Filtered by Subscriptions: Asia Economics Use setting Asia Economics
Headline inflation rates across emerging Asia, which had been trending lower this year, look set to pick up in coming months. Nonetheless, inflation in the region is unlikely to rise sharply and should not be an obstacle to further policy loosening in …
11th September 2012
All five central banks which announce their policy rate decisions this week are likely to signal that global worries are a key downside risk for local growth. Only in Korea do we expect a policy rate cut over the next few days, but, given our view that …
7th September 2012
Bank Negara Malaysia (BNM) kept its policy rate on hold today at 3%, as was widely expected. The economy has shaken off the global slowdown better than almost any in Asia, meaning there is little urgency for a rate cut. We expect rates to be held until …
6th September 2012
The Bank of Thailand (BoT) kept its policy rate at 3.0% today, as was widely expected. Healthy domestic demand is cushioning the blow from soft exports, but we think persistent global weakness will prompt the BoT to loosen its policy settings ahead. We …
5th September 2012
Australia’s economy slowed to close to its trend rate in the second quarter, after an unsustainable surge in mining investment drove strong growth in Q1. Although growth is likely to weaken again in the second half, Australia will remain a strong …
Demographic trends are turning much less favourable in many countries across Asia. Nevertheless, this is unlikely to be the end of the region’s growth miracle that many commentators have claimed it will be. We expect emerging Asia will continue to enjoy …
3rd September 2012
The August PMIs showed that Asia’s manufacturers are continuing to struggle. With global demand set to remain weak, we see little prospect of a strong recovery. However, policy loosening should prevent conditions from getting much worse. … Regional …
We expect global demand to stay weak in coming quarters and for labour markets and consumer confidence in Asia to soften as a result. Central banks in the region are likely to ease further, which should prevent a sharp fall in credit and economic growth. …
31st August 2012
Today’s GDP data from India show that although the y/y rate of growth increased, the economy remains very weak. India’s economic troubles are mostly self-inflicted and result from policy paralysis. Unfortunately, the situation is unlikely to improve …
The arrest last week of two well-connected businessmen has helped to highlight the worsening problems in Vietnam’s banking sector, which has seen a sharp rise in non-performing loans and a slump in credit growth. Until these problems are fixed and credit …
30th August 2012
GDP growth in the Philippines remained strong in Q2, with the pace of expansion slowing only slightly compared with Q1. Both domestic demand and exports continued to grow at a healthy pace. But with the crisis in the euro-zone set to weigh on exports, we …
Indonesia has seen a sharp deterioration of its current account position over the past year. Large inflows of foreign direct investment mean the country should have few problems sustaining the deficit over the medium term. However, the worsening current …
29th August 2012
Malaysia’s government is hoping that its Economic Transformation Programme (ETP) will take the country to high-income status by the end of this decade. Structural problems and sluggish global growth will probably cause it to miss this target, but there is …
The minutes of the US Federal Reserve’s August meeting strongly suggested that the Fed will embark on a third round of quantitative easing (QE3) in September. This week’s lead article assesses the likely impact of QE3 on equities, growth and inflation in …
24th August 2012
Over the past few weeks, Indonesia, Malaysia and Thailand all reported GDP data that were better than the consensus expected, reflecting strong domestic demand helping to offset export weakness. However, domestic demand in Asia is unlikely to stay as …
22nd August 2012
Thanks mainly to strong domestic demand, economic growth in ASEAN has held up much better than in the rest of Asia so far this year. Although weaker exports will weigh on demand in the coming quarters, ASEAN should continue to outperform the rest of Asia …
21st August 2012
Today’s Q2 GDP figures from Thailand were better than the consensus had expected. Nonetheless, we still think that growth will be sluggish over the next few quarters and that the Bank of Thailand (BoT) is likely to cut its policy rate by year-end. … …
20th August 2012
Asia’s export weakness is showing no signs of abating. Indeed, the July trade data reported so far across the region suggest that the export slowdown has deepened. … Asia’s exports make a poor start to …
17th August 2012
Efforts by policymakers in Taiwan and China to strengthen their economic ties have had a negligible impact on Taiwan’s merchandise exports to the mainland, although Taiwan has benefitted in some other ways. Further measures are likely to be announced in …
16th August 2012
Today’s GDP data show that Malaysia’s growth unexpectedly increased in Q2, with strong domestic demand more than offsetting export weakness. We are raising our 2012 growth forecast and no longer expect an interest rate cut this year. Nonetheless, a …
15th August 2012
The latest output and inflation data suggest India is now suffering from stagflation. Industrial production has stopped growing while inflation is stuck at around 7%. What’s more, there is little reason to expect an improvement on either front any time …
14th August 2012
Asia’s strong rebound from the 2008-09 global financial crisis took many by surprise. Despite the policy easing now underway in Asia, the region’s recovery from the current global crisis is unlikely to be as dramatic. … Emerging Asia set for weak recovery …
13th August 2012
The State Bank of Pakistan (SBP) cut its discount rate by 150bp to 10.5% today. Monetary policy is likely to be loosened further in an effort to revive growth, even at the risk of stoking already-high inflationary pressures. We have pencilled in another …
Ahead of last Thursday’s National Day holiday in Singapore, a music video urged patriotic citizens to “celebrate National Night by giving the country the population spurt it so desperately needs”. The tongue-in-cheek marketing campaign picked up on a …
10th August 2012
The Bank of Korea (BoK) held its policy rate at 3.0% today. Nonetheless, we believe that global growth will continue to disappoint and that more policy stimulus will be needed soon to support Korea’s economy. The upshot is that we have pencilled in a 25bp …
