Buoyant global demand should help to support growth across most of Emerging Asia over the coming quarters, but mounting domestic headwinds mean a strong rebound is not on the cards. Although the improving near-term outlook means the rate cutting cycle in most countries has now come to an end, few places will be rushing to tighten monetary policy. We expect most currencies in Emerging Asia to depreciate against the US dollar this year but remain broadly stable on a trade-weighted basis. Although we don’t expect Asian equities to gain much further ground in the near term, the longer-term outlook is better, supported by solid growth prospects and attractive valuations.
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