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The Central Bank of Sri Lanka (CBSL) kept its policy rates unchanged at today’s meeting, as expected. The upswing will probably stay strong while inflation is likely to accelerate in coming months. We continue to expect that the CBSL will tighten monetary …
8th February 2011
Q4 GDP data for Indonesia, published today, were stronger than expected. The upswing will almost certainly remain impressive, with domestic demand leading the way. Government bonds will continue to struggle for a while given that annual inflation will …
7th February 2011
We expect Korea’s central bank to hike the base rate by 25bp for the second meeting in a row on Friday, which would take the policy rate to 3.0%. This is also the consensus view. Core inflation, which excludes food and fuel, has surged while GDP growth is …
Bank Indonesia today hiked its reference rate by 25bp to 6.75%. This is what we expected would happen, but was a surprise to the consensus. More hikes are on the way, and soon. We continue to anticipate that the reference rate will be lifted to 7.50% by …
4th February 2011
Manufacturing PMIs for January, released today and yesterday, improved in India and Taiwan and stayed above the key 50 level which signals expansion in Korea and Singapore. Manufacturing in Asia looks set to gain more momentum in coming months at a time …
1st February 2011
Q4 employment data for Singapore, published yesterday, were strong. What’s more, the 2011 budget due in mid-February will probably focus on handouts to low-income groups, measures to lift productivity growth, and transportation infrastructure …
The Reserve Bank of Australia (RBA) held its cash rate at 4.75% today, as was universally expected. Low inflation and the uncertainty created by the floods disaster are likely to keep the RBA on the sidelines for a while. Nonetheless, above-trend GDP …
Monthly indicators for December released at the end of last week and today underline that Thailand’s economy is now regaining momentum. The main threat to the economic outlook is an increase in domestic political tensions, with fresh elections now likely …
31st January 2011
Q4 GDP in the Philippines, published today, was up in q/q terms, after dropping in Q3. Household spending and private investment should be strong in coming quarters. An increase in the central bank (BSP) policy rate is only a matter of time and we …
Taiwan continued to outperform most expectations at the end of 2010 thanks to strong export growth. But the relative weakness of household spending means that the economy is likely to underperform if, as we expect, the global recovery disappoints in 2011 …
In a surprise decision over the weekend, the State Bank of Pakistan (SBP) left its policy rate unchanged at 14.0%. The SBP was unequivocal in its criticism of government policies but is prepared to give the, politicians the benefit of the doubt in the …
It is a close call but we still expect Indonesia’s central bank (BI) to finally lift its policy rate this week, by 25bp to 6.75%. The economic upswing should stay in good shape, while macro prudential measures are increasingly being used to manage the …
The government in Australia will introduce a temporary levy on household incomes to help pay for the damage caused by recent floods. The floods disaster has not materially changed the economic outlook. The mining investment boom is unstoppable and will …
27th January 2011
Bank Negara Malaysia (BNM) left the overnight rate unchanged today at 2.75%, as expected. Nevertheless, few will now have any doubts about the durability of the economic upswing while even the BNM acknowledges that the policy rate at its current level is …
The decision by the Reserve Bank of New Zealand (RBNZ) to leave the cash rate at 3.0% for the fourth consecutive meeting was universally expected. We anticipate that the upswing will gain more traction in coming quarters and that inflation pressures will …
GDP growth has continued to slow while markets in the region have been stressed by the acceleration in inflation. We expect inflation to top out in coming months, with the peaks generally being lower than in previous economic upswings. Policy interest …
26th January 2011
Today’s Q4 GDP data for Korea show that growth eased in q/q terms, as expected. The economy is likely to regain traction during the course of this year, while policymakers have rightly become more concerned about inflation. Accordingly, we still expect …
The central bank in India (RBI) today hiked the repo rate by 25bp to 6.5%, as was expected. In addition, the RBI adopted an unequivocally hawkish stance. High inflation, particularly when led by food prices, has inevitably become a big political issue as …
25th January 2011
Malaysia’s central bank (BNM) meets on Thursday and will probably keep the overnight policy rate unchanged at 2.75%. The economic recovery has inevitably lost some momentum as exports have been hit by the tough conditions in the West and the …
24th January 2011
Vietnam’s National Party Congress, which closed today, is the most important set-piece meeting of the Communist Party. Comments from the top officials, to no-one’s surprise, suggest that containing inflation and accelerating state-enterprise reform are …
19th January 2011
India data released last week showed industrial production growth slowed sharply in late 2010 while the annual gain in wholesale prices picked up. The Reserve Bank (RBI) will respond to the latter by tightening policy further. We expect the RBI to hike …
17th January 2011
The Bank of Korea (BoK) lifted its policy rate by 25bp to 2.75% today, which was in line with our forecast but surprised the consensus. Policymakers have rightly become more focused on inflation and we expect that rates will move up further, with the next …
13th January 2011
The Bank of Thailand (BoT) raised its policy rate by 25bp to 2.25% today, as expected. Growth is likely to pick up during the course of this year, and will be led by strengthening domestic demand and exports to the rest of Asia. Curbing inflation and …
12th January 2011
The Central Bank of Sri Lanka (CBSL) unexpectedly cut its two policy rates at today’s meeting. Inflation accelerated at the end of last year while the economic upswing is set to stay strong. Nevertheless, the CBSL anticipates that food price pressures …
11th January 2011
The flooding in Queensland continues to devastate communities and businesses but it is still most likely that the impact on Australia’s economy as a whole will be relatively small and temporary. Growth will be lower for a while, and inflation will be …
