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The last week has been dominated by concerns that the People’s Bank of China was embarking on a competitive devaluation of the renminbi and fears that the Chinese economy might be heading for a “hard landing“. Neither seemed likely to us, and today's …
17th August 2015
The central bank in the Philippines (BSP) today left its policy rate on hold at 4.0%. With growth set ton recover in the coming quarters, but inflation likely to remain low, we think the central bank will be in little hurry to adjust monetary policy. … …
13th August 2015
Considering the headwinds that were facing Malaysia’s economy in the second quarter – such as the introduction of the Goods & Services tax (GST) in April, low commodity prices and the generally weak global environment – growth of 4.9% y/y was a good …
The Bank of Korea (BoK) kept its policy rate unchanged at a record low of 1.50% today, despite talk of a fresh round of "currency wars" across Asia following the People's Bank of China's decision to lower the daily reference rate for the renminbi in …
The second downward revision to the People‘s Bank of China‘s daily reference rate for the renminbi has today intensified talk that a fresh round of “currency wars“ is about to sweep across Asia. We think that is unlikely. So far, the drop in the renminbi …
12th August 2015
The revised estimate of Singapore’s Q2 GDP confirmed that the economy contracted sharply last quarter. Given that Singapore’s economy is highly volatile, the Q2 contraction is not, on its own, cause for alarm, but the subdued outlook for global demand and …
11th August 2015
As Singapore celebrates its 50th anniversary since independence on 9th August, it can look back on a half-century in which it achieved enormous economic success. However, the country goes into its second 50 years facing doubts over the suitability of a …
7th August 2015
The Bank of Thailand’s (BoT) kept its policy rate on hold at 1.5% today, but with the economy still struggling for momentum, we think it is still too early to call the end of the easing cycle. We continue to see scope for one more 25bp cut this year. … …
5th August 2015
Indonesia's economy recorded another quarter of weak growth in Q2, again showing the negative effects of lower commodity prices. If, as we expect, there is no improvement in the second half of the year, pressure on Bank Indonesia to reduce interest rates …
Although most of Emerging Asia's PMIs ticked up in July, the woes of the region's manufacturing sectors are far from over. In fact, in the three economies where the PMIs most closely track the hard data, the surveys still point to falling manufacturing …
3rd August 2015
Asian currencies have fallen again over the past week, with a number now at multi-year low sagainst the US dollar. With the exception of Malaysia, where US dollar debt is high, currency weakness is not a major threat to the region. In fact, in so far as …
31st July 2015
A new manufacturing PMI survey for Malaysia launched by Nikkei and Markit earlier this month appears to track the hard data reasonably well and points to a further slowdown in the manufacturing sector in the months ahead. … How useful is Malaysia's …
GDP growth in Taiwan slowed much more sharply than expected in the second quarter of the year, with the recent slump in export demand taking a heavy toll on the economy. However, there are reasons to think that the economy will turn a corner soon on the …
Asian currencies have been caught up in a general sell-off of EM assets this month, as interest rate hikes in the US have started to loom. Some currencies are now at or close to multi-year lows. That said, with a couple of exceptions, Asian currencies …
30th July 2015
The controversy surrounding the state investment company, 1Malaysia Development Bhd (1MDB), has intensified in recent days after Prime Minister Najib Razak, who has been accused of taking money from the fund, on Tuesday sacked his deputy prime minister, …
29th July 2015
There is concern among some parts of Taiwan’s business community that a cooler stance toward China under the next government could hurt the economy. However, closer relations between China and Taiwan have not delivered the benefits that its proponents …
24th July 2015
Korea's economy slowed sharply in the second quarter, reflecting the outbreak of Middle East Respiratory Syndrome (MERS). But with the worst of the MERS outbreak over, Korea's economy should recover over the coming quarters, supported by a combination of …
23rd July 2015
A severe drought in Thailand is hurting its agricultural sector and adding to the country’s economic woes. Rising downside risks to growth will increase pressure on the Bank of Thailand (BoT) to provide further policy support. … Drought adds to …
21st July 2015
In our Q3 Emerging Asia Outlook , which was published on Thursday, we rolled out our forecasts to include 2017. This Weekly looks in more detail at the region’s growth prospects for the year after next. … What to expect from Asia in …
17th July 2015
After a poor start to 2015, we expect growth in Emerging Asia to pick up in the second half of the year as the benefits of lower oil prices and loose monetary policy filter through to the domestic economy. Further ahead, a slowdown in credit growth and …
16th July 2015
With inflation still well above target, today’s decision by Bank Indonesia (BI) to leave its main policy rate on hold at 7.50% was no great surprise. While we think rates will stay on hold in the coming months, we expect to see a cut towards the end of …
14th July 2015
The marked contraction in Singapore’s economy in the second quarter is not, on its own, cause for great concern. However, the outlook for the domestic economy is clouded by the likely unwinding of a credit bubble that has developed over years of loose …
Property in both Hong Kong and Taiwan looks significantly overvalued. A slump in prices is one of the major risks for these economies over the coming year. … Property price bubbles a …
10th July 2015
Despite the weak economy, the Bank of Korea (BoK) kept its policy rate unchanged at a record low of 1.50% today. We think it will take a severe deterioration in the growth outlook to convince the BoK to cut rates again given concerns about household …
9th July 2015
The continued resilience of the labour market in June seems odd given the economic challenges that Australia is facing. As such, we expect that an easing in jobs growth and a rise in the unemployment rate in the second half of the year will play a part in …
