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A damp squib Liberation Day 2.0 was largely shrugged off by investors, with most equity markets in Asia rising over the course of the week. This could be because tariff deadlines were extended by three weeks, giving countries more time to agree deals …
11th July 2025
The Bank of Korea left interest rates unchanged at its meeting today (at 2.50%), but gave strong hints that the easing cycle still had further to run. With growth set to struggle and inflation contained, we are expecting a further 50bps of cuts before the …
10th July 2025
The Bank of Korea rarely cuts interest rates at back-to-back meetings, and the decision to leave interest rates on hold today at 2.50% comes as no surprise. The announcement was correctly predicted by all 33 analysts polled by LSEG, including ourselves. …
Outside of China, there is no immediate threat of any other country in Asia falling into a prolonged period of deflation. That said, persistently weak price pressures are likely to remain a worry for central banks and will tip the balance towards more …
9th July 2025
First cut of the cycle – more to come Bank Negara Malaysia (BNM) today cut its policy rate by 25bps, to 2.75%. With growth likely to slow and inflation set to remain contained, we think further easing lies in store. Today’s cut was predicted by just over …
Trump has confirmed that punitive tariffs on Asian countries will take effect on 1 st August unless trade deals are agreed by the end of the month. Despite the urgency, negotiations could prove difficult if, as some reports are indicating, the US is …
8th July 2025
President Donald Trump has now released “letters” to 14 countries today, announcing that, unless they negotiate a deal over the next few weeks, he will impose reciprocal tariffs on those countries from August 1 st . In most cases, those tariffs that would …
7th July 2025
President Donald Trump has released the first of his “letters” threatening to impose country-specific tariffs of 25% on both Japan and South Korea from August 1 st , if those countries can’t reach a deal with his administration by then. Back in April, …
Taiwan and Korea face some of the world’s worst demographic headwinds with working-age populations set to shrink by 1% a year over the next decade. Efforts to boost fertility have largely failed, and immigration on the scale needed to stabilise the size …
Vietnam’s US-bound exports have surged since the US imposed very high tariffs on imports from China. While the export figures are overstating the benefits to Vietnam’s economy due to a surge in rerouting, the country is set to remain a key beneficiary …
Key questions left unanswered The trade agreement announced this week between the US and Vietnam, which imposes tariffs of 20% on Vietnam’s exports to the US (along with 40% for re-routed goods), leaves many questions unanswered. Not least how will …
4th July 2025
Vietnam has had one of the weakest hands to play in its trade negotiations with the US. If it is confirmed that it has agreed to a 20% tariff, this isn’t a template that other countries will feel they have to follow. Instead, the key lesson for other …
2nd July 2025
The Taiwan dollar has appreciated sharply against the US dollar in recent months but, for a host of reasons, the central bank seems now to be less tolerant of further currency strength. Even without intervention, we think that the currency will give up …
The latest batch of monthly activity and inflation data for Korea support the case for further monetary policy easing by the central bank. We are expecting another 50bps of cuts before the end of the year. The monthly activity data for May, which were …
Thailand faces renewed political uncertainty after Prime Minister Paetongtarn Shinawatra was today suspended. This will undermine consumer and business sentiment and complicate efforts to agree a free-trade deal with the US. Thailand’s Constitutional …
1st July 2025
The June PMI readings for most countries in Asia were subdued. With worries about growth having taken precedence over those about inflation, we think most central banks in the region will continue to loosen monetary policy and by more than most analyst …
Asia Chart Pack (June 2025) …
30th June 2025
Boost for Korean consumers The weakness of consumer spending in Korea has continued in recent months, with retail sales now just over 2% below their pre-pandemic levels. (See Chart 1.) However, there are good reasons to think the worst is now over. …
27th June 2025
Overview – We expect GDP growth across most of Asia to soften in 2025, with many countries likely to record below-consensus growth. The risk of escalating trade tensions remains a key concern, particularly for Vietnam, which is highly dependent on US …
26th June 2025
Today’s hold does not mark the end of the easing cycle Thailand’s central bank (BoT) today left interest rates unchanged at 1.75%, but the dovish commentary from the press conference supports our view that further easing is likely over the coming months. …
25th June 2025
Growth boost for Korea More policy support in Korea looks to be on its way soon. According to the minutes of the Bank of Korea’s May meeting (when rates were cut a further 25bps) which were released earlier this week, Board members were united on the need …
20th June 2025
Taiwan’s central bank (CBC) left its main policy rate on hold today (at 2.0%) and we expect interest rates to remain unchanged for the foreseeable future. In contrast, most other analysts are expecting rate cuts to begin in Q4. The decision to keep rates …
19th June 2025
With inflation set to stay low, BSP to cut rates further The central bank in the Philippines (BSP) today cut its main policy rate by a further 25bps (to 5.25%), and the dovish tone from the central bank’s statement and press conference suggests further …
BI to resume easing cycle soon Bank Indonesia today left interest rates unchanged at 5.50%, but as dovish comments in the press conference by Governor Perry Warjiyo make clear, this is unlikely to mark the end of the central bank’s easing cycle. We are …
