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Preliminary Q1 GDP data from Singapore were stunningly strong and, as we had expected, encouraged the authorities to tighten monetary policy by allowing the currency to appreciate. Economic growth will almost certainly ease back during the rest of 2010 …
14th April 2010
The shocking weekend events in Bangkok could make it more difficult to reach a compromise on the date of new elections, or may bring new urgency to the negotiations. We suspect that new elections will be agreed sooner rather than later. The tensions will …
12th April 2010
The Monetary Authority of Singapore (MAS) meets on Wednesday and, we forecast, will shift to an appreciation bias on the SGD nominal effective exchange rate. Q1 GDP growth was almost certainly very strong and inflation pressures are likely to rise during …
The Bank of Korea (BoK) left its policy rate at 2.00% today, as expected. New BoK Governor Kim is sympathetic to the government view that monetary tightening can be delayed, while imminent elections also lessen the likelihood of a rate hike soon. We still …
9th April 2010
Yesterday’s declaration of a state of emergency in Thailand could mark the start of a dangerous escalation in the confrontation between street protestors and the government. But while the stand-off will probably continue for a while, we still believe the …
8th April 2010
The Reserve Bank of Australia (RBA) raised its cash rate to 4.25% today. GDP growth should be strong this year despite the withdrawal of stimulus measures, while core inflation remains above target. Policy rates are still below neutral and we continue to …
6th April 2010
Bank Indonesia (BI) left rates at 6.5% today, as expected. The economic upswing will almost certainly stay strong but bank credit growth is still weaker than the authorities would like and annual inflation should stay comfortably below the 6% target …
Moving early has given the Reserve Bank of Australia (RBA) the flexibility to vary the pace of monetary tightening. Further rate hikes are inevitable but labour market and retail sales data have been disappointing since the RBA move in early March. It is …
5th April 2010
The March manufacturing PMIs for emerging Asia (ex-China) were generally weaker but still signal that exports and industry will keep improving in coming months. Nevertheless, global conditions will probably become tougher later this year, which means that …
1st April 2010
Malaysia’s New Economic Model (NEM), published today, is a positive step toward promoting longterm economic reform. Boosting foreign investment, lifting education standards and reducing the role of government is the right way to increase trend GDP growth. …
30th March 2010
Vietnam is the first Asian country to report GDP data and the latest figures, released today, showed that the economy expanded 5.8% y/y in Q1. The economic upswing will probably strengthen during the course of 2010 while foreign reserves should rise. But …
This report is only available as a PDF. Click to download. … Malaysia set to accelerate structural reform …
29th March 2010
The State Bank of Pakistan (SBP), as expected, left its policy rate unchanged at 12.50% over the weekend. We forecast that rates will stay on hold for the rest of 2010. The economic upswing should continue but the recovery will probably be weak. …
27th March 2010
The central bank of Vietnam (SBV) today announced that its key policy rate will stay unchanged at 8.0% during April. This is a dangerous strategy. Inflation has already hit 9.5% y/y and will probably accelerate further. By moving too slowly, the SBV risks …
25th March 2010
Taiwan’s central bank left interest rates on hold today, as expected. The economy has recovered very strongly, but inflation remains a distant threat. As a result, rates are likely to remain at their current level for another three months or more, and …
The government will probably continue to hold the upper hand in Thailand’s street protests and a compromise is increasingly likely which will involve early elections. But a new vote may not end the political tensions. There is no guarantee that the loser …
22nd March 2010
This report is only available as a PDF. Click to download. … Vietnam needs to tighten further, and soon …
The emerging Asia economies have picked up speed, inflation has increased, and more central banks have indicated that monetary policy needs to be tightened. By the end of April we expect that rates will have moved up in Vietnam and India, and possibly in …
18th March 2010
The surge in February wholesale prices, published today, means that it is a near-certainty that India will raise policy rates by at least 50bps at the next monetary policy review on 20th April. The chance of an earlier hike remains significant as well. …
15th March 2010
This report is only available as a PDF. Click to download. … India data to spotlight inflation yet again …
The Philippine central bank (BSP) left its key policy rate unchanged at today’s meeting, as expected, but continued to unwind some of the other support measures which are no longer needed. Politics complicates when the key overnight rate is moved up from …
11th March 2010
The Bank of Korea (BoK) left its policy rate at 2.00% today, as expected. BoK Governor Lee’s term ends this month and his replacement is likely to be sympathetic to the government view that monetary tightening can be delayed. We continue to expect the …
The Reserve Bank of New Zealand (RBNZ) as expected left its cash rate unchanged at 2.5% overnight and, crucially, retained its commitment to start lifting rates from around the middle of 2010. The economic recovery is set to remain sluggish while …
The Thai policy rate was left unchanged at 1.25% today, as expected. The Bank of Thailand (BoT) acknowledged that the economic momentum built up at the end of last year has carried forward into 2010. However, core price pressures are subdued and political …
10th March 2010
