Emerging Asia

Emerging Asia Economic Outlook

Central banks in no hurry to tighten

Omicron should prove no more than a small stumbling block for Asia. Our forecasts are for above-trend and above-consensus growth in most countries this year. India, Indonesia and Korea are likely to raise interest rates in 2022, but with inflationary pressures in most countries set to ease, other major economies will be in no hurry to tighten.

25 January 2022

Emerging Asia Economics Update

Surprise move by the MAS likely not its last in 2022

The Monetary Authority of Singapore’s (MAS) surprise move to tighten policy today, ahead of its usual April meeting, probably won’t be its last. We think the added uplift to inflation from a domestic outbreak of Omicron will force the MAS to tighten again this year.

25 January 2022

Emerging Asia Data Response

Korea GDP (Q4, provisional)

While Omicron means that the strong GDP growth recorded in Q4 2021 is unlikely to be repeated this quarter, the recovery should be back on track before long. With the economic outlook still upbeat, the Bank of Korea is set to continue tightening over the quarters ahead. Drop-In (08:00 GMT, 27th Jan): China Outlook – Cyclical trough, tepid rebound. Join Mark Williams and Julian Evans-Pritchard for a discussion about China’s economic and policy outlook this year. Register here.

25 January 2022

Key Forecasts

Table 3: Financial Markets

Forecasts

Forecasts

Currency

Latest

End

End

Stock Market

Latest

End

End

(21st Jan.)

2022

2023

(21st Jan.)

2022

2023

South Korea

KRW

1,194

1,150

1,130

KOSPI

2,818

3,350

3,500

Singapore

SGD

1.35

1.38

1.36

Straits Times

3,293

3,450

3,600

Taiwan

TWD

27.7

29.5

28.5

TAIEX

17,918

17,700

18,700

Pakistan

PKR

176

180

190

Karachi 100

44,826

50,100

54,400

Sri Lanka

LKR

202

220

225

Colombo All

13,361

9,000

9,500

Indonesia

IDR

14,345

15,000

15,500

Jakarta.

6,663

6,850

7,300

Malaysia

MYR

4.18

4.40

4.30

KLCI

1,524

1,800

1,975

Philippines

PHP

51.4

54.0

54.0

PSEi

7,270

7,750

8,225

Thailand

THB

33.0

36.0

34.0

Thai SET

1,647

1,700

1,800

Vietnam

VND

22,630

22,250

22,000

Ho Chi Minh

1,469

1,325

1,375

Sources: Bloomberg, Capital Economics


Thai tourism boost, new oil price forecasts

Emerging Asia Economics Weekly

26 January 2022

Our view

Many places in Asia have reintroduced new border controls to try and slow the spread of Omicron, and it seems likely that restrictions on domestic activity will be tightened over the coming weeks too. We will be reviewing our GDP growth forecasts ahead of the publication of our Q1 2022 Outlook in January. Central banks – unlike in much of the emerging world – are in little rush to tighten. Inflation hasn’t emerged as a concern and, with Omicron now emerging as a major downside risk, we expect policy rates in most countries to remain on hold over the coming year. In contrast, the consensus and financial markets are expecting central banks to begin tightening in 2022.

Latest Outlook

Emerging Asia Economic Outlook

Central banks in no hurry to tighten

Omicron should prove no more than a small stumbling block for Asia. Our forecasts are for above-trend and above-consensus growth in most countries this year. India, Indonesia and Korea are likely to raise interest rates in 2022, but with inflationary pressures in most countries set to ease, other major economies will be in no hurry to tighten.

25 January 2022