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The decision by the US and Russia to “lay the groundwork” to end the war in Ukraine marks a potentially significant turning point after three years of conflict. Negotiations will take time and the macroeconomic implications will depend on the features of …
18th February 2025
GDP growth in Thailand slowed in Q4, but we are expecting a better year ahead, with loose fiscal policy and further recovery in tourism spending set to be the key drivers. However, downside risks remain high. The 3.2% y/y rise in Q4 GDP was below …
17th February 2025
India most vulnerable to reciprocal tariff President Trump looks to have abandoned the idea of imposing a flat universal tariff of 10%-20% on all imports to the US, and now appears to be favouring new reciprocal tariffs that will be imposed on a …
14th February 2025
Economy enters a softer patch Malaysia’s economy contracted in Q4 but that comes after a very strong run in recent quarters. We think growth will ease slightly this year due to tighter fiscal policy and a moderation in investment growth. According to the …
BSP to resume easing cycle soon In a surprise move the central bank in the Philippines (BSP) left its policy rate on hold at 5.75% today, but we think this represents a pause, rather than a halt to the easing cycle. The announcement was predicted by just …
13th February 2025
Trade war begins: winners and losers in Asia Donald Trump’s 10% tariffs on China (along with those threatened for Mexico and Canada) could prove to be the start of a protracted trade war. (See here .) While there is a lot of uncertainty over what will …
7th February 2025
Official figures released today suggest that economic growth in Indonesia was virtually unchanged again last quarter at about 5.0% y/y, but we don’t have much faith in the official data. Our own Indonesia Activity Tracker (IAT) suggests that the economy …
5th February 2025
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
Pakistan: easing to be more gradual from here The State Bank of Pakistan (SBP) lowered its policy rate earlier this week by a further 100bps (to 12.0%), the sixth consecutive meeting at which rates were lowered. However, the accompanying statement makes …
31st January 2025
Asia Chart Pack (January 2025) …
30th January 2025
Interest rate cuts to support growth in 2025 GDP growth in the Philippines picked up slightly in the final quarter of last year, and we expect decent growth in 2025 as interest rate cuts help offset the drag from weaker exports and tighter fiscal policy. …
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
India’s outbound tourism market is poised to become one of the world’s largest over the coming years. The Maldives and the UAE are arguably the biggest beneficiaries, though Oman and Thailand are well placed to take advantage too. Other EMs – particularly …
Homegrown problems a bigger risk to growth Our assumption is that Trump will impose a 10% tariff on all US imports (including on Korea), most likely sometime in the second quarter. On its own this would not have a huge impact on Korea, since a universal …
24th January 2025
Strong exports and investment supporting the economy Taiwan’s economy picked up in Q4, and we expect GDP growth to remain robust over the coming quarters, helped by continued strong growth in information and communication technology exports. The advance …
MAS loosens policy, further easing likely amid low inflation Singapore’s central bank loosened monetary policy today and with inflation likely to remain low and economic growth soft, we expect further easing in the coming quarters. The MAS conducts …
Korea’s economy continued to struggle in Q4 and we suspect that the weakness in activity could persist in the near term due to the ongoing political crisis and the bleak outlook for the construction sector. Data released today show that GDP growth …
22nd January 2025
Headline inflation in Asia has continued to ease over the past year and is now back to (or below) target everywhere. We expect inflation to remain subdued over the coming year as improved growing conditions help keep a lid on food prices and below-trend …
Rates on hold (again), prolonged hold likely Bank Negara Malaysia (BNM) today left its main policy rate unchanged at 3.0%, and hinted that it was in no hurry to change rates anytime soon. The decision comes as no surprise – the outcome was correctly …
Vietnam could take a number of measures to reduce its huge bilateral trade surplus with the US, notably stepping up its purchases of US farm products and clamping down on transshipments from China. But even if these were successful, they would still leave …
21st January 2025
Korea: political crisis weighing on growth The political crisis in Korea is continuing to drag on, with no clear sign of when or how it will come to an end. President Yoon Suk Yeol was arrested this week on charges of insurrection following his …
17th January 2025
The Shape of the Fractured World in 2025 The share of the fracturing global economy that is accounted for by China and its geopolitical allies contracted in 2024, leaving it under a third the size of the US bloc at the start of 2025. This fall was in part …
Tighter fiscal policy to weigh on growth Economic growth in Malaysia softened in Q3 and we expect a year of fairly subdued growth ahead as tight fiscal policy weighs on demand. According to the advanced estimate published today, GDP growth eased to 4.8% …
The Bank of Korea today left its main policy rate unchanged at 3.00%, but with the economy struggling and inflation under control, we doubt it will be long before the central bank resumes its easing cycle. The decision not to cut interest rates for the …
16th January 2025
Interest rates on hold, but BoK to resume easing cycle soon The Bank of Korea today left its main policy rate unchanged at 3.00%, but we doubt it will be long before the central bank resumes its easing cycle. The decision was correctly predicted by just …
