Filtered by Subscriptions: Asia Economics Use setting Asia Economics
The recent collapse in oil prices will help most Asian economies, with oil-intensive Thailand and India benefiting the most. The trouble though is that oil prices are falling because the global economy is getting weaker. Given Asia’s reliance on …
27th June 2012
India’s economic troubles are mostly self-inflicted and result from policy paralysis and opposition to reforms. That is unlikely to change until the 2014 general elections at the earliest … What’s gone wrong in …
26th June 2012
Exports from Asia have been weak so far in Q2 but domestic demand has held up reasonably well. Nonetheless, we doubt that growth in Asia’s trade-dependent economies would remain so resilient if global demand were to weaken significantly further. Headline …
Sharp falls in commodity prices over recent weeks have raised questions over the sustainability of Australia’s mining investment boom. On the plus side, the struggling non-mining parts of the economy would stand to benefit if further commodity price falls …
25th June 2012
Taiwan’s central bank (CBC) kept its policy rate at 1.875% today, as was widely expected. The economy’s dependence on export-led growth means that the global outlook will remain the key consideration for local policymakers. Given our view that the world …
21st June 2012
Today’s GDP data show that New Zealand’s economy grew at its fastest pace since 2007 in Q1. We have raised our 2012 growth forecast in response. However, the strong Q1 performance does not change our view that New Zealand’s cash rate is unlikely to be …
GDP growth in Sri Lanka weakened in the first quarter to its slowest pace in two years. Growth is likely to slow further over the rest of the year due to a combination of tight monetary policy and subdued global demand. … Growth slows in Sri Lanka, …
18th June 2012
The Reserve Bank of India (RBI) unexpectedly left its repo rate at 8.0% today. Nonetheless, we expect it to cut rates by 50bp by the end of this year as its focus is likely to shift back towards supporting growth rather than curbing inflation. … Reserve …
Despite a rise in headline inflation in May, we think the Reserve Bank of India is likely to cut the repo rate by 25bp at its rate-setting meeting on Monday. The underlying inflation rate has not risen and the central bank will want to respond to the …
14th June 2012
The Philippines central bank (BSP) today left its main policy rate on hold at 4%, as expected. Although interest rates are likely to remain on hold for the next few months, with the crisis in the euro-zone set to intensify and global demand likely to …
The Bank of Thailand (BoT) kept its policy rate at 3.0% today, as was widely expected. While Thailand’s economy bounced back strongly in Q1 from last year’s flood-induced slump, the focus has now switched to the deteriorating global outlook and rising …
13th June 2012
Our view that Asia is well-placed to withstand sluggish global growth and the crisis in the euro-zone is based on our belief that policymakers in the region have plenty of scope to cut interest rates and loosen fiscal policy. So far policymakers have been …
12th June 2012
Bank Indonesia (BI) today left its main policy rate on hold for the fourth consecutive month and we expect rates to remain at their current levels for the rest of the year. However, in contrast to the rest of the region, there is an outside chance of a …
The Bank of Korea (BoK) has become increasingly worried about the outlook for growth, but lingering inflation concerns are dissuading the central bank from loosening policy. We expect inflation to remain low in coming months and see inflation expectations …
11th June 2012
The central bank in Vietnam (SBV) today announced the fourth reduction in interest rates in as many months amid sharp falls in inflation, problems in the banking sector and weak economic growth. Further cuts are likely later this year. … Another rate cut …
8th June 2012
The Indonesian rupiah has been one of the worst performing currencies in emerging Asia so far this year. We think an intensification of the euro-zone crisis, a worsening of the trade balance, rising inflation and inconsistent policymaking will all weigh …
7th June 2012
Recent weak data from China has led to renewed fears of a hard landing in Asia’s biggest economy. The countries most exposed would be those for which China is an important export market such as Hong Kong and Singapore, as well as big commodity exporters …
6th June 2012
Australia’s economy grew far more quickly than expected in Q1. A global slowdown and a strong currency have taken its toll on exports, but the domestic economy is being bolstered by an investment boom in the mining sector that still has some way to run. …
The latest Purchasing Manager Indices suggest that Asia’s manufacturers are feeling the effects of turmoil in Europe and a slowdown in China. With the data also indicating that inflationary pressures are on the decline, the PMIs are further reason to …
4th June 2012
Following a strong start to the year, most Asian currencies and equities fell sharply in May. The main reason is that renewed concerns over the euro-zone’s future brought a return in global risk aversion, prompting outflows of capital from Asia and other …
31st May 2012
The sharp slowdown in India’s GDP growth in the first quarter means hopes for growth of 7% or more this calendar year are too optimistic. We are cutting our forecast to 6%. … India’s growth rate slows further, worse still to …
GDP growth in the Philippines rebounded strongly in the first quarter due to continued strong private consumption, a pick-up in government spending and a recovery in exports. However, with the crisis in the euro-zone likely to weigh on export demand, this …
The New Zealand dollar has been one of Asia’s worst-hit currencies since fears of a euro-zone breakup escalated. The currency has regained some ground in recent days and most analysts expect it to strengthen further over the rest of this year. In …
29th May 2012
We continue to expect central banks in Asia to cut their policy rates this year by more than the consensus anticipates. Vietnam is likely to cut most aggressively, as both growth and inflation there have fallen sharply in recent months. In most places, …
28th May 2012
India’s first quarter GDP data, due to be published on 31st May, are likely to show a further slowdown in activity compared to the last quarter of 2011. With no sign that growth is likely to pick up in the second quarter, this will only heighten concerns …
