Domestic resilience amid global slowdown

Over the past few weeks, Indonesia, Malaysia and Thailand all reported GDP data that were better than the consensus expected, reflecting strong domestic demand helping to offset export weakness. However, domestic demand in Asia is unlikely to stay as strong if, as we expect, the global economy remains weak for longer than is generally anticipated. Meanwhile, we believe that the recent increases in global commodity prices will be reversed and will not lead to an inflation spike in Asia. The upshot is that we continue to expect more policy loosening across the region.