This report is only available as a PDF. Click to download. … New Zealand’s upswing is already losing traction …
8th March 2010
Bank Negara (BNM) raised the overnight policy rate by 25bps to 2.25% at today’s meeting. This was contrary to the consensus expectation but in line with our forecast. Economic growth has recently surprised on the upside and will probably stay strong in …
4th March 2010
Bank Indonesia (BI) left rates at 6.5% today, as expected. The major new development is that politics is high profile again and threatens to stall the new reforms Indonesia needs to lift its trend growth rate. Nevertheless, we believe that this is just a …
The Reserve Bank of Australia (RBA) raised its cash rate to 4.00% today, as expected. GDP growth is returning to trend and could even be there already, while core inflation is above target. Policy rates are still below neutral, so more hikes are only a …
2nd March 2010
Today’s headlines that Vietnam is moving toward price controls do not mark a shift away from the free market policy adjustments needed to successfully tackle its inflation and balance of payments problem. We still expect that policy rates will be hiked in …
1st March 2010
The momentum built-up by the Thailand economy at the end of 2009 has carried forward into January. Consumption will be strong for a while but it is investment that will lead GDP growth this year. Meanwhile, inflation should stay low and politics is likely …
It is a close call, but the Reserve Bank (RBA) is likely to hike rates again at its Tuesday meeting. The no change in early February was always a pause and not the end of monetary tightening. Sufficient information has probably come through since then to …
Q4 GDP growth published today came in far weaker than expected but the slowdown will be short. Today’s FY10-11 budget aims to cut the fiscal deficit, which is good news. Private sector spending is well placed to drive the economy forward as stimulatory …
26th February 2010
The emerging Asia upswing has picked up speed and inflation has increased. More central banks have indicated that monetary policy needs to be tightened and, over the next month, we expect rates to move up in Malaysia and in Australia. The markets for a …
25th February 2010
Today was Malaysia’s turn to report Q4 GDP growth far stronger than the consensus and even our more-bullish-than-most expectations. All the positives will probably stay in place in coming quarters and, even if the global backdrop does darken during the …
24th February 2010
The 2010 budget, published today, focused on structural reforms to enhance the already-high flexibility of Singapore’s economy. Global and regional conditions will become more challenging during the course of 2010 but Singapore’s upswing should slow …
22nd February 2010
Today’s Thai Q4 GDP data were stronger than our above-consensus forecast, with growth being led by government spending and household consumption. We expect that GDP growth will stay high for a few more quarters, although the first half of this year will …
Taiwan’s growth looks likely to far outpace expectations in 2010, but economic activity will not feel so healthy on the ground. … Taiwan’s growth surge won’t …
This report is only available as a PDF. Click to download. … India to start fiscal consolidation …
The trade-dependent economies will eventually see slower GDP growth later this year and in 2011 as the global upswing loses momentum. But Asia’s rebound will not come to a complete halt and growth, by some distance, will stay higher than in any other part …
19th February 2010
The surge in January wholesale prices, published today, means that it is a near-certainty that India will raise policy interest rates at the next monetary policy review in April. The chance of an earlier hike remains significant as well and could be timed …
15th February 2010
This report is only available as a PDF. Click to download. … Singapore’s upswing set to broaden out …
The Bank of Korea (BoK) left its policy rate at 2.00% today, as expected. Political pressures to hold off monetary tightening have intensified and we now expect the first increase to be delayed until Q3. We maintain our view that the tightening to come …
11th February 2010
Vietnam today devalued its currency by 3%. Only the timing of the move was a surprise. The devaluation is necessary and reduces the risk of a disorderly currency decline. Nevertheless, more adjustments are needed, including further big hikes in the policy …
Indonesia’s Q4 GDP growth accelerated to 5.4% y/y and all the key indicators point to a further pickup in coming quarters, with domestic demand leading the way. Monetary tightening is imminent, which will hit bonds, but the rupiah should appreciate …
10th February 2010
New Zealand’s household savings rate has been negative since the early 1990s and has now widened to around 14% of disposable income. The gap between spending and income should narrow over the next few years, given the high household debt burden, a …
9th February 2010
This report is only available as a PDF. Click to download. … Lower unemployment masks underlying softness …
8th February 2010
Bank Indonesia (BI) left its policy rate at 6.5% today, as expected, and kept its neutral bias. The economic upswing should continue while annual inflation will probably stay below the 6% ceiling. We now expect a first rate hike in April or May but still …
4th February 2010
January’s manufacturing Purchasing Managers’ Indices (PMIs) signal that Asia’s exports and industrial output will continue to perform well in the coming months. But price pressures are rising too, which is consistent with our view that policy rates across …
2nd February 2010
The State Bank of Pakistan (SBP), as expected, left policy rates unchanged at 12.50% over the weekend. We forecast that rates will stay on hold this year, before rising in 2011. The economy should continue to stabilise, inflation is likely to accelerate, …
1st February 2010
This report is only available as a PDF. Click to download. … Australia’s policy rate set to move up again …
