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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
Gareth Leather Senior Asia Economist
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Export orders dip, but shortages will persist

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Vaccine progress, external turnaround in Indonesia

After a slow start, countries across South East Asia are now making encouraging progress with vaccine rollouts. The rise in coverage should reduce the need for further lockdowns and set the stage for a sustained recovery over the coming quarters. Meanwhile, although central banks in Emerging Asia are in no hurry to tighten policy, the coming week will focus attention on two exceptions to that rule. Korea and Sri Lanka are both expected to raise interest rates at their meetings on Thursday.

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