24th May 2012
Inflation in Vietnam fell in May for the ninth consecutive month, with the y/y rate dropping below 10% for the first time since late 2010. Weaker inflation should provide further support to the dong peg, and will give the central bank more room to cut …
Most of Asia reported weak GDP growth in the first quarter of this year, due mainly to weak export demand. The crisis in the euro-zone is likely to weigh heavily on Asia this year. However, the eurozone crisis is by no means the only worry for Asia. A …
23rd May 2012
Today’s GDP data show that Malaysia’s growth slowed in Q1, mainly due to weaker exports. With renewed concerns from the euro crisis weighing on global sentiment, exporters are likely to face an even harder time in the near term. The upshot is that we …
Today’s Q1 GDP data show that Thailand’s economy bounced back strongly from the flood-induced slump in Q4, as expected. Growth will inevitably slow sharply now that the easy gains have been achieved. More importantly, prospects for the rest of the year …
21st May 2012
Political deadlock in Greece has re-ignited market fears of euro-zone break-up. While Asia would not escape unscathed from turmoil associated with Greece’s departure from the currency union, the region’s healthy economic fundamentals and policymakers’ …
A rebalancing of China’s economy away from investment and towards consumption would be bad for the region’s capital goods and commodities exporters, with Korea, Indonesia and Australia likely to be worst hit. ASEAN countries, which are mostly big …
18th May 2012
We doubt that the Reserve Bank of India’s recent efforts to prop up the rupee will succeed. However, this may be a good thing, as India would benefit from a more competitive currency. … Will the Reserve Bank‘s support for the rupee …
14th May 2012
Fearing that the euro-zone crisis could lead to a sharp outflow of capital from Asia, policymakers have sought to strengthen the regional financial safety net. However, Asia is far less vulnerable to financial crisis today than ahead of the Asian …
Bank Negara Malaysia (BNM) left its policy rate unchanged at 3% today, as expected. There have been signs of a slowdown in the economy in early 2012, and low inflation gives BNM room to cut. We still expect BNM to loosen policy later in the year as the …
11th May 2012
The Bank of Korea (BoK) kept its policy rate at 3.25% today, as expected. Given that inflation is in retreat and concerns for the global economy are on the rise, we think the BoK’s stance will soon shift towards supporting growth. The upshot is that, in …
10th May 2012
Australia’s government retained its target of returning to a small budget surplus in 2012-13 in today’s federal budget. Solid economic growth and public spending restraint should help the government to achieve its goal. There is scope for the government …
8th May 2012
Indonesia recorded another quarter of strong economic growth in Q1, with the economy slowing only slightly compared with the previous quarter. Even after allowing for the likelihood of weak global growth, we still expect Indonesia's economy to expand 6% …
7th May 2012
Recent developments in Latin America have raised concerns in some quarters that the region could be set for another wave of nationalisations. The level of protection offered to foreign investors is generally better in Asia than in Latin America, but …
The Bank of Thailand (BoT) kept its policy rate at 3.0% today, as was widely expected. The economy looks to have grown strongly in Q1, following floods that brought a slump in GDP late last year. Domestic demand should strengthen further, but below-trend …
2nd May 2012
April PMIs for Asia were generally disappointing, and in Australia in particular the index was outright alarming. The weak numbers reinforce our belief that the region’s industrial sector is set for a bumpy ride this year. … April PMIs suggest Asia’s …
The Malaysian government used Labour Day to announce the introduction of the country’s first minimum wage. The policy should help to reduce poverty, but it will also squeeze businesses’ profit margins and put upward pressure on inflation. … What is the …
1st May 2012
The Reserve Bank of Australia (RBA) cut its cash rate by a larger-than-expected 50bp to 3.75% today. We continue to expect conditions outside of the resources sector to be sluggish, as the currency remains high, fiscal policy is being tightened and the …
Emerging Asia’s economies fared better in Q1 than Q4. Both Singapore and Taiwan returned to quarterly growth, while Korea’s economy grew at a faster q/q rate. Business and consumer surveys show an improvement in confidence, which bodes well for this …
30th April 2012
After a large devaluation early last year, the Vietnamese dong has been stable against the US dollar for the past 15 months. The fall in the trade deficit and easing inflation mean the currency is under less downward pressure. We believe the dong peg will …
Taiwan’s economy returned to growth in Q1, after two consecutive quarters of falling output at the end of last year. Nevertheless, growth remained lacklustre and given the economy’s export dependence, weakness overseas could easily derail the recovery. …
The past 15 years has seen a surge in the number of mainland Chinese travelling overseas. Although Chinese tourists are becoming increasingly adventurous and travelling further afield, the vast majority of overseas trips are to other countries in Asia, …
Today’s GDP data from Korea show that quarterly growth picked up in Q1. Nonetheless, the economy has expanded at a sub-trend pace over the past year and growth is unlikely to pick up strongly amid soft global demand. Consensus forecasts for 2013 in …
26th April 2012
Singapore’s economy is showing early signs of overheating. A global downturn would have a cooling effect, but tighter macroprudential controls could be needed. … Is Singapore …
23rd April 2012
Ties between India and Pakistan have warmed in recent months, raising hopes of a normalisation of trade relations. While this would have the potential to boost bilateral trade, we have doubts over how big the actual effect would be. Not only would a …
Asia is well placed to withstand the impact of any major shocks to the global economy. The health of economic fundamentals and policymakers’ room for stimulus should enable the region to grow by just below trend this year, even though global growth looks …
19th April 2012
