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Emerging Asia

Emerging Asia Economics Weekly

Emerging Asia Economics Weekly

Asia late to tightening but won’t have to go far

Central banks in India, the Philippines and Malaysia have all raised interest rates for the first time this cycle in recent weeks, and we expect further hikes next week in Indonesia, Korea and Pakistan. But with inflation set to fall back in the second half of the year and growth likely to weaken, tightening cycles are unlikely to be aggressive. Our forecasts are generally more dovish than the consensus.
Asia Drop-In (26th May, 0900 BST/16:00 SGT): Can Asia remain the low inflation exception? Join our 20-minute briefing about the region’s price and policy outlooks. Register here.

20 May 2022

Emerging Asia Economics Weekly

What next for the recovery? Politics takes centre stage

Despite a surge in virus cases at the start of the year, most countries recorded decent growth in the first quarter. We expect recoveries to continue over the coming months on the back of an easing of virus restrictions and a reopening of international borders. However, new headwinds are starting to emerge. There are already signs that higher oil prices are weighing on consumer sentiment, while there are also indications that exports are losing momentum.
Emerging Asia Drop-In (26th May): Can Emerging Asia remain the global low inflation exception? Economists from our Emerging Asia team will discuss the region’s growth, inflation and policy outlooks in this special 20-minute online briefing. Register now.

13 May 2022

Emerging Asia Economics Weekly

BSP to tighten gradually, Philippines election

Despite the sharp jump in inflation in the Philippines last month, the central bank looks set to raise interest rates only gradually. Meanwhile, the key event of the coming week is the presidential election in the Philippines. Ferdinand Marcos Jr., son of the former dictator, has a large lead in the polls and is the strong favourite. We plan to publish an Update when the results are announced. China Drop-In (12th May, 09:00 BST/16:00 SGT): Join our China and Markets economists for a 20-minute discussion about near to long-term economic challenges, from zero-COVID disruptions to US-China decoupling. Register now.

6 May 2022
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Emerging Asia Economics Weekly

Indonesia palm oil ban

Indonesia has caused turmoil in global commodity markets over the past week with its decision to ban exports of palm oil. However, given the importance of the sector to Indonesia’s economy and the country’s limited storage capacity, we suspect the ban will prove short lived and the impact on growth will be small. EM Drop-In (5th May, 10:00 EDT/15:00 BST): Join Shilan Shah for our latest monthly session on the big macro and markets stories in EMs. This month, Shilan and the team will be talking Russian gas, FX weakness and surging food prices. Register now

Emerging Asia Economics Weekly

Signs of exports softening, new governor at the BoK

There are growing signs that demand for the region’s exports are starting to soften. Weaker external demand will add to the headwinds facing the region’s economies, which are already being hit by the war in Ukraine and jump in global oil prices. Meanwhile, in his first public comments since becoming BoK governor on Thursday, Rhee Chang-yong acknowledged the difficult trade-off he faces between clamping down on inflation and supporting the economy. The even-handed tone of the new governor adds weight to our view that the BoK will raise interest rates no more than twice more this year.

Emerging Asia Economics Weekly

What next for Pakistan and Sri Lanka?

Recent tumultuous events in Pakistan and Sri Lanka should eventually pave the way for IMF deals in both countries, which over time may lead to the return of economic stability. However, this is by no means guaranteed. And painful periods of austerity are likely to precede that. We are sending this Weekly one day earlier than usual because our offices are closed for Good Friday on Friday, 15th April

Emerging Asia Economics Weekly

Pakistan: PM Khan stumped, emergency hike by SBP

In Pakistan, the week began with a constitutional crisis and it will likely end with a new Prime Minister at the helm following the Supreme Court ruling on Thursday. Prime Minister Khan’s successors will face challenges on many fronts. And they will need to ensure that Pakistan remains on an IMF programme to steer the economy away from an external crisis. In response to the developing situation, the central bank hiked rates in an emergency meeting by 250bps – its largest hike since 1996.

Emerging Asia Economics Weekly

Q1 GDP data to paint a picture of resilience

GDP data released over the next month or so in Emerging Asia are likely to show that recoveries continued everywhere across the region (excluding China) in Q1. That’s despite the fact that almost all countries set fresh records for daily new virus cases, with some experiencing full-scale outbreaks for the first time. Omicron is now fast receding, but it’s not all plain sailing from here. Other headwinds to growth are mounting from the surge in global commodity prices and the potential disruption from COVID outbreaks in China.

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