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Trump tariffs – impact will be manageable for most Following a flurry of trade deals agreed over the past couple of weeks and a new Executive Order last night, from next Friday (US time) most countries in Asia will face tariffs of 15-25% on their exports …
1st August 2025
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 …
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 …
Asia Chart Pack (July 2025) …
31st July 2025
Export boom supports rapid GDP growth Taiwan’s economy recorded another quarter of strong growth in Q2, of 3.1% q/q, on the back of a boom in exports which more than offset a further slowdown in domestic demand. This pace of growth is unlikely to be …
Donald Trump has announced on Truth Social that South Korea has agreed to a “comprehensive deal” involving a 15% tariff on all goods exported to the US, down from the previously threatened 25%, in exchange for maintaining zero tariffs on US imports. The …
MAS hold today likely to be a pause, not an end, to the easing cycle Singapore’s central bank kept monetary policy settings unchanged today but with inflation set to remain well below target and the economy likely to weaken, we continue to expect further …
30th July 2025
India is now home to some of the world’s largest financial markets, but foreign access remains limited. That will change over time as policymakers continue to liberalise the capital account, but it is likely to be a gradual process. The growth of India’s …
29th July 2025
We will be holding an online Drop-In next week to discuss the implications of recent US trade deals for regional supply chains, global fracturing, economic growth, and financial markets across Asia. To register click here . Limited impact from …
25th July 2025
Korea’s economy rebounded in Q2, averting a technical recession, and while the worst is probably over we expect a broad-based slowdown in growth over the near term. Data released today show that GDP rose by 0.6% q/q in Q2 (following a contraction of 0.2% …
24th July 2025
The US has set a 19% tariff on Philippine imports, aligning it with rates for other Asian nations that have already agreed deals with the US. While the economic hit to the Philippines will be modest, the deal does at least help shield it from losing …
23rd July 2025
Given the weakness of Thailand’s economy, there is no doubt that the country needs lower interest rates. But the appointment of Vitai Ratanakorn as the next Governor of the Bank of Thailand is likely to fuel concerns about central bank independence. The …
22nd July 2025
Indonesia joined Vietnam this week in securing a trade deal with the US. The deal, based on Trump’s Truth Social post, will see US imports from Indonesia subject to a 19% tariff (compared to a tariff of 32% announced on “Liberation Day” in April which was …
18th July 2025
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 …
Broad based softening in growth likely GDP growth in Malaysia picked up during the second quarter but we expect this strength to fade and continue to expect the central bank to cut interest rates later this year. According to the advanced estimate …
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 …
BI cuts rate, Trump touts trade deal with Indonesia Bank Indonesia (BI) resumed its easing cycle with a 25bp cut to its benchmark 7-day reverse repo rate, to 5.25%, today and, with inflation subdued and GDP growth likely to slow, we think there’s scope …
16th July 2025
Singapore’s economy rebounded sharply during the second quarter, but we doubt this resilience will last. We expect a broad-based slowdown in the coming quarters and continue to expect the central bank to loosen monetary policy further. According to the …
14th July 2025
A damp squib Liberation Day 2.0 was largely shrugged off by investors, with most equity markets in Asia rising over the course of the week. This could be because tariff deadlines were extended by three weeks, giving countries more time to agree deals …
11th July 2025
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
The Bank of Korea rarely cuts interest rates at back-to-back meetings, and the decision to leave interest rates on hold today at 2.50% comes as no surprise. The announcement was correctly predicted by all 33 analysts polled by LSEG, including ourselves. …
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
First cut of the cycle – more to come Bank Negara Malaysia (BNM) today cut its policy rate by 25bps, to 2.75%. With growth likely to slow and inflation set to remain contained, we think further easing lies in store. Today’s cut was predicted by just over …
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
President Donald Trump has now released “letters” to 14 countries today, announcing that, unless they negotiate a deal over the next few weeks, he will impose reciprocal tariffs on those countries from August 1 st . In most cases, those tariffs that would …
7th July 2025
President Donald Trump has released the first of his “letters” threatening to impose country-specific tariffs of 25% on both Japan and South Korea from August 1 st , if those countries can’t reach a deal with his administration by then. Back in April, …
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 …
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 …
Key questions left unanswered The trade agreement announced this week between the US and Vietnam, which imposes tariffs of 20% on Vietnam’s exports to the US (along with 40% for re-routed goods), leaves many questions unanswered. Not least how will …
4th July 2025
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 …
Asia Chart Pack (June 2025) …
30th June 2025
Boost for Korean consumers The weakness of consumer spending in Korea has continued in recent months, with retail sales now just over 2% below their pre-pandemic levels. (See Chart 1.) However, there are good reasons to think the worst is now over. …
27th June 2025
Overview – We expect GDP growth across most of Asia to soften in 2025, with many countries likely to record below-consensus growth. The risk of escalating trade tensions remains a key concern, particularly for Vietnam, which is highly dependent on US …
26th June 2025
Today’s hold does not mark the end of the easing cycle Thailand’s central bank (BoT) today left interest rates unchanged at 1.75%, but the dovish commentary from the press conference supports our view that further easing is likely over the coming months. …
25th June 2025
Growth boost for Korea More policy support in Korea looks to be on its way soon. According to the minutes of the Bank of Korea’s May meeting (when rates were cut a further 25bps) which were released earlier this week, Board members were united on the need …
20th June 2025
Taiwan’s central bank (CBC) left its main policy rate on hold today (at 2.0%) and we expect interest rates to remain unchanged for the foreseeable future. In contrast, most other analysts are expecting rate cuts to begin in Q4. The decision to keep rates …
19th June 2025
With inflation set to stay low, BSP to cut rates further The central bank in the Philippines (BSP) today cut its main policy rate by a further 25bps (to 5.25%), and the dovish tone from the central bank’s statement and press conference suggests further …
BI to resume easing cycle soon Bank Indonesia today left interest rates unchanged at 5.50%, but as dovish comments in the press conference by Governor Perry Warjiyo make clear, this is unlikely to mark the end of the central bank’s easing cycle. We are …
18th June 2025
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
Price pressures continue to ease across Asia Inflation data published over the past week or so shows that price pressures across the region remained weak in May. (See Chart 1.) Thailand, Sri Lanka and China are in deflation, while the headline rate is …
We are hosting an online briefing to discuss the outlook for India’s economy and financial markets. Sign up here . Korea: economy key challenge for President Lee One of the key challenges facing Korea’s newly-elected president, Lee Jae-myung of the …
6th 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
New president will have his work cut out Barring a major surprise, Lee Jae-myung of the Democratic Party (DP) will be elected as Korea’s president when the country votes on Tuesday. Polls have narrowed in the past couple of weeks but still give him a …
30th May 2025