We expect Korea’s central bank to lift its policy rate by 25bp to 2.75% on Thursday. This is in contrast to the consensus view which forecasts no change. The worst of the slowdown looks to have come through and GDP growth will probably pick up during the …
10th January 2011
Indonesia has introduced more macro prudential measures to regulate the foreign liabilities of the banking sector. This is a sound strategy which will limit the extent to which any sudden change in capital flows disrupts the economy. The use of targeted …
6th January 2011
The authorities in Vietnam continue to give mixed signals on what they will do in 2011. This should not be a big surprise ahead of the important National Party Congress which will take place next week. Nevertheless, the challenge remains the same when …
Political instability, which is never far away in Pakistan, has risen following this week’s assassination of the governor of Punjab province and the withdrawal of another party from the ruling coalition. For now, the Opposition appear intent on keeping …
5th January 2011
Bank Indonesia (BI) left its reference rate unchanged today at 6.5%, as was universally expected. Nevertheless, the reference rate is now negative in real terms while inflation will probably accelerate further in coming months. Capital inflow and rupiah …
The manufacturing PMIs for December, released yesterday and today, improved in Taiwan and Korea and stayed above 50 in India and Singapore. Industrial activity across the region should gain traction in coming months, although probably not in Australia. …
4th January 2011
Singapore data published yesterday and today showed Q4 GDP rebounded in q/q terms, residential property prices climbed too, while the December PMI also suggests that manufacturing will continue to expand in coming months. The upswing will probably stay in …
Data published in Vietnam over the next few days should confirm that the economy expanded at a rapid pace in Q4 but inflation remains far too high. What’s more, recent debt downgrades have highlighted the governance problems in state-owned enterprises and …
27th December 2010
Q3 GDP, published early today, was weak and in line with our below-consensus expectation. Nevertheless, most of the softness was due to temporary factors. The upswing will probably regain traction in Q4 and in coming quarters. The Reserve Bank (RBNZ) is …
23rd December 2010
New Zealand Q3 GDP data, published overnight on Thursday, are expected to be weak. We forecast that GDP actually fell in q/q terms while the consensus anticipates only 0.1% q/q growth, after an already-soft expansion pace of 0.2% in Q2. Nevertheless, the …
20th December 2010
India’s Reserve Bank (RBI) kept its repo rate unchanged today at 6.25%, as was widely expected. Nevertheless, the monetary policy tightening is not over. The upswing will stay strong in coming quarters, concerns over asset bubbles will continue to grow, …
16th December 2010
The amendments in the Korea-US free trade deal (KORUS) announced earlier this month have caused some protests in Korea, but the risk that the new arrangement is blocked by the National Assembly looks low. Both countries would benefit from the modified …
Data released today showed that Sri Lanka’s economy expanded at a slightly slower pace in Q3. Nevertheless, the outlook remains upbeat. The central bank (CBSL) left policy rates unchanged yesterday, as expected, but rapid GDP growth will probably force it …
15th December 2010
The half-yearly Economic and Fiscal Update published overnight in New Zealand makes it clear that the May Budget will be a tough affair even though 2011 will be an election year. It is essential that fiscal policy is kept tight and prudent in the years …
14th December 2010
The Reserve Bank (RBI) will probably keep the repo rate unchanged at 6.25% on Thursday, while the cash reserve ratio will almost certainly be held steady at 6.0% given ongoing tight liquidity conditions. Nonetheless, the upswing will probably stay strong …
13th December 2010
Economic growth across Emerging Asia has continued to ease. However, this is just a return to what is normal and can be sustained rather than the start of a severe and prolonged downturn. Most of the slowdown, we judge, has already come through and the …
10th December 2010
The Bank of Korea (BoK) held its policy rate at 2.5% today, as expected. Nonetheless, the economy should regain momentum during the course of next year while inflation is likely to trend higher. The upshot is that we continue to expect further monetary …
9th December 2010
The Reserve Bank of New Zealand (RBNZ) left the cash rate at 3.0% earlier today, as expected. What’s more, the Monetary Policy Statement (MPS) was downbeat, yet again. We have adjusted our forecast and now anticipate that the cash rate will move up from …
The Reserve Bank of Australia (RBA) held its cash rate at 4.75% today, as expected. Its commentary was unusually dovish. Nevertheless, above-trend GDP growth still looks likely in 2011-12, which means that the inflation threat will probably rise. We still …
7th December 2010
The current account shortfall in India has climbed quickly to the equivalent of almost 4% of GDP while the composition of foreign financing has deteriorated. Nevertheless, we judge that this should not be a big cause for concern. The external deficit …
6th December 2010
The Reserve Bank of Australia (RBA) meets on Tuesday and is likely to keep its cash rate unchanged at 4.75%. This is because recent data have been soft while mortgage rates have generally increased by far more than the RBA’s 25bp hike last month. …
Bank Indonesia (BI) kept its reference rate unchanged today at 6.5%. The no-change outcome was not a surprise but we suspect that the decision was finely-balanced. Inflation is picking up fast while the upswing should stay strong. For now, BI is focused …
3rd December 2010
Yes is the answer to this question, unless policy-makers change course. A shift is needed towards targeting stability and lower inflation, rather than achieving high growth for its own sake. The good news is we anticipate that the policy change which is …
2nd December 2010
The November manufacturing sector PMIs in India, Taiwan, and Korea, which were published today, all climbed relative to October. Strong intra-regional trade and the pick-up in domestic demand are offsetting the weakness in the West, and growth in the …
1st December 2010
Australia’s economy in Q3 expanded for the seventh consecutive quarter, albeit at a slow pace. The outlook is upbeat. GDP growth should accelerate soon to an above-trend pace, with investment leading the way. Our view on the Reserve Bank (RBA) is …
