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The Indian economy is facing a severe credit crunch which will hit investment spending, the main driver of growth in recent years, extremely hard. We expect GDP growth to fall to around 4% next year from close to 8% this year and well below the 9% plus …
17th December 2008
The Bank of Japan’s Tankan survey of business conditions was not quite as bad as we had feared, but we may just have been a quarter early. The one consolation is that Japan is not alone – other major economies are doing just as badly, or a lot worse. … …
15th December 2008
This report is only available as a PDF. Click to download. … Strains in trade financing adding to exporters’ woes …
The Bank of Korea’s decision to cut its key official rate by a full percentage point to 3.0% today has already taken it to a historic low. But with incoming data pointing to an outright recession next year – possibly a severe and prolonged one at that – …
11th December 2008
We expect the headline numbers from the Bank of Japan’s quarterly “Tankan” survey for December, released next Monday, to be even worse than the consensus. Our forecast for the large manufacturers’ index is -40, compared to the median in the Bloomberg …
10th December 2008
Local sources suggest that Chinese exports have experienced a sudden collapse. This may explain last week’s inter-day weakness in the renminbi. But the case for a sustained depreciation is still poor. … Chinese exports fall off a …
8th December 2008
The latest fiscal and monetary policy initiatives unveiled this weekend in India are unlikely to boost its flagging economy. With exports plummeting, industry facing a severe credit crunch and confidence dented by the recent terrorist attacks, we continue …
This report is only available as a PDF. Click to download. … Korea facing deep recession in 2009 …
With the aftershocks from the Mumbai terror attacks adding to the downside risks to growth, further rate cuts and a fiscal stimulus look imminent in India. But these measures are unlikely to ward off a severe credit crunch. We expect GDP growth to slow to …
5th December 2008
A sizeable depreciation of the renminbi against the dollar would be provocative during a global slump and might do little to help China’s economy. … Should China force a renminbi …
4th December 2008
Japanese households and companies have avoided the financial excesses and over-indebtedness that point to a severe and prolonged recession in the West. Japanese banks are also in relatively good shape. We therefore continue to expect Japan to be among the …
A run of poor data and doubts about the effectiveness of the government’s stimulus plans have prompted us to cut our 2009 GDP growth forecast for China from 8% to 7%. Admittedly, the government’s response to the ongoing slowdown has been impressive, at …
3rd December 2008
Today’s decision by the Bank of Thailand to cut official rates by a larger-than-expected 100bp to 2.75% is likely to be the first of a series of moves by the central bank to counter the possibility of a recession. We now expect rates to fall to a historic …
This report is only available as a PDF. Click to download. … What is there left for China to do? …
1st December 2008
With credit quotas lifted, China’s aggressive rate cuts today should ensure that the flow of credit to the economy is sustained. But the government’s hopes that the banking sector will finance much of its fiscal stimulus could prove overblown. … China …
26th November 2008
Thirty years after the launch of reform in China, the experience of Japan and the Asian tigers underlines the need for China to shift its economic model if it is to sustain rapid growth over the medium term. … Is China running out of steam after 30 years …
24th November 2008
This report is only available as a PDF. Click to download. … Bracing for some poor GDP numbers in India …
As widely anticipated, the Bank of Japan left policy rates unchanged today. However, the prospect of outright declines in both economic activity and prices next year suggests that rates are heading back to zero and will remain there for the foreseeable …
21st November 2008
This report is only available as a PDF. Click to download. … Japan’s recession to be relatively shallow and short-lived …
17th November 2008
So much for decoupling. With the world headed for its worst recession since the 1930s, even the most resilient economies in the region will slow. We now expect growth in Asia ex-Japan to slow to around 5.0% next year, from 7.5% this year and an average of …
12th November 2008
This report is only available as a PDF. Click to download. … China’s fiscal package may not be quite what it seems …
10th November 2008
This report is only available as a PDF. Click to download. … How will Chinese exporters cope with the global slump? …
The Japanese financial system remains in relatively good shape. Despite the erosion of bank capital due to sliding stock markets, a number of factors suggest that there are no major risks to the banking sector. … Is trouble lurking within Japan’s …
6th November 2008
This report is only available as a PDF. Click to download. … Australian interest rates to fall to 2.0% …
4th November 2008
The quiet lifting of credit quotas, confirmed in Chinese media over the weekend, is arguably the most significant step taken so far by the authorities as they attempt to limit China’s economic slowdown. Quotas on the amount banks can lend have been …
This report is only available as a PDF. Click to download. … Asia to continue cutting interest rates aggressively …
3rd November 2008
