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We expect more intervention and FX reserves accumulation in Emerging Asia as well as further regulatory controls to curb capital inflow. However, the regional approach will most probably remain a measured and sensible response pitched at moderating the …
11th October 2010
Singapore Q3 GDP, released on Thursday, is likely to show a sharp fall in q/q annualised terms but this will mainly just be pay-back from the spectacular gains seen in the first half of this year. These data are very volatile and the economic upswing is …
As expected, the Philippines’ central bank (BSP) kept its key policy rate on hold at 4.0% today. The upswing will probably stay strong while inflation risks will climb next year. But currency appreciation is doing much of the heavily-lifting in terms of …
7th October 2010
The Reserve Bank of Australia (RBA) unexpectedly held its cash rate at 4.5% today. Nonetheless, the RBA did state that rate hikes are likely if the economy develops in line with its main-case projections. We still expect the cash rate to be lifted in Q4, …
5th October 2010
As expected, Bank Indonesia (BI) today held the policy rate steady at 6.5%. Monetary conditions have actually tightened in recent months given that rupiah appreciation has more than offset the fall in real interest rates. The pressure from food price …
India got there just in time and yesterday’s opening ceremony for the Commonwealth Games proved to be a big success. Nevertheless, the poor preparation for the Games does highlight the growing governance problems in the public sector and the issues …
4th October 2010
Bank Indonesia (BI) is almost certain to keep its reference rate at 6.5% on Tuesday. GDP growth remains strong but the economy is expanding close to its trend rate of 6% pa rather than at a faster pace. In addition, the annual gain in consumer prices has …
Manufacturing PMIs for emerging Asia and Australia declined further in September. Factory output across the region will continue to adjust as the global upswing stays on a weak track. Nevertheless, the growth in manufacturing output should eventually …
1st October 2010
Economic growth across Emerging Asia generally eased in July-August while inflation pressures remain relatively high and will probably bring further monetary policy tightening in a number of countries soon. Rapid exchange rate appreciation across the …
30th September 2010
Today’s batch of August data highlight the continued slowdown in manufacturing, which is heavily focused on exports production. The easing in this area is not over but domestic demand is well-placed to cushion the blow to the economy as a whole. The Bank …
Following today’s expected rate hike, the outlook for monetary policy in Taiwan depends largely on what happens to property prices. We think there is a good chance rates will return to being on hold. … Taiwan's tightening cycle has probably run its …
Pakistan’s central bank (SBP) today lifted its discount rate by 50bp to 13.5%, as was expected. Rates will probably be increased again later this year but 14% should be the peak. … Pakistan continues to make the right …
29th September 2010
September data and Q3 GDP published over the last few days show that the economy in Vietnam is picking up speed. This contrasts with just about everywhere else in ASEAN where growth is losing rather than gaining momentum. But in Vietnam’s case this is a …
27th September 2010
Commentary from the Reserve Bank (RBA) over recent days makes it clear that Australia’s cash rate will move up again soon. Accordingly, we have brought forward our forecast and now expect a 25bp hike to 4.75% on 3rd October. The external threats to the …
The global upswing is now regaining some traction and the threat of renewed financial crisis has diminished. However, the world recovery will stay weak and vulnerable to other risks such as deflation and protectionism. Emerging Asia’s expansion will …
23rd September 2010
New Zealand’s Q2 GDP data, released today, were poor. Reconstruction work following then earthquake will lift growth over the next 12 months but high headline figures will hide an underlying trend which is weak given on-going household sector …
India’s currency has climbed sharply against the US dollar since the beginning of September, and the appreciation will probably continue. Capital inflows are likely to stay strong as investors continue to distinguish between emerging markets which will be …
20th September 2010
Data released today showed that Sri Lanka’s economy expanded at a faster pace in Q2 than in Q1. Domestic demand should hold strong and offset the fading support from exports. The central bank (CBSL) policy rates look set to stay on hold for a long time …
16th September 2010
The Reserve Bank of India (RBI) today raised the repo rate by 25bp, which was in line with expectations. It lifted the reverse repo rate by 50bp as well, which surprised the consensus but matched our view. The RBI is not quite finished but we have revised …
The Reserve Bank of New Zealand (RBNZ) today kept policy rates on hold at 3.0%, as expected. The aftermath of the earthquake will inevitably cause some disruption in coming months but the RBNZ even before this event was minded to pause given recent …
Wholesale price data published today were based on a new index and probably exaggerate the easing of price pressures which is coming through. What’s more, the upswing appears to be speeding up. The upshot is that we still expect the Reserve Bank (RBI) to …
14th September 2010
Over the weekend, Prime Minister Najib Razak stated that Malaysia was looking at allowing offshore trading of the ringgit. But Malaysia would need to make the currency fully convertible on the capital account first, and so would also have to become more …
13th September 2010
The 4th September earthquake in Christchurch means that it is virtually certain that the Reserve Bank of New Zealand (RBNZ) will keep its cash rate unchanged at 3.0%. Recent economic data have been disappointing too, so even before the earthquake the RBNZ …
The Bank of Korea (BoK) unexpectedly held its policy rate at 2.25% today. Concerns about rising global uncertainties tipped the balance in favour of no change, despite the BoK expecting solid GDP growth and that inflation will gather pace. We have revised …
9th September 2010
The Reserve Bank of Australia (RBA) held its cash rate at 4.5% today, as expected. Nevertheless, the local economic upswing remains strong, at a time when there is little spare capacity. Accordingly, we judge that further hikes in the cash rate are only a …
