currencies look …
27th September 2011
Owing to our recent downward revisions to growth in the US and euro-zone in 2011-12 we have cut our forecasts for growth across emerging Asia. However, in a reflection of the region’s healthy fundamentals, we still think Asia will perform relatively well …
23rd September 2011
