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Exports from Asia have weakened significantly in recent months. Not only are they contracting in y/y terms in many countries, but they have slowed much more sharply compared with other emerging regions. Weak export demand will cause growth to slow to …
8th February 2012
The Reserve Bank of Australia (RBA) unexpectedly kept its cash rate at 4.25% today. Nonetheless, we continue to expect conditions outside of the resources sector to remain weak and, despite the recent improvement in global data, we think euro-zone …
7th February 2012
The economies of Asia and Latin America should be able to weather any financial contagion stemming from Europe’s debt crisis. But the economies of emerging Europe – notably Hungary, Turkey and the Balkan countries – look far more vulnerable to possible …
6th February 2012
Indonesia’s economy continued to grow strongly in the fourth quarter of last year. Underlining the economy’s resilience, household consumption and investment growth actually accelerated despite a slowdown in export demand. Economic growth is likely to …
Inflation has been falling across Asia, and the Q4 GDP data released so far show that growth is slowing too. For the most part, we expect these trends to continue. But Indonesia is an important exception. This week’s figures are likely to show that growth …
Purchasing Managers’ Indices (PMIs) improved for four out of the five economies in Asia (outside Japan and China) for which they were released today. This suggests that the slowdown in industrial activity has bottomed out in the region. However, weak …
1st February 2012
Bank Negara Malaysia (BNM) kept its overnight rate at 3.0% today, as was widely anticipated. Looking ahead, we think that Malaysia’s exports will struggle and that inflation is likely to fall further. Risks to domestic demand are also skewed to the …
31st January 2012
Taiwan’s economy contracted for a second successive quarter at the end of 2011 due not only to weak exports but to lacklustre domestic demand too. The central bank is soon likely to join the regional trend by starting to cut interest rates. … Taiwan …
The Philippines recorded another quarter of weak growth in Q4 due to continued weak export demand. Although the resilience of domestic demand is encouraging, sluggish global demand is likely to weigh on the economy in the coming quarters, and we expect …
30th January 2012
Most Asian currencies have risen strongly so far this year amid a recovery in global risk appetite. However, the rebound is unlikely to last long. We are of the opinion that the euro-zone will slip into recession this year, which is likely to lead to a …
Today’s Q4 GDP data from Korea show that the economy ended 2011 on a very weak note. Growth is likely to be sluggish at best over the next few quarters amid soft global demand, while Korea’s inflation should fall back into its target range this quarter. …
26th January 2012
The Reserve Bank of New Zealand (RBNZ) kept its policy rate at 2.5% today, as was widely anticipated. Most analysts expect policy to be tightened significantly over the next two years. In contrast, we still expect New Zealand’s cash rate to be unchanged …
The Bank of Thailand (BoT) lowered its policy rate by 25bp to 3.0% today, as expected. Thailand’s economy has been hit hard by floods and weak global demand is likely to limit the rebound in manufacturing and exports. The upshot is that we expect …
25th January 2012
The Reserve Bank of India (RBI) cut its cash reserve requirement today but left the repo rate on hold. The hawkish tone of the policy statement suggests that, although rate cuts are surely coming later this year, there is a growing risk that they will be …
24th January 2012
Emerging Asia’s equities have risen by more than the global average so far this year, but we do not expect the outperformance to last. Stock markets in Asia typically underperform developed markets during bad times and the coming year is likely to be …
23rd January 2012
Inflation rose sharply in 2011 as a whole relative to 2010 across the region. However, we expect below-trend growth and lower commodity prices to pull down inflation significantly this year. With price pressures likely to be low and growth set to be …
The Philippines’ central bank (BSP) cut its overnight rate by 25bp to 4.25% today, as expected. Exports have slumped and are unlikely to pick up much this year, while inflation is set to fall towards the lower end of the BSP’s target range. With this …
19th January 2012
Data released today show a big drop in headline inflation, to 7.5% y/y in December. But the key measure of core inflation fell only slightly. Consequently, the Reserve Bank of India is likely to wait until its March policy-setting meeting before cutting …
16th January 2012
The Bank of Korea (BoK) has become increasingly worried about the growth outlook, but lingering inflation concerns are dissuading the central bank from loosening policy. We believe that inflation is likely to fall faster than the BoK currently expects, …
The ongoing debt crisis in the euro-zone is likely to weigh on growth in Asia in 2012-13. Although the region’s most open economies are set to slow quite sharply, we forecast that growth in the region as a whole will ease to only a little below trend this …
12th January 2012
Bank Indonesia (BI), kept its reference rate on hold today, as expected, after cutting rates by a cumulative 75bp in the final quarter of 2011. Despite the likelihood that inflation will accelerate sharply in the second half of this year, more cuts this …
A number of important elections and leadership changes are due to take place across emerging Asia over the next 12 months. The outcomes will have implications for economic policymaking and growth across the region. … Elections in Asia - what they mean for …
9th January 2012
December PMIs for Asia paint a mixed picture. The surveys suggest manufacturing output returned to growth in Australia, while in contrast to the weakness of recent data, factory output rebounded strongly in India. However, production looks to have …
4th January 2012
India’s economy has slowed abruptly in the past few months and now faces a downturn comparable to that of 2008-09. However, a big difference is that the authorities now have much less scope for policy stimulus. … How bad is the outlook for Indian …
26th December 2011