In a major surprise, Bank Indonesia today cut interest rates by 25bps (taking its main policy rate to 5.75%), citing the need to support economic growth. Given the central bank’s renewed focus on supporting the economy we are making adjustments to our …
15th January 2025
If Donald Trump were to impose a universal 10% tariff on US imports, we wouldn’t expect widespread reshoring of manufacturing production back to the US. And if it were accompanied by a 60% tariff on Chinese imports, the main beneficiaries would be other …
14th January 2025
Signs that political crisis is weighing on growth With inflation under control and signs the political crisis is weighing on the already-weak economy, we expect the Bank of Korea to cut interest rates by a further 25bps at its meeting on Thursday. …
10th January 2025
The Cold War was defined by geopolitical blocs – the Soviet or Eastern bloc against the Western bloc. Geopolitics retreated with the collapse of the Soviet Union. The period from the early-1990s to the early-2010s was instead an era of globalisation: most …
7th January 2025
Donald Trump’s second term could redraw the global geopolitical map. A sustainable “Grand Bargain” with China, warmer relations with Russia, or a breakdown in the relationship between the US and its traditional allies could each reshape supply chains and …
GDP growth in Vietnam picked up in the fourth quarter of 2024 and we expect another year of strong growth in 2025, with the main support coming from exports. This was the second quarter in a row when Vietnam’s statistical office waited until the end of …
6th January 2025
The December PMIs for Asia were a mixed bag, but we continue to expect manufacturing activity and GDP growth in the region to remain subdued in the near term. With growth set to struggle and inflation below target in most countries, we think central banks …
2nd January 2025
Asia Chart Pack (December 2024) …
30th December 2024
Korea’s political crisis deepened today after parliament voted to impeach acting president, Han Duck-soo, just two weeks after President Yoon Suk Yeol was himself impeached following his shock declaration of martial law. This Update discusses the …
27th December 2024
Dovish BoK minutes point to further rate cuts This week’s publication of the minutes from the Bank of Korea’s November meeting , at which it cut rates for a second month in a row, confirmed that inflation concerns have now largely subsided and that the …
20th December 2024
Taiwan’s central bank (CBC) left its main policy rate unchanged today (at 2.0%) and with risks to the inflation outlook skewed firmly to the upside we expect rates to remain on hold throughout 2025. In contrast, the consensus is expecting the central bank …
19th December 2024
Low inflation in the Philippines to prompt further rate cuts The central bank in the Philippines (BSP) today cut rates by 25bps (to 5.75%) for the third consecutive meeting and signalled that more rate cuts of the same magnitude are likely over the …
Currency concerns to keep Bank Indonesia on the sidelines Bank Indonesia today left interest rates on hold at 6.00%, and given worries about the exchange rate we don’t think it will be until the second half of next year at the earliest that it resumes …
18th December 2024
BoT to resume easing cycle next year Thailand’s central bank (BoT) today left interest rates unchanged (at 2.25%), but kept the door open to rate cuts next year. With inflation set to stay very low and growth likely to struggle, we are expecting a total …
Overview – We expect another year of below-trend and below-consensus GDP growth in most of Asia in 2025, as tight fiscal policy and weak exports weigh on output. In China, a slowdown in construction will act as a further drag. Inflation is back to (or …
13th December 2024
Deflation concerns to sway BoT After a relatively quiet week in terms of scheduled events and releases, the coming week sees central bank meetings in Pakistan, Thailand, Indonesia, Taiwan and the Philippines. We are expecting holds in Indonesia and …
Prolonged crisis would weigh on the economy The easiest way out of the political crisis that Korea finds itself in would be for President Yoon Suk Yeol to resign. A resignation would trigger a presidential election within 60 days. Given the extent of …
6th December 2024
President Yoon Suk Yoel has rescinded his declaration of martial law, but Korea’s political crisis is far from over. The opposition are now trying to impeach the president, while financial markets remain volatile. This Update answers five key questions on …
4th December 2024
The declaration of martial law by Korea’s president is an extraordinary step that seems likely to trigger either the suspension of Constitutional democracy in Korea or the president’s own rapid impeachment and removal. For investors the key question is …
3rd December 2024
The November PMIs for Asia remained weak and are consistent with our expectation for manufacturing activity in the region to remain subdued in the near term. The data also showed a modest pick-up in price pressures. But with headline inflation now below …
2nd December 2024
Activity data highlight need for further support We were one of the few analysts to correctly predict this week’s rate cut by the Bank of Korea , and we think it is only a matter of time before the Bank cuts again. The central bank’s statement and the …
29th November 2024
We held an online session on US import tariffs on 26th November. (See a recording here ). In this Update we answer the questions we were most asked. What are Trump’s motives for threatening tariffs and will he follow through? Trump has spoken about using …
Asia Chart Pack (November 2024) …
The Bank of Korea cut interest rates again today by a further 25bps (to 3.00%) and made clear in its statement that more easing is on the way. We are sticking with our view that the central bank will continue to cut interest rates steadily over the coming …
28th November 2024
Interest rates cut, further easing ahead The Bank of Korea cut interest rates today by 25bps (to 3.00%) for a second meeting in a row. We were one of the few analysts to correctly predict a cut, with 34 out of 38 forecasters polled by Reuters expecting …
