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Emerging Asia

Thailand

Thailand GDP (Q1)

Following continued growth in the first quarter, the pace of the recovery will largely depend on how quickly tourists return now that the country has fully reopened to foreign visitors. Emerging Asia Drop-In (26th May): Can Emerging Asia remain the global low inflation exception? Economists from our Emerging Asia team will discuss the region’s growth, inflation and policy outlooks in this special 20-minute online briefing. Register now.

17 May 2022

What next for the recovery? Politics takes centre stage

Despite a surge in virus cases at the start of the year, most countries recorded decent growth in the first quarter. We expect recoveries to continue over the coming months on the back of an easing of virus restrictions and a reopening of international borders. However, new headwinds are starting to emerge. There are already signs that higher oil prices are weighing on consumer sentiment, while there are also indications that exports are losing momentum.
Emerging Asia Drop-In (26th May): Can Emerging Asia remain the global low inflation exception? Economists from our Emerging Asia team will discuss the region’s growth, inflation and policy outlooks in this special 20-minute online briefing. Register now.

13 May 2022

New headwinds emerge

Our GDP growth forecasts are generally above the consensus, but with higher commodity prices and weaker global demand set to weigh on economic recoveries, growth across much of Emerging Asia will be slower than we had anticipated in our last Outlook. Most central banks in the region are likely to raise interest rates this year – the exceptions are parts of South East Asia and China (where we expect a rate cut). However, with growth set to slow and inflation relatively subdued, Asian central banks will tighten policy less aggressively than those elsewhere, and our interest rate forecasts are more dovish than most.

28 April 2022
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Manufacturing PMIs, Korea Trade (Mar.)

While Korean trade data show exports remained buoyant, regional Manufacturing PMIs point to lost momentum. With headwinds to export-focussed industry mounting, there are tougher times ahead.

Thailand: rates to stay low despite inflation worries

The Bank of Thailand (BoT) left interest rates unchanged at its meeting today and suggested that it would continue to look through a temporary rise in inflation to support the economic recovery. We are sticking with our view that the central bank will leave interest rates unchanged this year.

Omicron recedes, but other headwinds emerge

Successful vaccination campaigns allowed governments to keep economies open during the recent Omicron waves, and our Mobility Trackers suggest that activity held up much better than we had originally anticipated. Indeed, GDP figures for Vietnam published earlier today suggest the economy brushed off the impact of Omicron this quarter. However, while the risks to growth from COVID-19 are fading, new headwinds are emerging. The war in Ukraine and the surge in global oil prices will drag on the purchasing power of consumers, while a slowdown in the global recovery will weigh on the region’s exports. We recently cut our 2022 forecasts for regional GDP growth by 0.5%. Meanwhile, rising virus cases in China and the lockdowns that have been introduced in some major cities in the country raise the risk of further disruption to global supply chains. Vietnam’s close integration into Chinese supply chains makes it the most vulnerable country in Asia to problems in China.

More dovish signals from South East Asia

Dovish comments from policymakers over the past week support our view that central banks in South East Asia will buck the trend of global tightening and leave interest rates unchanged over the coming months.

Korea COVID surge, Thai baht to weaken

Despite surging cases of COVID-19 in Korea, the economy appears to be holding up well. We are sticking with our view that the central bank will resume its tightening cycle in April. Meanwhile, the Thai baht is likely to remain under downward pressure over coming months, as high energy prices lead to a further widening of the current account deficit.

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