7th September 2010
The IMF late last week approved an emergency $0.45bn loan for Pakistan. The funding is small compared to the cost of the reconstruction work but is a vote of confidence in a government whose initial response to the crisis has been heavily criticised. The …
6th September 2010
The weekend earthquake in the South Island makes it virtually certain that the Reserve Bank of New Zealand (RBNZ) will pause its monetary policy tightening next week. The latest shock comes on top of a string of disappointing economic data and the late …
The Bank of Korea (BoK) meets this week and we expect it to raise its base rate by 25bp to 2.50%. Monetary policy remains stimulatory and the BoK has grown increasingly concerned about rising price pressures. The economy also looks well-placed to expand …
Bank Indonesia (BI) left its policy rate at 6.5% today, as expected. However, it also announced that the reserve requirement will rise from 5% to 8%, starting from the beginning of November. The economic upswing remains strong and inflation is already …
3rd September 2010
The manufacturing PMIs declined in August. The global upswing is shifting to a slower pace but we expect that the industrial sector expansion in Asia will stabilise at trend rather than collapse. … Asia's manufacturing boom is easing to a pace that can …
Bank Negara Malaysia (BNM) left the reference rate unchanged today at 2.75%, as expected. Our view is that the local economic upswing will comfortably survive the tough global conditions which are in prospect. Accordingly, we still expect that BNM policy …
2nd September 2010
Australia’s GDP growth accelerated in Q2 and was led by exports and household spending. The economic outlook remains bright, with the mining boom set to sustain above-trend growth in 2010-11. The upshot is that we continue to forecast that the Reserve …
1st September 2010
Bank of Thailand (BoT) monthly indicators for July are consistent with industrial activity and export growth in the second half of the year being weaker than in the first. But this should be no surprise and we still expect healthy domestic demand to limit …
31st August 2010
Q2 GDP data published today were strong relative to a year ago but suggest that momentum slowed sharply in q/q annualised terms. We had expected the recent weakness but do not think that it will last. Domestic private sector spending will probably ensure …
The consensus expects that Indonesia will achieve investment grade over the next one-to-three years but we believe that an upgrade by one of the three major ratings agencies will probably happen over the next 12 months. The markets have been positioning …
August data published over the last week show that the upswing in Vietnam remains strong, inflation has stayed on a slower track, while higher capital inflows are easing the strain on the balance of payments. Interest rates should stay close to current …
India’s economic upswing will probably stay strong over the medium term but we suspect that Q2 GDP, published on Tuesday, will be little changed in y/y terms compared to January-March. Household expenditure and business spending are well-placed to take …
30th August 2010
Q2 GDP in the Philippines came in stronger than even our above-consensus forecast. Domestic demand will probably stay strong and should offset the fading support from foreign conditions and inventory-rebuilding. The central bank (BSP) kept its policy rate …
26th August 2010
The Bank of Thailand (BoT) raised its policy rate by 25bp to 1.75% today, as expected. The economy has shrugged off the political crisis and domestic demand should improve even as exports slow. The BoT also highlighted increased concerns about inflation. …
25th August 2010
Economic growth across Emerging Asia eased in Q2 and in July, as the global upswing lost momentum and domestic policies tightened. Nevertheless, private sector domestic demand is well placed to cushion the slowdown. Moreover, overheating worries should …
24th August 2010
Thailand’s GDP growth came in stronger than our above-consensus forecast in Q2. Export growth will slow from now on but a slump is unlikely while domestic demand is set to stay strong. It is now virtually certain that the Bank of Thailand (BoT) will hike …
23rd August 2010
The hung parliament outcome of Australia’s weekend election will inevitably hit local markets for a time but the long-run impact should be small. The main political parties have similar fiscal consolidation objectives and the proposed mining tax will …
Thailand’s Q2 GDP data are released on Monday and the figures should confirm that the hit to the economy from the April-May troubles in Bangkok was not severe. We have always expected that this would be the case. Thailand’s export growth will slow from …
Pakistan was already struggling to keep the IMF on-side and the floods have changed the near term economic outlook so much that it makes sense to re-write the current adjustment programme. GDP growth in coming quarters is now set to be far lower than was …
20th August 2010
In a surprise move, the Central Bank of Sri Lanka (CBSL) cut its reverse repo rate earlier today. Inflation has continued to slow while market interest rates have not come down as much as was anticipated in response to the last policy rate cut in early …
Q2 GDP data, released today, confirm that Taiwan’s economy will be one of the world’s best performers in 2010. However, weaker external demand will increasingly weigh on growth from now on. Policy rates are likely to move up in September but the …
19th August 2010
Data released today showed that Malaysia’s economy expanded at a slower pace in Q2 than in Q1. The upswing will continue to lose momentum in coming quarters but the risk that the expansion stalls is low. Private sector spending should take over as the …
18th August 2010
Recent India data show that inflation pressures have eased while the gain in industrial production has slowed sharply. External risks have climbed too. Nevertheless, non-food inflation is unlikely to slow far and GDP growth still looks set to stay rapid. …
16th August 2010
Malaysia’s Q2 GDP figures are released on Wednesday and are likely to show that the economy continued to expand at a rapid pace in y/y terms, albeit not as fast as in Q1. Exports and industrial growth will slow, but domestic demand should remain healthy. …
The Bank of Korea (BoK) held its policy rate at 2.25% today but maintained its tightening bias. The broad-based domestic economic recovery should continue despite external risks, while inflation is set to rise. We expect the policy rate to be hiked in …
12th August 2010