18th June 2025
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
13th June 2025
Price pressures continue to ease across Asia Inflation data published over the past week or so shows that price pressures across the region remained weak in May. (See Chart 1.) Thailand, Sri Lanka and China are in deflation, while the headline rate is …
We are hosting an online briefing to discuss the outlook for India’s economy and financial markets. Sign up here . Korea: economy key challenge for President Lee One of the key challenges facing Korea’s newly-elected president, Lee Jae-myung of the …
6th June 2025
The abolition of Vietnam’s controversial two-child policy will not lead to a sharp rise in the number of children being born, and will have only a small economic impact. Vietnam’s government announced earlier this week that it was scrapping its two-child …
5th June 2025
President Lee’s pledge to provide fiscal stimulus would, if implemented, provide a much-needed lift to Korea’s economy. The country’s public finances could easily accommodate a temporary rise in spending. But any signs that a looser fiscal stance is here …
We’re hosting an online drop-in on Wednesday to discuss the outcome of Korea’s election and the macro and market implications. Sign up here . Victory for Lee Jae-myung of the Democratic Party (DP) in today’s presidential election in Korea should help …
3rd June 2025
We’re hosting an online drop-in on Wednesday to discuss the outcome of Korea’s election and the macro and market implications. Sign up here . The impact of the trade war on Korean exporters has so far been limited. Although exports to the US fell in May, …
2nd June 2025
New president will have his work cut out Barring a major surprise, Lee Jae-myung of the Democratic Party (DP) will be elected as Korea’s president when the country votes on Tuesday. Polls have narrowed in the past couple of weeks but still give him a …
30th May 2025
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Europe is being buffeted by geopolitical and geoeconomic shifts but, …
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
29th May 2025
The dovish tone adopted by the Bank of Korea today, alongside what we think will be continued weakness of the economy suggest that further interest rate cuts are likely in the coming months. The decision to lower the policy rate by 25bps to 2.50% – the …
Further easing coming With the economy set to struggle and concerns about inflation unlikely to resurface anytime soon, we expect the Bank of Korea to remain in easing mode after today’s 25bp cut. The decision to lower the policy rate to 2.50% – the …
MAS to loosen policy further GDP in Singapore contracted by 0.6% q/q last quarter according to the second estimate of national accounts figures published on Thursday. While this marked a slight improvement from the initial estimate (a 1.0% decline), it …
23rd May 2025
Asia Chart Pack (May 2025) …
22nd May 2025
Given the widespread public anger toward the impeached former president Yoon Suk Yeol of the People’s Power Party (PPP), following his botched attempt at declaring martial law, Lee Jae-myung of the Democratic Party (DP) appears poised to become Korea’s …
21st May 2025
Easing cycle to be gradual Bank Indonesia today cut interest rates by 25bps for the first time since January, and we expect further easing over the coming months. Today’s decision to cut the policy rate from 5.75% to 5.50% was predicted by 20 out of the …
Economic growth in Thailand accelerated in Q1 but we think growth over the rest of the year will be rather weak as the boost from stronger public consumption is likely to be offset by weakness in other components of GDP. The 0.7% q/q rise in GDP in Q1 …
19th May 2025
Slow progress on trade deals Monday’s agreement between the US and China to lower tariffs marks a significant de-escalation in tensions between the two countries. However, the deal addresses none of the issues that caused tensions to rise in the first …
16th May 2025
Weaker growth to prompt rate cuts later this year GDP growth in Malaysia slowed in the first quarter, and we think the economy will struggle this year, opening the door for the central bank to cut interest rates. According to the second estimate published …
The recent climbdown has left the effective US tariff rate on the rest of the world at around 15% as opposed to the 27% which was threatened at the height of this year’s trade war. While this is still the highest since the 1930s, it is unlikely to cause a …
13th May 2025
Global Trade Stress Monitor …
The US and China have each suspended for 90 days all but 10% of their Liberation Day tariffs and cancelled other retaliatory tariffs. This is a substantial de-escalation. However, the US still has much higher tariffs on China than on other countries and …
12th May 2025
Asian exporters benefit from front-loading Asia publishes trade data much sooner than other regions which allows us to get an early indication of how Trump tariffs are affecting global trade. While the April data for Korea showed exports to the US …
9th May 2025
Rates on hold (again), but rate cuts are coming Bank Negara Malaysia (BNM) today left its main policy rate unchanged at 3.0%, but sounded more downbeat on the economic outlook, suggesting scope for rate cuts later in the year. The decision was correctly …
8th May 2025
Lower interest rates to support growth in 2025 GDP growth in the Philippines accelerated slightly in the first quarter of last year, and we expect steady growth in 2025 as interest rate cuts and low inflation help offset the drag from weaker exports and …
If limited just to Kashmir, a period of fighting between Pakistani and Indian forces would have a small impact on the economy of either country. Pakistan would have more to lose than India from a broader conflict, though that would also risk reversing the …
7th May 2025
