Emerging Asia will remain a bright spot in the global economy in 2013. Weak external demand from the developed world will hamper Asia’s exports, but subdued inflation will provide room for more policy rate cuts to support domestic demand. Within the region, we think South East Asia is likely to outperform whereas India will disappoint. Despite the region’s favourable economic outlook, we expect renewed global risk aversion to cause Asia’s currencies and equities to end 2013 lower than where they are today.
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