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President Trump’s latest flurry of tariffs implies that the US effective tariff rate will rise to about 17%, from 2.3% last year. That is a little higher than we assumed and so presents modest downside risks to our forecast for global GDP growth and a …
1st August 2025
The July PMI readings for most countries in Asia were subdued and we continue to expect activity in Asia’s export-oriented manufacturing sectors to struggle in the coming months. And with inflation set to stay low, we think that most central banks in the …
Taiwan’s gridlocked government could secure a legislative majority and freedom to enact its policy goals if recall votes next week go its way. The immediate implications for the economy are limited – inflation could end up a little lower. But a concerted …
18th July 2025
Indonesia’s government is cutting spending and considering new taxes as it tries to prevent the budget deficit breaching the 3% of GDP legal limit. An alternative for President Prabowo Subianto would be to ditch, or at least find a workaround for, the …
The Bank of Korea left interest rates unchanged at its meeting today (at 2.50%), but gave strong hints that the easing cycle still had further to run. With growth set to struggle and inflation contained, we are expecting a further 50bps of cuts before the …
10th July 2025
Outside of China, there is no immediate threat of any other country in Asia falling into a prolonged period of deflation. That said, persistently weak price pressures are likely to remain a worry for central banks and will tip the balance towards more …
9th July 2025
Trump has confirmed that punitive tariffs on Asian countries will take effect on 1 st August unless trade deals are agreed by the end of the month. Despite the urgency, negotiations could prove difficult if, as some reports are indicating, the US is …
8th July 2025
Taiwan and Korea face some of the world’s worst demographic headwinds with working-age populations set to shrink by 1% a year over the next decade. Efforts to boost fertility have largely failed, and immigration on the scale needed to stabilise the size …
7th July 2025
Vietnam’s US-bound exports have surged since the US imposed very high tariffs on imports from China. While the export figures are overstating the benefits to Vietnam’s economy due to a surge in rerouting, the country is set to remain a key beneficiary …
Vietnam has had one of the weakest hands to play in its trade negotiations with the US. If it is confirmed that it has agreed to a 20% tariff, this isn’t a template that other countries will feel they have to follow. Instead, the key lesson for other …
2nd July 2025
The Taiwan dollar has appreciated sharply against the US dollar in recent months but, for a host of reasons, the central bank seems now to be less tolerant of further currency strength. Even without intervention, we think that the currency will give up …
The latest batch of monthly activity and inflation data for Korea support the case for further monetary policy easing by the central bank. We are expecting another 50bps of cuts before the end of the year. The monthly activity data for May, which were …
Thailand faces renewed political uncertainty after Prime Minister Paetongtarn Shinawatra was today suspended. This will undermine consumer and business sentiment and complicate efforts to agree a free-trade deal with the US. Thailand’s Constitutional …
1st July 2025
The June PMI readings for most countries in Asia were subdued. With worries about growth having taken precedence over those about inflation, we think most central banks in the region will continue to loosen monetary policy and by more than most analyst …
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
13th June 2025
The abolition of Vietnam’s controversial two-child policy will not lead to a sharp rise in the number of children being born, and will have only a small economic impact. Vietnam’s government announced earlier this week that it was scrapping its two-child …
5th June 2025
President Lee’s pledge to provide fiscal stimulus would, if implemented, provide a much-needed lift to Korea’s economy. The country’s public finances could easily accommodate a temporary rise in spending. But any signs that a looser fiscal stance is here …
We’re hosting an online drop-in on Wednesday to discuss the outcome of Korea’s election and the macro and market implications. Sign up here . Victory for Lee Jae-myung of the Democratic Party (DP) in today’s presidential election in Korea should help …
3rd June 2025
We’re hosting an online drop-in on Wednesday to discuss the outcome of Korea’s election and the macro and market implications. Sign up here . The impact of the trade war on Korean exporters has so far been limited. Although exports to the US fell in May, …
2nd June 2025
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
29th May 2025
The dovish tone adopted by the Bank of Korea today, alongside what we think will be continued weakness of the economy suggest that further interest rate cuts are likely in the coming months. The decision to lower the policy rate by 25bps to 2.50% – the …
The recent climbdown has left the effective US tariff rate on the rest of the world at around 15% as opposed to the 27% which was threatened at the height of this year’s trade war. While this is still the highest since the 1930s, it is unlikely to cause a …
13th May 2025
Global Trade Stress Monitor …
The US and China have each suspended for 90 days all but 10% of their Liberation Day tariffs and cancelled other retaliatory tariffs. This is a substantial de-escalation. However, the US still has much higher tariffs on China than on other countries and …
12th May 2025
If limited just to Kashmir, a period of fighting between Pakistani and Indian forces would have a small impact on the economy of either country. Pakistan would have more to lose than India from a broader conflict, though that would also risk reversing the …
7th May 2025
Early signs are that Vietnam is doing well as US buyers look to find alternative suppliers outside China. Asia publishes export data much faster than other regions, providing some of the most timely evidence of how trade is being affected by Trump’s …
6th May 2025
