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Encouraging Q1 data, but headwinds growing The past week has brought a flurry of GDP releases, with most countries in Asia now having reported GDP data for the first quarter. (See here .) The figures have been encouraging. Despite a surge in virus cases …
13th May 2022
Jump in inflation likely to be temporary Interest rates in the Philippines look set to rise soon, but the tightening cycle is likely be gradual. Figures published earlier this week show that headline inflation in the Philippines increased from 4.0% y/y in …
6th May 2022
Indonesia export ban may prove short lived Indonesia has caused turmoil in global commodity markets over the past week with its decision to ban exports of palm oil. The country is the biggest palm oil producer in the world, accounting for over 50% of …
29th April 2022
Softer trade figures a sign of things to come There are growing signs that demand for the region’s exports are starting to soften, a trend we expect to continue over the coming months. Figures published on Wednesday show that Taiwanese export orders …
22nd April 2022
Pakistan – new government faces major challenges It has been a tumultuous week in South Asia. On Saturday, Imran Khan lost a vote of confidence and was replaced as prime minister on Monday by Shehbaz Sharif . The new PM faces a difficult balancing act as …
14th April 2022
Prime Minister loses case in Supreme Court A change of leadership in Pakistan looks likely this weekend, calling the future of the country’s IMF deal into question. Yesterday, the Pakistani Supreme Court ruled unconstitutional the dissolution of the …
8th April 2022
Omicron hit to be even smaller than first thought GDP data released over the next month or so are likely to show that recoveries continued everywhere across the region (excluding China) in Q1. That’s despite the fact that almost all countries set fresh …
1st April 2022
Doves in the ascendency Dovish comments from policymakers over the past week support our view that central banks in South East Asia will buck the trend of global tightening and leave interest rates unchanged over the coming months. The central bank in the …
25th March 2022
More rate hikes despite Omicron surge New daily cases of COVID-19 in Korea hit a high of over 600,000 on Thursday, and over the past week an average of just under 1% of the population has been testing positive for the virus every day. This is one of the …
18th March 2022
Higher energy prices will hurt consumption We are cutting our GDP growth forecasts for many parts of emerging Asia in response to the surge in global energy prices and the war in Ukraine. Movements in energy prices have no direct impact on real GDP. But …
11th March 2022
Bank of Thailand in a tricky spot Inflation has become a major policy headache for the Bank of Thailand (BoT) after figures released today showed that the headline rate surged from 3.2% y/y in January to 5.3% in February, the highest rate since 2008. (See …
4th March 2022
Virus cases reach record levels Most of the focus of the past week has been on events in Ukraine. You can follow our coverage of the crisis here . Having fallen sharply on the day of Russia’s full-scale invasion, financial markets across the region …
25th February 2022
Ukraine crisis adds to inflation risks The main channel through which the Ukraine-Russia crisis could affect Asia is higher oil prices. Our current inflation forecasts assume that the price of a barrel of Brent crude will drop back to US$70 by the end of …
18th February 2022
Singapore budget to focus on revenue raising The focus of Singapore’s 2022 budget next Friday will be on steps to raise revenues to help deal with a rapidly ageing population. The government is set to confirm a delayed hike in the Goods and Services Tax …
11th February 2022
Omicron impact likely to be mild The Philippines has been hit harder than any other country in the region by the pandemic, but the past week has at least brought some good news. The country was the first in Asia to bit hit by an Omicron wave. But daily …
4th February 2022
Korea learning to live with COVID-19 A successful vaccination campaign means that, despite a surge in COVID cases, Korea is sticking with its plans to reopen the economy. Chart 1: Daily New Cases of COVID-19 in Korea Source: JHU Korea recorded a record …
28th January 2022
Thai tourism to support the baht Better times lie head for Thailand’s tourism industry after the government this week announced it would resume its quarantine-free travel scheme from 1 st February. The scheme was suspended late last year due to fears …
21st January 2022
Employment back above pre-crisis levels At face value, the Korean labour market figures for December (published earlier this week) paint an encouraging picture, with total employment rising to a record high. (See Chart 1.) Chart 1: Korea Total Employment …
14th January 2022
Philippines won’t start tightening this year Falling inflation and an increasingly uncertain economic outlook add weight to our non-consensus view that the central bank in the Philippines (BSP) will not start tightening in 2022. Figures released earlier …
7th January 2022
Fed rate hikes pose little threat to Asia With the start of US monetary tightening drawing near, questions have been asked about whether Asia’s central banks will respond with tightening of their own. Hong Kong and Singapore will: their exchange rate …
17th December 2021
Rates to stay on hold throughout most of next year The central bank of Taiwan (CBC) is likely to leave interest rates unchanged at its meeting on Thursday (both the consensus and ourselves expect no change), but with the economy operating well-above its …
10th December 2021
Rising inflation piles pressure on CBSL The economic situation in Sri Lanka is going from bad to worse, with a surge in inflation undermining the credibility of the central bank (CBSL) and making a debt default all the more likely. Data released earlier …
3rd December 2021
Recent hikes not the start of Asian tightening cycle Attention over the past week has been on the region’s more hawkish central banks, following rate hikes in Korea and Pakistan . Both countries, along with Sri Lanka (which unexpectedly left rates …
26th November 2021
Encouraging vaccine progress in South East Asia After a slow start, countries across South East Asia are now making encouraging progress with vaccine rollouts. Malaysia has been the frontrunner and has now fully-vaccinated 76% of its population, but the …
19th November 2021
Encouraging signs in Malaysia and Vietnam At face value, the 3.6% q/q contraction in Malaysia’s Q3 GDP that was revealed today was fairly gloomy. But the detail showed the economy rebounding strongly by the end of the quarter. The monthly national …
