Emerging Asia

Philippines

Central banks in no hurry to tighten

Omicron should prove no more than a small stumbling block for Asia. Our forecasts are for above-trend and above-consensus growth in most countries this year. India, Indonesia and Korea are likely to raise interest rates in 2022, but with inflationary pressures in most countries set to ease, other major economies will be in no hurry to tighten.

25 January 2022

What to expect in Emerging Asia in 2022

Asia will be – contrary to consensus expectations for widespread hikes – the only EM region in which the median central bank isn’t tightening this year.

10 January 2022

A guide to political events in 2022

Korea, the Philippines and India are each holding elections this year that will play a role in setting fiscal and structural reform priorities, including the possible introduction of a universal basic income in Korea. And China looks set to tear up the leadership succession rules that have contributed to its unusual stability as an autocracy over recent decades. In view of the wider interest, we are also making this Emerging Asia Economics Update available to clients of our India and China services.

10 January 2022
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Philippines in no rush to hike, new growth forecasts

Falling inflation and an increasingly uncertain economic outlook add weight to our non-consensus view that the central bank in the Philippines (BSP) will not tighten monetary policy in 2022. Meanwhile, the near-term outlook for growth has taken a turn for the worse due to the arrival of Omicron, and we are nudging down our GDP growth forecasts for the first quarter of this year for several countries.

What Omicron means for monetary policy in Asia

Most countries in Emerging Asia have now recorded cases of Omicron, and the experience from elsewhere in the world suggests that it is only a matter of time before there is widespread community transmission of the new variant. Many places have already introduced new border controls and it seems likely that restrictions on domestic activity will be tightened over the coming weeks. We will be reviewing our GDP growth forecasts ahead of the publication of our Q1 2022 Outlook next month. In terms of monetary policy, the downside risks to growth posed by Omicron reinforce our view that most central banks in Asia will keep interest rates low next year.

Philippines: BSP to leave rates low to support recovery

The central bank in the Philippines (BSP) today left interest rates unchanged at 2.00%, and with inflation set to ease further over the coming months we think the central bank will keep monetary policy loose for the foreseeable future.   Note: Central Bank Drop-In – The Fed, ECB and BoE are just some of the key central bank decisions expected in this packed week of meetings. Neil Shearing and a special panel of our chief economists will sift through the outcomes on Thursday, 16th December at 11:00 ET/16:00 GMT and discuss the monetary policy outlook for 2022.

Rates in the Philippines to stay low on falling inflation

Inflationary pressures in the Philippines are easing sharply. This will allow the central bank to keep interest rates low to support the economic recovery.

Omicron fears stall plans to reopen borders

Amid all the uncertainty caused by the arrival of Omicron, one thing we can say with some conviction is that the new variant is further bad news for the region’s beleaguered tourism industry. Up until last week, countries across Asia had been making slow but steady progress in reopening their international borders, and it is notable that Singapore and Malaysia today pressed ahead with plans to reopen their land border for the first time in nearly two years. Elsewhere in the region, however, countries are closing their doors again. Indonesia has reintroduced quarantine for all inbound travellers, while the Philippines and Japan have banned foreign visitors from entering the country. Singapore has also put on hold plans to open vaccinated travels lanes with the UAE, Qatar and Saudi Arabia. Most countries in the region have also introduced travel restrictions with southern Africa. The worsening prospects for regional tourism reinforce our view that after an initial reopening bounce in the final quarter of the year, economic recoveries will start to lose momentum in early 2022 and that policymakers will look to keep monetary policy loose for the foreseeable future to support demand.

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