Sri Lanka’s GDP grew strongly in the third quarter of 2011, following a rapid expansion in all of the main sectors of the economy. Rapid growth reduces the immediate urgency for interest rate cuts. But with inflation continuing to trend downwards, and …
21st December 2011
Given the lack of transparency in North Korea, it would be unwise to leap to any conclusions following news of Kim Jong-il’s death. Our best guess is that the uncomfortable status quo will continue. In the event that the North Korean regime collapses, the …
19th December 2011
In a good week for Indonesia, Fitch upgraded the country’s long-term sovereign debt rating to investment grade on Thursday and parliament passed a long-awaited land acquisition bill on Friday. Both developments reinforce our belief that Indonesia’s …
Although it left its repo rate unchanged at today’s meeting, the Reserve Bank of India (RBI) signalled that it is preparing the ground to loosen policy earlier than previously expected. We now think the first 25bp rate cut is likely to come in the first …
16th December 2011
Exports from the region have been weak due to lower demand from the West. However, domestic demand has so far remained fairly resilient across the region. Central banks in Australia and Thailand have recently cut policy rates. With inflation set to fall …
15th December 2011
The impact on emerging Asia of a fall in lending by euro-zone banks to the region would be small. However, Asia would be vulnerable if the crisis in the euro-zone caused global credit markets to freeze, particularly if this led to a re-run of the …
The government in Vietnam has moved to restructure some of the country’s banks. This comes after a surge in lending in recent years, which has contributed to a rise in bad debt. The non-performing loan (NPL) ratio could easily surpass 15%, causing major …
13th December 2011
The main cause of its weak performance has been low investment. Demographic factors should push the savings rate higher over the next decade, which should in turn support stronger investment and faster economic growth. However, the Philippines is unlikely …
12th December 2011
8th December 2011
After cutting interest rates by a cumulative 75bp at its last two meetings, Bank Indonesia (BI) kept its key reference rate on hold today, as expected. However, with inflation continuing to fall and global demand set to weaken further next year, more rate …
We broadly agree with the consensus view that most emerging economies will hold up well in 2012. But with the US set to slow and the euro-zone heading towards break-up, the path ahead is going to be bumpy. Here are five developments that emerging market …
7th December 2011
The Reserve Bank of Australia (RBA) lowered its cash rate by 25bp to 4.25% today. We see global growth slowing to a below-trend pace in 2012, which in turn should bring more policy loosening in Australia. We have pencilled in another 25bp cut at the RBA’s …
6th December 2011
The central bank in Vietnam (SBV) is coming under pressure from the government to cut interest rates amid signs of slowing economic growth. However, with inflation at just under 20% y/y in November, we think it is too soon for rates to be cut. … Vietnam's …
5th December 2011
Most Asian currencies looked weak even before the falls of the past few months. We expect them to fall further over the coming year as the euro-zone crisis intensifies. And even when global risk appetite does recover, Asian policymakers will remain wary …
Following changes to our assumption about the timing of an EMU break-up, we have revised down our forecasts for emerging Asia’s currency and equity markets for next year. However, we see both currencies and equities rebounding strongly in 2013. … What …
2nd December 2011
Purchasing Managers’ Indices (PMIs) released today for India, Korea, Taiwan and Australia confirm that manufacturing in these countries is weak. With fears for growth rising and inflation trending lower, these data provide further reason to expect policy …
1st December 2011
The Bank of Thailand (BoT) lowered its policy rate by 25bp to 3.25% today in a bid to lift confidence and activity following recent floods. The economy is almost certain to contract in Q4 and weak global demand is likely to limit the rebound in …
30th November 2011
GDP figures released today confirm that India’s economy slowed sharply in the third quarter of this year, even before the latest drop in business surveys and exports. With tight monetary policy beginning to bite and global demand slackening, activity is …
The Philippines reported weak Q3 GDP data today on the back of a slump in exports. Growth is likely to remain sluggish in the coming quarters. The poor state of the economy means the central bank is now likely to cut its policy rate at its monetary policy …
28th November 2011
Hopes that Asia had de-coupled from the rest of the world were dashed during the 2008-09 global crisis, as domestic demand fell almost as sharply as exports. However, there are good reasons to expect domestic demand in Asia to be more resilient in the …
Although Asia as a whole is not experiencing a property price bubble, we believe that prices in Hong Kong and Taipei are now in bubble territory. There is a growing risk of a sharp correction in these two markets. … Is emerging Asia experiencing a …
25th November 2011
The fall in the rupee is mainly a result of global factors and is likely to be reversed when global sentiment improves. However, with the euro crisis set to drag on, that may be several months away. … What next for the Indian …
23rd November 2011
Thailand’s Q3 GDP data show that the economy was struggling even before the flood situation worsened in late October. With activity weak, confidence flagging and fears for the global economy intensifying, we think that Thailand’s central bank will opt to …
21st November 2011
Vietnam’s fiscal position has deteriorated in recent years. Debt levels would be even higher if contingent liabilities of the banking sector and state-owned enterprises are included. The biggest risk to the outlook is a sharp slowdown in GDP growth, which …
The goal of the Association of South East Asian Nations (ASEAN) of establishing a fully-integrated economic community by 2015, with complete free flow of goods, services and investment, is likely to remain out of reach. What’s more, we are sceptical that …
With the exception of Indonesia, Q3 GDP figures published across emerging Asia so far have been weak. Exports have been hit by low demand from the West, and growing fears for the global outlook are undermining confidence at home. Accordingly, …
17th November 2011