High indebtedness, dysfunctional credit markets, and the prospect of a deep and prolonged global slowdown will drag Korea into its first recession since the Asian financial crisis of 1997. We expect the Bank of Korea to slash rates to an all-time low of …
31st October 2008
The Bank of Japan’s willingness to cut interest rates even further from already exceptionally low levels, combined with the prospect of outright declines in both economic activity and prices, suggests that rates are heading back to zero and will remain …
Inflation fears are rapidly being replaced by the very real chance of deflation in all the major economies. Indeed, we now expect Japanese inflation to turn negative again next year, averaging minus 0.5%. (The consensus is still plus 1.0%.) But in this …
28th October 2008
Global financial market turmoil and the dollar rebound have been reflected in further equity market weakness in China and in a surge in the renminbi’s tradeweighted exchange rate. But global weakness in demand has yet to make much of a mark on the real …
This report is only available as a PDF. Click to download. … Asia's emerging markets still healthier than those of Europe …
27th October 2008
Today’s decision by the Reserve Bank of India (RBI) to leave policy rates on hold was widely expected after recent actions proved successful in calming India’s money markets. Nonetheless, with inflation pressures easing, equity markets plummeting and the …
24th October 2008
A closer look at different measures of wages growth in Japan shows that, contrary to most analysis, the economic recovery in recent years has not been a “wageless” phenomenon. Even continued modest growth in nominal wages should be sufficient to support a …
23rd October 2008
The recent acceleration in the dollar’s appreciation against other major currencies (with the notable exception of the yen) reflects a combination of factors, none of which is likely to reverse any time soon. We are therefore revising our dollar forecasts …
22nd October 2008
In focusing too narrowly on supporting the economy over the short term, China risks undermining its successes in making growth more sustainable over the long term. … Botching the slowdown in …
The Japanese economy may already be in technical recession, but we expect the downturn to be relatively short-lived and shallow. Sharp falls in inflation will boost real incomes, while Japan has avoided the fundamental economic and financial imbalances …
21st October 2008
The announcement of a massive $130bn (13% of GDP) liquidity support package by the Korean authorities over the weekend should calm the markets and boost the currency in the short run, but it won’t prevent a broad-based slowdown in the economy. … Korean …
20th October 2008
Today’s unexpected 100 basis point (bp) cut by the Reserve Bank of India (RBI) in the key repo lending rate, to 8.0%, is intended to boost investor and consumer confidence. But given that this is the fourth surprise announcement in only two weeks, and …
The sharp slowdown in Chinese GDP growth in the third quarter is hard to square with detail showing still healthy growth in spending across the economy. Nonetheless, officials will err on the side of caution. Further interest rate cuts and a fiscal boost …
This report is only available as a PDF. Click to download. … Commodities bear brunt of Chinese slowdown …
Japan’s seasonally adjusted trade deficit of ¥208 billion in August reported earlier in the week – the first monthly deficit since the early 1980s – has increased concerns about the fallout from the global economic slowdown. But we still think there are …
17th October 2008
Today’s announcement by the Reserve Bank of India (RBI) of another cut in the cash reserve ratio suggests that the shift in focus away from inflation is towards financial stability and not growth. … India's financial stability fears prompt another reserve …
15th October 2008
The latest data suggest that investors have been pulling money out of China in recent weeks. After dealing with hot inflows of nearly $200bn in the first half of 2008, officials will be glad for the respite. … Capital outflows now affecting China …
14th October 2008
This report is only available as a PDF. Click to download. … Japan to top G7 growth table in 2009 …
13th October 2008
The dramatic events in global financial markets in recent weeks have increased fears about the impact on the wider economies, while the collapse of commodity prices has swiftly put to rest lingering concerns about inflation. As a result, Asian central …
The Bank of Korea’s decision to cut interest rates by 25 basis points (bp) to 5% (together with a similar move by Taiwan and a further 50bp cut by Hong Kong) was not so surprising given yesterday’s coordinated cuts by the world’s major central banks. The …
9th October 2008
One of the many talking points from today’s coordinated cuts in global interest rates is the fact that China quickly followed, whereas Japan left rates on hold. As it happens, the inaction from Japan is easy to explain in terms of domestic factors. But …
8th October 2008
7th October 2008
Today’s surprisingly large 100 basis points (bp) rate cut by the Reserve Bank of Australia (RBA) from 7.00% to 6.00% (consensus 50bp), may be the first in a series of aggressive moves from the world’s major central banks. … Australia leading the way on …
Today’s surprise announcement by the Reserve Bank of India (RBI) of a 50 basis point (bp) cut in the cash reserve ratio is the latest indication that the country is not immune to the global financial crisis. … Credit crisis prompts India to loosen …
6th October 2008
