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The September PMIs for Emerging Asia were generally disappointing. With new orders also lacklustre, the manufacturing recovery is likely to remain uneven and slow-going. … Manufacturing recovery losing …
1st October 2014
The Reserve Bank of India (RBI) left its policy rates on hold today but, given the weakness of recent activity data and the fact that inflation has fallen below the central bank’s near-term target, we think that modest policy loosening will come onto the …
30th September 2014
Asia’s financial markets performed poorly in September, largely reflecting concerns about the outlook for US monetary policy. The New Zealand and Australian dollars were the worst performers, but Indonesia’s vulnerabilities have also been dragged back …
Lower oil prices should provide a boost to the economies of Emerging Asia. However, some countries are likely to benefit more than others. Indonesia and Thailand stand to gain the most, while Malaysia, which is the region’s only net oil exporter, will be …
26th September 2014
Today’s GDP data show that Vietnam’s economy is showing gradual signs of a recovery from the financial crisis that erupted more than three years ago. Looking ahead, the government is making some progress in cleaning up the banks, but more resources are …
Malaysia’s government finances have traditionally stood out as a potential threat to its economic stability, but there have been notable improvements in recent years. The 2015 budget is expected to continue on the path of fiscal reform, but is unlikely to …
24th September 2014
Sizeable falls in a number of Asian currencies against the US dollar over the past month have rekindled unwelcome memories of last summer’s “Taper Tantrum”. As was the case during last year’s sell-off, the Indonesian rupiah, has been one of the hardest …
23rd September 2014
Following last week's strong GDP figures, the central bank of Sri Lanka (CBSL) kept its deposit and lending rates on hold at 6.5% and 8.0%, respectively, today. But with credit growth staying sluggish, the CBSL moved to limit access to its deposit …
We have been arguing for some time that Emerging Asia’s credit binge is unsustainable, and that credit growth will need to slow for a crisis to be avoided. While there are encouraging signs that credit is starting to slow in some economies, notably China …
19th September 2014
Although the Malaysian central bank (BNM) kept its policy rate on hold at 3.25% today, we continue to see scope for at least another 25bp hike in the coming quarters. … Rate pause in Malaysia likely to prove …
18th September 2014
New Zealand’s economy slowed in Q2, but that wasn't necessarily a bad thing after several quarters of breakneck growth. Indeed, the central bank has tightened monetary policy over the last year in an effort to prevent the economy from overheating. Even …
With the economy showing signs of the improvement, the Bank of Thailand (BoT) unsurprisingly held its policy rate at 2.0% at its meeting today. Nonetheless, the economy is still some way away from full health and the BoT is unlikely to be comfortable with …
17th September 2014
Sri Lanka's economy continued to impress in the first half of 2014, and looks set to remain one of Asia's fastest growing economies. … Sri Lanka to remain one of Asia's star …
16th September 2014
Weak Chinese demand for exports from Emerging Asia in recent months has led some commentators to worry that China’s move up the value chain is having unwelcome knock-on effects for the rest of the region. But this isn’t a new development, and it doesn’t …
Today’s industrial production data for India have dampened hopes that the sector is on the cusp of a sustained recovery. But the good news is that inflation has also slowed, which could open up the possibility of interest rate cuts in order to support the …
12th September 2014
Data released last week showed that Australia added more jobs in August than in any other month on record. But the jump does not change the broader picture of labour market weakness, and it does not mean that Australia’s economy is over the worst of its …
Interest rates in Korea, which were left on hold today, are likely to rise from next year as economic growth picks up. However, with inflation likely to remain fairly subdued, the pace of tightening looks set to be fairly gradual. … Bank of Korea set to …
Despite recent sharp falls in inflation and worries about the slowing economy, Bank Indonesia (BI) today left interest rates on hold amid concerns about the current account position. We expect interest rates will remain on hold until at least the end of …
11th September 2014
The central bank in the Philippines (BSP) today hiked two key policy rates against a backdrop of increasing risks in the financial sector and rising inflationary pressures. We expect to see further tightening before the end of the year. … Further …
The Reserve Bank of New Zealand (RBNZ) kept its policy rate at 3.5% at its meeting today, pausing a hiking cycle that began in March. The RBNZ will wait to see the effects of previous hikes, but we still see scope for another rate increase in early 2015. …
Thailand's economy is showing signs of improvement going into the second half of 2014 amid reduced political uncertainty. However, it continues to face headwinds that will restrain the pace of its recovery. … Thailand's recovery will be …
10th September 2014
There are signs property prices are coming off the boil in Hong Kong, Taiwan and Singapore. That said, prices in these three economies still look significantly overvalued, and a slump in prices remains one of the key risks facing these economies over the …
5th September 2014
Australia’s economy slowed sharply in Q2, as the surge in net exports at the start of the year gave way to a sharp fall. The more general picture is one of an economy struggling to adjust to a slowdown in mining investment. We think growth is likely to …
3rd September 2014
The Reserve Bank of Australia (RBA) kept its policy rate on hold at 2.5% at its meeting today, as widely expected. With recent data weak, most analysts have reined in their expectations for policy tightening but the consensus is still that the RBA will …
2nd September 2014
While the region's manufacturing sector recovery remains intact, the August PMIs for Emerging Asia are a reminder that a strong and sustainable pick-up is still some way away. … Manufacturing recovery intact, but headwinds …
1st September 2014