9th August 2012
The Reserve Bank of Australia (RBA) held its policy rate at 3.5% today. It probably won't be long until the RBA cuts again, but it is nearing the end of its loosening cycle. … Australia pauses, but one more rate cut is on the …
7th August 2012
Indonesia’s economy picked up slightly in the second quarter, despite weaker export demand. Indonesia is weathering the global slowdown well compared with other countries in the region. We expect GDP growth to average 6.0% this year and next. … Indonesia …
6th August 2012
India attracted international headlines for all the wrong reasons (again) following massive power cuts that left half of its population without electricity for two days. Power cuts are alsoa big issue in Pakistan. Unfortunately, both countries are likely …
3rd August 2012
The July PMIs showed that conditions within Asia’s manufacturing sectors are getting worse. A silver lining is that price pressures continue to ease, which should make more policymakers comfortable about introducing stimulus. … Manufacturing deteriorates …
1st August 2012
Central banks in the Philippines, Korea and Vietnam have cut their policy rates over the past month in response to the deterioration in global demand. Q2 GDP data out so far in Asia have been soft, mainly due to weakness in exports. Given our view that …
31st July 2012
Taiwan’s export-oriented economy is struggling amid the global slowdown. We expect the global backdrop to remain difficult, while local inflation should stay among the lowest in Asia. Accordingly, we think Taiwan’s policymakers will soon step up their …
While today’s decision to leave interest rates unchanged was expected, the accompanying statement is a bit more newsworthy. It makes gloomy reading. The central bank cut its growth forecast, increased its inflation forecast and gave no hint that it will …
India is less vulnerable to a failed monsoon than it was a decade ago. But, if it persists, this year’s disappointing rainfall may still have a significant negative impact on output, inflation and the budget. … What will be the effect of India’s …
30th July 2012
The prices of many agricultural commodities have risen strongly over the past couple of months, raising fears of a sharp rise in inflation across the region. However, we believe the recent spike in global food prices will be temporary and will not lead to …
27th July 2012
Today’s GDP data from Korea show that the economy grew at a sub-trend pace in the second quarter. Given that tackling inflation is no longer policymakers’ top priority, more stimulus measures are likely to be introduced soon in an effort to revive growth. …
26th July 2012
The Philippines’ central bank (BSP) today cut its policy rate by 25bp to 3.75%. With inflationary pressures set to remain low and global demand likely to disappoint this year, we expect further policy loosening before the end of the year. … Rate cut in …
Compared with other emerging regions, Asia is relatively well placed to withstand sluggish global growth. For one thing, policymakers have the ability and willingness to significantly loosen monetary and fiscal policy. Although we expect most countries to …
Political tensions have intensified in Thailand due to the government’s efforts to amend the constitution. There is a significant chance that the proposed reforms could trigger a political deadlock and economic disruption, although any fallout for local …
20th July 2012
There has been no let-up in the bad news from India. Economic activity remained very weak in the second quarter of the year while inflation is still above 7%. This combination is set to persist in the coming months, leaving room for only 50bp of rate cuts …
Asian sovereign bonds have performed well in the years since the 2008-09 global crisis, offering investors reasonable yields without excessive risk. But some may still face sell-offs if global conditions take a turn for the worse, as we think they will. … …
19th July 2012
Figures released on Friday showed that China’s economy grew by just 7.6% y/y in the second quarter, the weakest pace since the first quarter of 2009. The lead article this week examines the effect of the Chinese slowdown on the rest of the region so far. …
13th July 2012
Today’s GDP data show that Singapore's economy contracted in Q2, as manufacturers struggled. The figures back up our view that this will be a lacklustre year for the Singapore economy, and we retain our view that the central bank will loosen policy at its …
The Bank of Korea (BoK) cut its policy rate to 3% today. It was a surprise that the move came at this meeting, but we have long held the view that rates would need to be cut this year to support the economy. Indeed, with inflation subdued and conditions …
12th July 2012
Bank Indonesia (BI) today left its main policy rate unchanged at a record low of 5.75%. Although inflation is likely to rise sharply in the second half of the year, with global demand set to remain weak we expect interest rates to remain on hold for the …
The Philippines looks increasingly likely to be awarded investment grade status sometime in the next couple of years. A major improvement in the country’s fiscal position and much better macro-fundamentals mean an upgrade would be well deserved. … The …
9th July 2012
Bank Negara Malaysia (BNM) left its policy rate unchanged at 3% today. This came as no surprise. Resilient domestic demand is for now compensating for an export slowdown. Nevertheless, we still expect BNM to loosen policy later in the year as the global …
5th July 2012
The Reserve Bank of Australia (RBA) held its cash rate at 3.5% today, but the RBA's loosening cycle is still not over. Weakening external demand and recent falls in commodity prices will slow the economy during the rest of the year. We have pencilled in …
3rd July 2012
The June PMIs for Asia were disappointing. With global growth set to remain weak and the situation in the euro-zone likely to worsen, we expect conditions in Asia’s manufacturing sector to remain subdued for the rest of the year. … Latest PMIs suggest …
2nd July 2012
Monday 2nd July marks the 15-year anniversary of the start of the Asian Financial Crisis. In retrospect, the region weathered the crisis and its aftermath well. However, trend growth has slowed sharply in the four countries worst affected by the crisis. … …
29th June 2012
Economic growth in Vietnam in the second quarter of this year remained weak. Easing inflation and looser monetary policy will help, but growth will be held back by ongoing problems in the banking sector and weaker exports. Accordingly, we think Vietnam’s …
