Having previously expected equity and currency markets to fall sharply across Emerging Asia before the end of the year, we have revised our forecasts and now expect financial markets to remain broadly stable. Our new forecasts will have important implications for monetary policy, most notably in Indonesia. We now think Bank Indonesia will cut interest rates by a further 50bp this cycle, having previously expected just one more 25bp rate cut. Tourist arrivals from China to Taiwan collapsed in September following the decision by the mainland government to stop issuing travel permits for individual leisure trips to Taiwan. The poor prospects for the tourism sector are a reason why we think growth in Taiwan will slow a little over the coming quarters.
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