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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
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Europe is being buffeted by geopolitical and geoeconomic shifts but, …
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 …
Further easing coming With the economy set to struggle and concerns about inflation unlikely to resurface anytime soon, we expect the Bank of Korea to remain in easing mode after today’s 25bp cut. The decision to lower the policy rate to 2.50% – the …
MAS to loosen policy further GDP in Singapore contracted by 0.6% q/q last quarter according to the second estimate of national accounts figures published on Thursday. While this marked a slight improvement from the initial estimate (a 1.0% decline), it …
23rd May 2025
Asia Chart Pack (May 2025) …
22nd May 2025
Given the widespread public anger toward the impeached former president Yoon Suk Yeol of the People’s Power Party (PPP), following his botched attempt at declaring martial law, Lee Jae-myung of the Democratic Party (DP) appears poised to become Korea’s …
21st May 2025
Easing cycle to be gradual Bank Indonesia today cut interest rates by 25bps for the first time since January, and we expect further easing over the coming months. Today’s decision to cut the policy rate from 5.75% to 5.50% was predicted by 20 out of the …
Economic growth in Thailand accelerated in Q1 but we think growth over the rest of the year will be rather weak as the boost from stronger public consumption is likely to be offset by weakness in other components of GDP. The 0.7% q/q rise in GDP in Q1 …
19th May 2025
Slow progress on trade deals Monday’s agreement between the US and China to lower tariffs marks a significant de-escalation in tensions between the two countries. However, the deal addresses none of the issues that caused tensions to rise in the first …
16th May 2025
Weaker growth to prompt rate cuts later this year GDP growth in Malaysia slowed in the first quarter, and we think the economy will struggle this year, opening the door for the central bank to cut interest rates. According to the second estimate published …
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
Asian exporters benefit from front-loading Asia publishes trade data much sooner than other regions which allows us to get an early indication of how Trump tariffs are affecting global trade. While the April data for Korea showed exports to the US …
9th May 2025
Rates on hold (again), but rate cuts are coming Bank Negara Malaysia (BNM) today left its main policy rate unchanged at 3.0%, but sounded more downbeat on the economic outlook, suggesting scope for rate cuts later in the year. The decision was correctly …
8th May 2025
Lower interest rates to support growth in 2025 GDP growth in the Philippines accelerated slightly in the first quarter of last year, and we expect steady growth in 2025 as interest rate cuts and low inflation help offset the drag from weaker exports and …
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 see a few reasons to be sceptical about the chances of a broad-based upwards revaluation of Asian currencies, despite recent moves. At the time of writing the breakneck rally in Asian currencies vs. the US dollar seemed to have come to a screaming …
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
A cut more likely than a hold Malaysia is one of the few countries in the region not to have cut interest rates this cycle. Concerns about the inflation outlook and healthy economic growth have meant the central bank has been in no hurry to loosen. …
2nd 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 …
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
Asia Chart Pack (April 2025) …
30th April 2025
Strong exports to support growth despite tariff risks Economic growth in Taiwan picked up strongly in the first quarter of the year, helped by very strong exports and robust investment. Although Trump’s tariffs pose a downside threat to the economy, we …
Dovish BoT and rising downside risks prompts forecast change Thailand’s central bank (BoT) today cut interest rates by a further 25bps (to 1.75%) and the poor prospects for the economy mean more easing is likely soon. The decision was correctly …
Parts of South East Asia, notably Vietnam, as well as India are well placed to immediately gain market share in response to penal US tariffs on Chinese imports. But uncertainty over the future tariff landscape will deter investment in additional capacity …
29th April 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
Slump in Korean construction not over GDP figures published this week show that Korea’s economy remains in deep trouble. GDP contracted by 0.2% in q/q terms in the first three months of the year and was 0.3% smaller than a year ago. The outturn was much …
25th April 2025
Korea’s economy weakened further in Q1 and we expect activity to remain weak in the near term due to headwinds from tariffs and the bleak outlook for the construction sector. Data released today show that GDP declined by 0.2% q/q in Q1 (following growth …
24th April 2025
Rates on hold amid currency concerns, BI in no rush to cut The decision by Bank Indonesia to leave interest rates unchanged at 5.75% came as little surprise and was correctly predicted by 24 out of the 26 analysts polled by Reuters, including ourselves. …
23rd April 2025
Electronics reprieve may prove short lived The US tariff exemptions announced last Friday on various electronics products, including on smartphones, semiconductors and TVs, represent a further let-off for Asia after the decision to pause the reciprocal …
17th 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 …
Interest rates on hold, but BoK to resume easing cycle soon The Bank of Korea today left its main policy rate unchanged at 2.75%, but we think this represents a pause not an end to the easing cycle. The decision was correctly predicted by 24 out of 37 …
Singapore’s central bank loosened monetary policy again today and with inflation set to remain low and the economy weak, further easing looks likely in the coming quarters. The MAS conducts monetary policy by targeting the nominal effective exchange rate …
14th April 2025
Crisis is not over, but winners could emerge Most of Asia outside China breathed a sigh of relief when Donald Trump announced a 90-day pause on his “reciprocal” tariffs. However, the crisis for the region is far from over. Exports from Asia to the US …
11th 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
Low inflation and tariff uncertainty supports case for further monetary easing The central bank in the Philippines (BSP) resumed its easing cycle today by lowering its policy rate by 25bp (to 5.50%) and in its communications highlighted the threat to …
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 …
Asian economies were hit with some of the highest “reciprocal” tariffs by the US. (See Chart 1.) Our initial response is here , and more of our coverage can be found on this page . Chart 1: “Reciprocal” Tariffs Sources : White House, Capital Economics …
4th April 2025