Thailand has struggled with disappointing export growth over the past couple of years, with subdued global demand and real exchange rate appreciation only telling part of the story. Other factors such as the country’s exposure to slowing industries and …
8th July 2015
The Malaysian ringgit weakened past its 1998-2005 peg level of 3.80 against the dollar today for the first time since the peg was scrapped. Today’s decline may have been triggered by concern over the fallout from Greece’s referendum, along with local …
6th July 2015
Emerging Asia’s exports have continued to disappoint over recent months. The downturn can be explained partly by falling commodity prices and currency effects. However, weak global demand has also played a part. We expect export growth to start to recover …
3rd July 2015
The economic outlook for Emerging Asia over the next few years varies considerably from one country to the next. Years of loose monetary policy in the region’s wealthy economies have led to the emergence of asset bubbles, and these countries are likely to …
Most of Emerging Asia's PMIs for Emerging Asia fell back in June, suggesting the region's manufacturing sectors remain in the doldrums. In the two economies where the PMIs most closely track the hard data, the fall in manufacturing output now appears to …
1st July 2015
Although most Asian equities markets and currencies weakened in June, reflectingrising expectations that the US Fed will soon start to raise interest rates and thegrowing risk of Greece exiting the euro-zone, the moves were not dramatic. Whilewe think …
30th June 2015
The direct links between Emerging Asia and Greece are very limited. Exports to Greece account for only a tiny proportion of regional GDP, while banking sector ties are negligible. What matters more from an Asian perspective is not so much the crisis in …
The Malaysian ringgit has been Emerging Asia’s worst-performing major currency over the pastyear. While a weak ringgit should bolster Malaysia’s exports, it also poses a threat to financialstability. The danger of further depreciation is one reason why we …
26th June 2015
Vietnam’s economy continued down the path to recovery in the second quarter, led by robust growth in the manufacturing sector. We are nudging up our growth forecast for this year to reflect the improving prospects for the economy. … Vietnam GDP …
The Korean government’s proposed fiscal stimulus package comes in response to the growing threat on the economy posed by the outbreak of Middle East Respiratory Syndrome (MERS). Although details of the stimulus package are still thin on the ground, an …
25th June 2015
A handful of Asian economies have been experiencing deflation for several months now, leading some commentators to suggest that a lasting and damaging period of falling prices lies ahead. However, we still think the current bout of deflation will prove …
23rd June 2015
Recent measures to boost growth in Indonesia have failed to address the main structural factors that are holding the economy back. Unless the government changes its approach, we see little prospect of a sustained economic recovery over the next couple of …
19th June 2015
Bank Indonesia (BI) today left its main policy rate on hold at 7.50% against a backdrop of slowing growth, high inflation and a weakening currency. We doubt there will be any changes in interest rates in the next few months either, but we see scope for …
18th June 2015
Based on the limited data available so far it looks like Middle East Respiratory Syndrome (MERS) has already taken a toll on Korea’s economy. In this Update , we outline our best and worse case scenarios for how the MERS crisis could unfold, and assess …
16th June 2015
Sri Lanka’s economy grew by 6.4% y/y in the first quarter of the year, unchanged from the final quarter of last year. Looking ahead, while the economy should continue to grow at a decent pace in 2015-16, political uncertainty is likely to keep growth …
15th June 2015
Credit growth has continued to slow in the economies which we previously highlighted at greatest risk of a financial crisis. However, with credit still expanding at a faster pace than nominal GDP, risks in the financial sector are continuing to build. And …
12th June 2015
The Bank of Korea (BoK) today cut its policy rate to a new record low of 1.50% amid growing economic risks from the recent outbreak of Middle East Respiratory Syndrome (MERS). But the hurdle for further cuts is high, given the financial stability risks …
11th June 2015
The Bank of Thailand's (BoT) decision to keep interest rates unchanged at 1.50% today came as no surprise, but with the economy still in a fragile state it is too soon to call the end of the easing cycle. … Thailand holds rates, but further easing …
10th June 2015
If Asia’s experience with SARS is anything to go by, the outbreak of Middle East Respiratory Syndrome (MERS) in Korea could have a short-lived but quite sharp negative impact on Korea’s economy. We think this threat will prompt the Bank of Korea (BoK) to …
8th June 2015
With just one year to go before presidential elections in the Philippines, attention is turning to who will replace the current president, Benigno Aquino. The current president deserves much credit for turning the Philippines fortunes around since his …
5th June 2015
Subdued global demand, rather than the strength of the Korean won against the Japanese yen is to blame for the poor recent performance of Korean exports. … Weak yen not to blame for Korean export …
1st June 2015
Most currencies sold off against the US dollar in May. Meanwhile, the region’s bond markets have settled down in recent weeks, after being briefly caught up in the global bond market sell-off earlier in the month. … Asian currencies fall, bond yields …
29th May 2015
Growth in Emerging Asia eased slightly last quarter, despite the boost from lower oil prices. Weak exports haven’t helped, but it has been the reluctance of consumers to spend their windfall from lower fuel prices that has stood out. … Asian growth eases …
Today’s handover from military to civilian rule in Myanmar marks another welcome step forward in the country’s political development. But the new government must overcome a number of major challenges if the economy is to meet its full potential. A key …
28th May 2015
The Philippines economy expanded at its weakest pace in more than three years in Q1, largely owing to a slowdown in export growth. However, we do not see cause for too much alarm. Exports are likely to recover later in the year, and domestic demand is …
