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Resurgent infections threaten recovery

Asia’s emergence from the pandemic has been threatened recently by a resurgence in infections across parts of the region. Most of South Asia, the Philippines and Thailand have had to introduce new restrictions to contain outbreaks of the virus, and we have cut our growth forecasts for a number of countries to reflect the worsening outlook. Elsewhere, China and Taiwan have already fully recovered from the crisis, while Vietnam is not far behind. Headline y/y growth rates in these economies will be flattered by base effects over the next couple of quarters, but in q/q terms growth will continue to slow. Central banks across the region are in no rush to tighten monetary policy. External factors won’t compel policymakers to tighten, and with inflationary pressures very weak, interest rates are likely to be kept low to support economic recoveries.
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Emerging Asia Economics Weekly

Singapore overheating fears, BSP forecast change

There are growing signs that Singapore’s economy is overheating, with inflation now nearly double the target and wages increasing rapidly. However, we do not expect the MAS to respond by tightening monetary policy further. We expect growth to slow in the second half of the year, which should help to cool underlying price pressures, while a reopening of the international border should help to ease labour shortages. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

24 June 2022

Emerging Asia Economics Update

Low inflation means BI is in little hurry to raise rates

Bank Indonesia left interest rates unchanged again today, and the relative weakness of inflation means any tightening cycle is unlikely to be aggressive. We are maintaining our view the central bank will raise interest rates by just 25bps this year. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

23 June 2022

Emerging Asia Economics Update

New rate forecasts following hawkish BSP comments

The central bank in the Philippines today raised its policy rate by another 25bp (to 2.5%), and signalled that further tightening was likely. However, with inflation set to peak soon and headwinds to the recovery mounting, we think the tightening cycle will be gradual. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

23 June 2022

More from Emerging Asia Economics Team

Emerging Asia Economics Weekly

August rate hike in Korea, Indonesia outbreak

We were already more hawkish that the consensus in expecting a rate hike in Korea this year, but recent comments by the central bank and strong economic data mean we are shifting forward our forecast for the first hike to the Bank of Korea’s meeting on 26th August. Meanwhile, Indonesia’s government has introduced tough new restrictions to combat a jump in virus cases. Despite the worsening outlook, there is little prospect of monetary or fiscal policy being loosened further to support demand.

25 June 2021

Emerging Asia Economics Update

Taiwan: outbreak to weigh on consumption

The first major outbreak of COVID-19 in Taiwan has triggered the first significant restrictions on activity. Consumer spending will suffer, but the rest of the economy should still perform strongly.

17 May 2021

Emerging Asia Economics Weekly

Taiwan’s semiconductor boom, Korea uncertainty

Booming demand for semiconductors is prompting us to raise our Taiwan growth forecast for this year from 4.5% to 5.0%. This is well above the consensus of just 4.2%. Meanwhile, labour market data provide further signs that Korea’s economy improved at the end of last quarter.

16 April 2021
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