Bank of Thailand to lower rates further

The Bank of Thailand (BoT) left its policy rate on hold at 0.5% today as expected. Given the deteriorating outlook for the economy and with two of the six MPC members voting for a rate cut, we now think the central bank will loosen policy further this year.  
Gareth Leather Senior Asia Economist
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Korea Activity Data (Oct.)

Korea’s economy is likely to have already rebounded from the downbeat October revealed in activity data today. But prospects for continued improvements have diminished, as a resurgence in virus cases pushes back the timeline for reopening the economy further.   Drop-In: India – How much scarring will the pandemic leave? 10:00 ET/15:00 GMT, Wednesday 1st December https://event.on24.com/wcc/r/3535749/63CC51718846E8FF3D871827AC84AF1E?partnerref=report Drop-In: Why is Asia sitting out the global inflation surge? 09:00 GMT/17:00 HKT, Thursday 2nd December https://event.on24.com/wcc/r/3546145/A9D34EF592141BEFCAC819ADB40359D5?partnerref=report

30 November 2021

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Omicron fears stall plans to reopen borders

Amid all the uncertainty caused by the arrival of Omicron, one thing we can say with some conviction is that the new variant is further bad news for the region’s beleaguered tourism industry. Up until last week, countries across Asia had been making slow but steady progress in reopening their international borders, and it is notable that Singapore and Malaysia today pressed ahead with plans to reopen their land border for the first time in nearly two years. Elsewhere in the region, however, countries are closing their doors again. Indonesia has reintroduced quarantine for all inbound travellers, while the Philippines and Japan have banned foreign visitors from entering the country. Singapore has also put on hold plans to open vaccinated travels lanes with the UAE, Qatar and Saudi Arabia. Most countries in the region have also introduced travel restrictions with southern Africa. The worsening prospects for regional tourism reinforce our view that after an initial reopening bounce in the final quarter of the year, economic recoveries will start to lose momentum in early 2022 and that policymakers will look to keep monetary policy loose for the foreseeable future to support demand.

29 November 2021

Emerging Asia Economics Weekly

Recent rate hikes not the start of a trend

Attention over the past week has been on the region’s more hawkish central banks, following rate hikes in Korea and Pakistan. Both countries, along with Sri Lanka (which unexpectedly left rates unchanged at its meeting on Thursday) are likely to raise interest rates further over the coming months. But these countries are very much the exception. For the rest of the region, we think interest rates will remain on hold as central banks look to keep monetary policy loose to support recoveries. Meanwhile, virus cases are rising again in Vietnam. While restrictions have been tightened, they have so far been fairly light touch, including a closure of bars and nightclubs and capacity limits on restaurants in some southern provinces. Nevertheless, the jump in cases will be watched closely by global carmakers, which were hit hard by the disruption from previous factory closures.   Drop-In: Why is Asia sitting out the global inflation surge? 09:00 GMT/17:00 HKT, Thursday 2nd December https://event.on24.com/wcc/r/3546145/A9D34EF592141BEFCAC819ADB40359D5?partnerref=report Drop-In: India – How much scarring will the pandemic leave? 10:00 ET/15:00 GMT, Wednesday 1st December https://event.on24.com/wcc/r/3535749/63CC51718846E8FF3D871827AC84AF1E?partnerref=report

26 November 2021

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Singapore: moving beyond zero-COVID

In a bold move that will be closely watched across the region, Singapore is set to drop its implicit target of pursuing zero local COVID-19 cases, with restrictions set to be eased gradually from August. In other words, Singapore will learn to live with the disease. While some restrictions will remain in place, especially for those who have not been vaccinated, the shift in policy will involve accepting a higher level of cases, hospitalisations and deaths from the virus. The aim is to stop the merry-go-round of the past couple of months of tightening and loosening containment measures every time cases rise and fall. The government is also hoping to allow quarantine-free inbound travel, beginning in September. Currently Singapore has some of the tightest border restrictions in the world, which have been weighing heavily on sectors such as tourism and business services. Essential to these plans is achieving widespread vaccination – the city state has already fully vaccinated nearly 55% of its population and aims to hit 80% by September. Other countries currently pursing zero-COVID strategies, such as China, Hong Kong, Australia, and Taiwan, will be keeping a keen eye on Singapore’s progress. Although the slower pace of their vaccine rollouts mean it is likely to be at least a few months until they are in position to follow suit.

28 July 2021

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Vietnam-US tensions ease, new GDP forecasts

Surging virus cases have cast a shadow over Vietnam’s near-term outlook, but there has also been some good news in the form of Monday’s announcement of a resolution to the long-running currency dispute between the US and Vietnam. The deal removes one of the key downside risks facing Vietnam’s economy, while the concessions it has made on the currency are unlikely to have a major impact on the value of the dong

23 July 2021

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Indonesia: further rate cuts unlikely despite virus surge

Bank Indonesia (BI) left interest rates unchanged today at 3.5%, and despite the worsening near-term outlook caused by a surge in COVID-19 cases, the central bank made clear further cuts are unlikely. We expect interest rates to remain unchanged until the end of next year.

22 July 2021
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