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Emerging Asia


GDP to rebound after gloomy Q3

The next few weeks will see the publication of a host of third quarter GDP figures from across the region. While the data are likely to paint a downbeat picture, output should rebound strongly in the final quarter of the year. That said, the recovery is coming from a low base – GDP in most countries is still well below pre-crisis levels – and the region will enter 2022 with lots of spare capacity. This will help keep a lid on underlying price pressures and is a key reason why we think central banks in the region will be in little hurry to tighten policy.

22 October 2021

Exports won’t come to the rescue in H2

  • Q2 GDP data released over the past month or so did not show a repeat of the across-the-board rises in exports seen in previous quarters, but the external sector still proved an important prop to GDP in many places. Thailand’s economy unexpectedly grew last quarter, as an increase in goods exports more than made up for a slump in domestic demand. Strong external demand also went a long way in offsetting sharp falls in private consumption in Taiwan and Malaysia. However, this is unlikely to continue. Recent monthly trade data show that merchandise exports have started to level off. And with high virus cases and strict containment measures weighing heavily on domestic demand across large parts of the region, we have pencilled in large falls in GDP for Thailand, Indonesia and Vietnam this quarter. The poor outlook means monetary policy is likely to be loosened further. We think the Bank of Thailand will cut rates by 25bps in September. The central bank in the Philippines is also likely to loosen policy next month. While we don’t have cuts pencilled in elsewhere, there is a growing chance that other central banks will follow suit.

31 August 2021

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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Virus disruption to continue

The virus situation in Emerging Asia has improved compared with a month ago. Although cases are rising sharply in Indonesia, daily numbers have come down in Taiwan, Singapore, India and Malaysia, and appear to have stabilised in the Philippines. That said, the situation remains serious. The more contagious Delta variant now appears prevalent across the region, which suggests countries will need to be cautious about how quickly they loosen restrictions. And while vaccine rollouts have gathered pace in a number of countries, it is only in Singapore, China, Hong Kong and Cambodia where more than 10% of the population is fully vaccinated. The upshot is that whereas life appears to be returning to normal in the US and most of Europe, COVID-19 will continue to cause significant economic disruption throughout this year across large parts of Emerging Asia.

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