Oil prices and inflation, fiscal support in Taiwan

Fuel price inflation across Emerging Asia will drop back over the coming months as last year’s low base starts to drop out of the annual comparison. With large output gaps set to keep underlying price pressures subdued, headline inflation should fall back too. The upshot is that inflation worries won’t prevent central banks from keeping interest rates low to support activity over the coming months. The virus situation in Taiwan remains precarious, but with exports surging and more fiscal stimulus on the way, economic activity should hold up relatively well.