12th November 2021
Transition from coal poses big challenge to Asia If the ambitious targets laid down by the 2015 Paris Agreement to limit the rise in global temperatures to less than 2°C (and preferably 1.5°C) compared to pre-Industrial levels are to be met, then global …
5th November 2021
Mixed end to the quarter for Korea The latest batch of activity data from Korea indicate that the automotive sector was hit hard by shortages last month, but that the service sector is enjoying a recovery. The provisional Q3 GDP figures released earlier …
29th October 2021
Economic gloom will be temporary The next few weeks will see the publication of a host of third quarter GDP figures from across the region. While the data are likely to paint a downbeat picture, output should rebound strongly in the final quarter of the …
22nd October 2021
Asia reopens While international travel in the rest of the world is making a steady recovery, tourism across Asia remains on its knees. In Mexico, international arrivals are now roughly 80% of their pre-crisis level, while in Spain the equivalent figure …
15th October 2021
What rising energy prices mean for inflation The recent jump in energy prices will put upward pressure on inflation across the region, but the impact should prove short lived and is unlikely to worry policymakers. In some places inflation is already …
8th October 2021
Pacquiao throws his hat into the ring The next presidential election in the Philippines is not until May, but the contest is already generating plenty of headlines with former boxing world champion Manny Pacquiao (PacMan to his fans) this week announcing …
1st October 2021
Weak recovery suggests further easing is likely Pakistan’s decision to raise interest rates earlier this week came as a surprise to many ( although not to us ), and we think another surprise could be in store at the Bank of Thailand’s scheduled meeting on …
24th September 2021
Indonesia and Taiwan on hold There are four major monetary policy meetings scheduled in the region next week. While we expect the central banks of Indonesia and Taiwan to leave rates unchanged, we are pencilling in a hike by the State Bank of Pakistan …
17th September 2021
Virus outbreaks starting to ease Virus outbreaks across South East Asia are in retreat. The biggest improvement has been in Indonesia, where daily cases of COVID-19 are now just over 10% of the level they reached in July. Numbers are also coming down in …
10th September 2021
Korea keeping fiscal policy supportive Korea’s proposed budget for 2022 indicates that fiscal policy will remain supportive. In nominal terms, expenditure in 2022 is set to be roughly in line with this year’s (which has been boosted by two stimulus …
3rd September 2021
South East Asia turning a corner? There are some signs that the Delta outbreak battering South East Asia is at least past its worst. But a rapid turnaround in the region’s economic fortunes looks unlikely. New cases have come down sharply in Indonesia and …
27th August 2021
Hike still on the cards With new cases of COVID-19 rising, most analysts expect the Bank of Korea (BoK) to leave rates unchanged on Thursday. While it is likely to be a close call, we are sticking with our view that the central bank will raise its main …
20th August 2021
Vaccine drives still moving too slowly With daily cases of COVID-19 reaching record levels in many countries, the region’s economic recovery has slipped in reverse, and vaccines look unlikely to steer a turnaround just yet. Widespread vaccination offers a …
13th August 2021
Thailand and Philippines to cut rates soon Whereas several EM central banks are in the middle of aggressive tightening cycles, Thailand and the Philippines are likely to resume rate cutting soon. The Bank of Thailand left its policy rate unchanged at its …
6th August 2021
Disruption a key concern for global supply chains Industry in Malaysia and Vietnam was already feeling a pinch from restrictions and worker shortages brought about by a jump in COVID-19 cases, but the situation is deteriorating fast. Daily new cases in …
30th July 2021
US currency deal reduces risks for Vietnam The near-term outlook in Vietnam has taken a turn for the worse in recent weeks, with a surge in virus cases and the introduction of restrictions leading to a fall in economic activity. However, there has also …
23rd July 2021
Virus cases surge in South East Asia The virus situation across South East Asia has gone from bad to worse over the past couple of weeks (see Chart 1), with Indonesia, Thailand, Malaysia and Vietnam all reporting a record high number of daily cases. The …
16th July 2021
Singapore rebounding as restrictions are lifted The government in Singapore is starting to ease restrictions, and the success of the country’s vaccination programme will hopefully allow a rapid return to normality. This should set the stage for a decent …
9th July 2021
Thailand’s reopening Thailand’s tourism sector will remain heavily depressed despite this week’s reopening of Phuket to foreign tourists. Since Thursday, fully-vaccinated foreigners have been allowed to visit the island without needing to quarantine …
2nd July 2021
Korea to hike rates in August We were already more hawkish that the consensus in expecting a rate hike in Korea this year, but recent comments by the central bank and strong economic data mean we are shifting forward our forecast for the first hike to the …
25th June 2021
Bank of Korea closer to pulling the trigger Minutes from the Bank of Korea’s (BoK’s) May meeting, released on Tuesday, support our view that the central bank will tighten policy this year. The minutes were decidedly hawkish, with one of the seven members …
18th June 2021
Signs of hope in Thailand The past week in Thailand has seen a number of encouraging developments, but it is too early to start raising our GDP growth forecasts. First, the bad news. The virus situation remains worrying. New daily cases of COVID-19 are …
11th June 2021
Korea: vaccines to supercharge the recovery Thanks to a fresh batch of supply, Korea has administered nearly three million jabs in the past seven days, covering over 5% of its population. (See Chart 1.) And there are hopeful signs that this pace will be …
4th June 2021
What do high oil prices mean for inflation? The price of Brent crude has risen to almost US$70pb over the past week as prospects for an imminent easing of US sanctions on Iran have fallen. A decline in US crude stocks also helped to push prices higher. …
28th May 2021
External trade to continue boosting GDP A common theme across the Q1 GDP data released over the past month has been the boost still being provided by exports. Data released on Monday showed that despite a tightening of restrictions and a jump in COVID-19 …
21st May 2021