The rest of Asia is likely to follow Singapore in showing Q2 GDP significantly improved on Q1. Economic recovery is likely to be sustained in all countries into 2010 but our forecast of only a slow and difficult upswing in the US and Europe means that the shape of recovery within Asia will vary. The trade-dependent economies (Singapore, Korea, Malaysia, and Thailand) which crashed the most in late 2008/early 2009, will likely see a big GDP bounce followed by weaker gains as inventory rebuilding fades in the manufacturing sector and domestic demand stays on a weaker track. Asia’s more domestic demand-driven economies which have not suffered as much anyway (Australia, India, Indonesia, and the Philippines) will likely see less spectacular GDP gains but the upside momentum should continue far into 2010. This means that central bank policy rates are likely to move up first in the domestic demand-driven economies.
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