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There is a huge amount of uncertainty over how things will play out over the coming weeks as the coronavirus crisis continues to unfold, and any forecasts should be taken with more than the usual pinch of salt. We are pulling down our forecasts again for …
10th March 2020
Most countries in Emerging Asia are net importers of oil, so would usually stand to gain from a big drop in prices. But with the coronavirus continuing to spread and people increasingly avoiding public spaces, the windfall from lower oil prices is more …
9th March 2020
Korea’s position as a key supplier of high-tech intermediate goods means it plays an important role in regional supply chains. Extended factory closures due to the spread of the coronavirus would cause significant disruption to the global electronics …
Bank of Korea complacent in face of virus threat There has been some better news from Korea over the last few days, with the country reporting a drop in the number of new infections. (See Chart 1.) The government has enacted a rapid ramp-up in screening, …
6th March 2020
The Central Bank of Sri Lanka (CBSL) left interest rates unchanged today, and while it kept the door open to loosening, high inflation and the CBSL’s concern over the rupee limits the scope for further cuts. Having cut rates three times since last May, …
5th March 2020
Bank Negara Malaysia (BNM) today cut its policy rate from 2.75% to 2.50%, and with headwinds to growth worsening, we think the central bank will ease policy again at its next policy meeting in May. 15 of the 24 analysts polled by Bloomberg, including …
3rd March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
The coronavirus itself may not trigger a wholesale reorganisation of supply chains, but it strengthens the argument for companies to reduce associated risks. One response might be to introduce more redundancy into supply chains to lessen reliance on …
PMIs likely understate weakness of industry PMI readings for Asia are likely to have understated the disruption to industry from factory shutdowns in China, and the recent rise in coronavirus cases outside of China means that worse may be yet to come. …
Korean trade data may get worse before they get better Growth in Korean trade in February masks underlying weakness. Trade with China shrank sharply due to disruption from the coronavirus, and there were few signs of strength elsewhere. Korean trade data …
Malaysia unveils fiscal response to virus The political wrangling that has been taking place since Malaysia’s Prime Minister Mahathir Mohamad unexpectedly resigned on Monday, did not prevent him from unveiling a stimulus package of 20bn ringgit (1.3% of …
28th February 2020
The Bank of Korea (BoK) unexpectedly left its main policy rate on hold at 1.25% today. But with the economic cost of the coronavirus mounting, policy support will have to be ramped up soon – we are forecasting a cut in April. Today’s decision was the …
27th February 2020
We still don’t have much in the way of hard data, but the figures that have been published so far suggest the coronavirus and the measures that China has taken to contain it, are having a severe economic impact. Tourist arrivals into Thailand have fallen …
25th February 2020
The political turmoil that has engulfed Malaysia is likely to undermine the government’s response to the coronavirus crisis and could also set back the progress the country has made in tackling corruption. Malaysia’s politics was thrown into turmoil …
24th February 2020
More countries considering fiscal response to virus Bank Indonesia this week became the latest central bank in the region to cut interest rates in response to the coronavirus outbreak (see here ), and we expect further easing over the coming week with the …
21st February 2020
Further signs that coronavirus is hitting industry Korean trade data for the first 20 days of February add to the evidence that factory closures in China are disrupting local industry. The timely nature of the Korean trade data makes them a good …
With the number of confirmed coronavirus cases in Korea jumping sharply over the past few days, the Bank of Korea is almost certain to cut interest rates at its meeting next week. The number of confirmed cases of the coronavirus in Korea doubled on …
20th February 2020
Bank Indonesia (BI) today cut its main policy rate by 25bp to 4.75%, but we doubt this will be the start of a prolonged easing cycle given the country’s relatively limited exposure to the slowdown in China and the central bank’s concern over the rupiah. …
With the economic cost of the coronavirus mounting, Singapore’s government opted to loosen policy significantly in its 2020 budget today. Growth is still likely to slow sharply, but the strong fiscal response means that the economy should be able to …
18th February 2020
Coronavirus to cause sharp slowdown in Thailand Figures published today reveal that Thailand’s economy was in a poor state, even before the coronavirus hit. With tourist arrivals collapsing and the disruption from factory closures in China likely to …
17th February 2020
Singapore to produce strong fiscal response to virus Singapore’s very strong fiscal position (it has fiscal reserves equivalent to 100% of GDP) mean it could afford a significant loosening of fiscal policy when it unveils its 2020 budget on Tuesday to …
14th February 2020
Factory shutdowns in China are starting to have significant knock-on effects on the rest of the region as companies struggle to source intermediate goods. The garment and electronics sectors are likely to experience the worst of the disruption, while …
13th February 2020
Given the rising economic toll from the coronavirus, worries about rising property prices and high levels of household debt are unlikely to stop the Bank of Korea (BoK) from cutting interest rates at the end of the month. With the economic costs of the …
12th February 2020
Worse to come GDP growth in Malaysia slowed again in Q4 and the disruption to trade and tourism flows from the coronavirus outbreak is likely to cause a much sharper downturn this quarter. The Prime Minister’s recent pronouncement that the economy will …
Some signs that coronavirus is hitting industry Korean trade data serve as a good bellwether for the rest of the region and figures for the first 10 days of February suggest that factory closures in China are disrupting regional industry. The timely …
11th February 2020