Emerging Asia's GDP data for the second quarter proved to be a mixed bag, with most economies in South East Asia picking up, but the Newly Industrialised Economies having some problems. We expect some improvement over the coming quarters, as global demand …
Today’s Q2 GDP data for India, which show that the economy grew at its fastest pace since Q1 2012, come as welcome news. But we suspect that this might be as good as it gets for some time. Both fiscal and monetary policy look set to remain tight, while …
29th August 2014
Most of Asia’s stock markets and currencies strengthened in August. The key exception is Pakistan, where political uncertainty has returned to the fore. … Asian financial markets higher, but political risks weigh on …
28th August 2014
GDP growth in the Philippines accelerated in the second quarter of the year, due to a strong contribution from net exports. Looking ahead, prospects for both exports and domestic demand look healthy, and we expect the economy to gain more momentum in the …
The region's exporters are still struggling. Although exports from Emerging Asia as a whole expanded at their fastest pace all year in June, this was mostly due to a recovery in China's exports, which have been distorted by over-invoicing in early 2013. …
27th August 2014
India’s Prime Minister Narendra Modi is approaching the end of his first hundred days in office on 3rd September with a worrying sense of drift rather than direction. Hopes that he would make a concerted early push on economic policy reform have been …
22nd August 2014
The trend over the past year in most of Emerging Asia has been towards bigger current account surpluses or smaller deficits. This should make their currencies less vulnerable to any negative shifts in investor sentiment when the Fed eventually starts to …
21st August 2014
Thailand's economic performance improved in the second quarter, following the military coup in late May that has helped calm political unrest and boosted confidence in the economy. Growth is set to pick up further in the coming quarters, but it will take …
18th August 2014
Inflation remains subdued across most of Asia, and we see little danger of it accelerating significantly any time soon. As such, we only expect rate hikes in a few economies before the end of 2014 . … Asian inflation likely to stay …
Malaysia's economy accelerated for the fifth straight quarter in Q2, supported by strong export growth. Although Malaysia’s headline growth rate is likely to drop off in the second half of the year as monetary conditions tighten, fiscal consolidation …
15th August 2014
Today’s interest rate cut by the Bank of Korea (BoK) is unlikely to mark the start of a prolonged period of policy easing. In fact, with growth likely to bounce back strongly in the second half of the year on increased government spending and faster …
14th August 2014
Today’s industrial production and inflation data for India were a disappointment. The slowdown in industrial production growth cast doubt on the recent recovery of the sector, while the sharp rise in inflation could make it difficult for the central bank …
12th August 2014
A sharp slowdown in the Korean economy last quarter and dovish rhetoric from the central bank has raised expectations that interest rates will be cut at Thursday’s scheduled policy meeting. With the economy likely to rebound strongly in the second half of …
11th August 2014
EM assets sold off sharply last year after the US Fed hinted that QE was on borrowed time, with some of Asia's major economies getting caught up in the turmoil. Markets have become jittery again in the last week, at least partly because of speculation …
8th August 2014
The Bank of Thailand (BoT) unsurprisingly held its policy rate at 2.0% at its meeting today amid an improving growth outlook. But as the economy may take some time to achieve a sustained recovery, we expect the BoT to keep monetary policy unchanged for …
6th August 2014
The Reserve Bank of India (RBI) left its policy rates on hold today, as expected, but with inflation on a downward trend there should be scope for the RBI to cut rates sooner than most analysts expect. … Indian rates could be cut sooner than …
5th August 2014
A breakdown of today’s GDP data show weak domestic demand as the main factor responsible for the slowdown in Indonesia’s economy last quarter. The disappointing figures act as a timely reminder of the scale of the challenge facing Joko Widodo as he …
The Reserve Bank of Australia (RBA) kept its policy rate on hold at 2.5% again today, and reiterated in its statement that it does not expect to make any rate changes in the near term. We think the policy rate is likely to stay unchanged for the …
Emerging Asia’s consumers have been struggling in recent months. Tight labour markets and improving growth prospects point to some pick-up going forward, but high levels of household debt in a number of economies, coupled with monetary tightening, will …
4th August 2014
The July PMIs for Emerging Asia show that the region's manufacturing sectors generally fared well over the past month. Encouragingly, rising new orders suggests the recovery has further to run. … July PMIs point to strengthening …
1st August 2014
The central bank in the Philippines (BSP) hiked its main policy rate earlier today for the first time in over three years in a further attempt to reduce risks in the financial sector and clamp down on rising inflation. We believe further tightening is …
31st July 2014
Most of the region's currencies and equity markets fared well over the past month. In particular, Joko Widodo's presidential election victory in July helped Indonesia's financial markets stage a rebound after a weak showing in June. … Indonesia's …
Taiwan’s economy continued to gain momentum last quarter, largely owing to a rebound in investment. Over the next year or so, we expect Taiwan’s economy to continue to record decent growth, supported by a combination of strong exports and loose monetary …
The central banks of New Zealand, the Philippines and Malaysia all tightened monetary policy last month amid signs that policymakers are becoming increasingly concerned that loose monetary policy is helping to fuel asset bubbles, especially in the …
30th July 2014
Financial markets have welcomed the election of Joko Widodo as Indonesia’s president, but there is still great uncertainty over his policy priorities and his ability to push through his own agenda. Mr Widodo’s stance on how to reform the country’s …
28th July 2014