We pay little attention to the official Indonesia GDP figures, which once again showed growth was unchanged at around 5% last quarter. While the official figures are likely to show growth remaining stable over the coming quarters, we expect activity to …
5th May 2025
The April PMIs for Asia fell sharply, providing the first sign that Trump tariffs are weighing on sentiment in the region. With concerns about growth mounting and inflation worries continuing to ease, we think most central banks in the region will …
2nd May 2025
Data published for Korea from the past few days suggests the economy remains weak, but that the trade war so far appears to be having a minimal impact. While exports to the US fell in April, the declines were relatively small and were more than made up …
1st May 2025
Provided it was limited just to Kashmir, a period of fighting between Pakistani and Indian forces would have a small impact on the overall economy of either country. The closing of the only land trade route is also largely symbolic – bilateral trade was …
28th April 2025
The Bank of Korea today left interest rates unchanged, but the dovish commentary from the press conference and the statement suggest further cuts are coming. We are sticking with our view that rates will end the year at 2.0% (from 2.75% currently). The …
17th April 2025
President Trump’s trade war has created material downside risks for the global economy. Our forecasts assume that tariffs on most countries outside China will stay at 10% and retaliation by other governments will be moderate. In this scenario, global GDP …
10th April 2025
President Trump’s reciprocal tariffs are particularly high on some of the lowest-income EMs, which are also among the most vulnerable to the suspension of US aid flows. That raises the risk of balance of payments strains, and also provides an opening for …
8th April 2025
Vietnam is pulling out all of the stops to secure concessions from Donald Trump. If the tariffs remain in place, the hit to Vietnam’s economy would be severe and would prompt a sharp cut to our GDP growth and interest rate forecasts for this year. Not …
Korea’s Constitutional Court upheld President Yoon’s impeachment today which should ease concerns around Korea’s institutional frameworks. With fresh presidential elections now set to occur soon, there is a chance that fiscal policy will be loosened but …
4th April 2025
We hosted two online Drop-In sessions on 3 rd April to discuss the fallout from President Trump’s Liberation Day tariff announcement. (See a recording here .) This Update contains answers to some of the questions that we received and links to several more …
3rd April 2025
Asian economies will be hit harder than most by US reciprocal tariffs. We were already expecting more rate cuts than the consensus in most countries in the region, but there’s now a risk that central banks in Malaysia and Taiwan may have to start easing …
The March PMIs for Asia were generally subdued, supporting our view that GDP growth in the region is set to remain below trend in the near term. And with inflation back to target in most economies, we think central banks in the region will continue to …
1st April 2025
In this Update, we answer several key questions about how the announced 25% tariffs on US imports of autos and parts might affect the global economy and the US itself. Mexico, Slovakia and Korea are most exposed with up to 1.6% of GDP at risk. But the …
27th March 2025
While Korea’s productivity growth has slowed, this has been offset by faster employment growth as more women and elderly have entered the labour market. If that trend continues and productivity growth picks up a bit in response to the AI revolution, …
24th March 2025
The sharp fall in Indonesia’s stock market today seems to reflect growing worries about the direction of fiscal policy and the state’s role in the economy under President Prabowo Subianto, which could weaken medium-term growth and raise the country risk …
18th March 2025
Vietnam has seen a surge in exports to the US in recent years and arguably emerged as the biggest winner of Trump’s first trade war with China. However, Vietnam’s huge bilateral trade surplus with the US makes it a likely target for penal tariffs in …
6th March 2025
Prabowo Subianto came into office in Indonesia in October pledging to raise economic growth to 8%, up from around the 5% rate it has been stuck at recently. However, the policy changes he has introduced so far risk causing trend growth to slow. One of …
5th March 2025
The events of the past two weeks have called into question whether the US is severing ties not just with adversaries such as China but also allies, including Canada, Mexico and the European Union. This would radically alter the shape of the fractured …
4th March 2025
The small uptick in the EM manufacturing PMI in February appears in part to be a result of the front-running of US tariffs, and is unlikely to be sustained. For now, the surveys continue to point to weak goods price inflation across the emerging world. …
3rd March 2025
Bank Indonesia now owns a larger share of government bonds than some DM central banks did at the height of their pandemic QE programmes. Amidst worries that the fiscal guardrails are coming off, BI’s continued bond purchases could create the impression …
27th February 2025
A week spent visiting clients, policymakers and contacts in India underlines that the digital economy is thriving, that there is hope that India will not be hit hard by Trump’s tariffs, and that much-needed improvements in macroeconomic data reporting …
25th February 2025
The Bank of Korea today cut interest rates by a further 25bps (to 2.75%) and made clear that further easing is on the way. With growth set to struggle and inflation likely to remain low, we are sticking with our view that the policy rate will be lowered …
The January PMIs for Asia were generally weak, supporting our view that manufacturing activity and GDP growth in the region are likely to remain below trend in the near term. And with inflation back to target in most Asian economies, we think central …
3rd February 2025
Thailand’s recovery from the COVID-19 pandemic has not only been much weaker than that experienced in other parts of Asia, but also compared with past crises. The weakness of the economy is the key reason why inflation in Thailand is so low, and we think …
27th January 2025