New GDP growth forecasts With the coronavirus continuing to spread, the economic costs to the rest of the region are starting to mount. There is clearly a great deal of uncertainty over how long the crisis will last, but based on the assumption that the …
7th February 2020
The Philippines (BSP) cut its main policy rate by 25bp to 3.75% today and with growth likely to disappoint and inflation set to remain well within the BSP’s target, we expect more easing later this year. Today’s decision to cut was correctly predicted by …
6th February 2020
The Bank of Thailand (BoT) cut interest rates today, and with the economy being hit hard by a slump in tourist arrivals as well as disruption to its industrial sector as the coronavirus continues to spread, we think more easing is likely. We have …
5th February 2020
Indonesia’s direct ties to China are relatively small, which makes the economy less vulnerable to the spread of the coronavirus than other countries in Emerging Asia. The main channel through which Indonesia will be affected is falling commodity prices …
A period of prolonged factory closures in China as the authorities struggle to contain the coronavirus would cause significant disruption to the rest of the region and is another reason why growth in Emerging Asia looks set to slow sharply this quarter. A …
3rd February 2020
Timely data too early to show impact from coronavirus PMIs for Emerging Asia (ex. China) and Korean trade data were mostly unchanged in January, but neither give a good indication of how the coronavirus has hit the regional economy most recently. With the …
Vietnam: policy dilemma for central bank Inflation in Vietnam reached its highest rate since 2013 in January, but we doubt the central bank will respond by raising interest rates. The sharp rise in inflation from just 2.0% y/y in September to 6.4% in …
31st January 2020
Before the coronavirus hit, the latest data suggested the region’s economies had turned a corner. Our regional GDP Tracker nudged up slightly at the end of last year, while GDP figures for Taiwan, Korea, Singapore and the Philippines (the only four …
30th January 2020
The Central Bank of Sri Lanka (CBSL) unexpectedly cut interest rates today but given our view that the rupee will come under downward pressure again this year, the scope for further loosening is limited. The CBSL’s decision to cut both its deposit and …
A sharp fall in Chinese tourist arrivals will hit economic growth in Emerging Asia hard this quarter. The impact will be even more severe if the disruption spreads to the region’s industrial sectors. At least initially, the main channel through which the …
28th January 2020
Wuhan virus continues to spread With the number of new cases of the coronavirus continuing to increase, concern is rising across Asia over the potential economic impact. If the outbreak continues to spread, one of the main channels through which the …
24th January 2020
Bank Indonesia (BI) today left interest rates unchanged at 5.0% but kept the door open to further cuts. With the economy struggling, inflationary pressures low and the rupiah continuing to appreciate against the US dollar, we think further easing is …
23rd January 2020
Pick-up in growth unlikely to be sustained this year GDP growth picked up pace again in the final quarter of last year, but with the big boost from government spending likely to fade this year, we think this will be as good as it gets. Data published …
The legislation that President Joko Widodo has presented to parliament, which includes proposals to cut red tape, lower taxes and free up the labour market, would form the basis of any foreign investor’s wish list. However, with opposition to the reforms …
22nd January 2020
Bank Negara Malaysia (BNM) today cut its policy rate from 3.00% to 2.75%, and with growth set to slow further over the next couple of quarters, we think the central bank will ease policy again later this year. Only two of the 26 analysts polled by …
Gradual recovery to follow rebound in Q4 GDP growth rebounded more strongly than expected at the end of last year, and the economy should continue to stage a recovery over the coming quarters. The strong outturn in Q4 means we no longer think that the …
Fears are growing about the spread of a newly-identified coronavirus across Asia. In this Update we discuss the likely implications for the region’s economies. Stock markets across the region fell today as fears over the spread of the virus escalated. It …
21st January 2020
GDP growth in Taiwan continues to buck the regional trend Taiwan’s economy picked up steam again last quarter, and with the economy continuing to benefit from the trade war, we expect growth to remain strong throughout 2020. Data published today show that …
In this Update we take a look at the important elections and political events that are set to take place across Asia over the coming year, assessing the implications for policymaking and economic growth. One of the main political events of the year has …
20th January 2020
Strong rupiah gives space for BI to cut again Bank Indonesia is likely to leave interest rates unchanged at its meeting on Thursday, but the strong recent performance of the rupiah (see Chart 1) means further cuts are likely over the coming months. Chart …
17th January 2020
The Bank of Korea (BoK) left policy unchanged today, but with the economy struggling for momentum and price pressures set to remain weak, we expect the Bank to resume its easing cycle later this year. Today’s decision marks the second consecutive meeting …
Overview – Most countries in Emerging Asia should stage a gradual recovery over the coming year helped by continued policy support. Several have announced expansionary budgets or fiscal stimulus packages, while most central banks are likely to cut …
16th January 2020
The signing of the Phase One trade deal is unlikely to spell the end of the trade war, and the disruption it has caused to Asian supply chains looks set to continue. On the plus side, the deal reduces the chances of an escalation in the near term, and if …
The two key economic challenges facing Tsai Ing-wen in her second and final term as Taiwan’s president are the deteriorating demographic outlook and the long-term decline in productivity growth. A combination of the trade war, which is leading some …
13th January 2020
Taiwan heads to the polls Given her huge lead in the opinion polls, it will come as a major surprise if Tsai Ing-wen is not re-elected for a second and final term as Taiwan’s president on Saturday. Whether Tsai can get to grips with the main challenges …
10th January 2020
