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With policy rates close to the zero bound in Korea, Taiwan and Thailand, we think it is only a matter of time before central banks in these economies implement full-blown quantitative easing (QE) programmes. Malaysia may not be far behind either. But …
21st May 2020
With the economy in a massive slump and prices falling sharply, today’s decision by the Bank of Thailand (BoT) to cut interest rates by a further 25bp to a new all-time low of 0.50% came as no surprise. With the policy rate now not much above zero, the …
20th May 2020
Bank Indonesia’s (BI) decision to leave interest rates unchanged today at 4.5% is a big surprise given the slump in economic activity and the rebound in the rupiah. We think it will cut interest rates again soon. Having cut interest rates by 25bp in both …
19th May 2020
Most economies in Emerging Asia will experience falls in GDP of 10-20% in the first half of the year, which is similar to what we expect in most other parts of the world. However, with many in the region appearing to be containing the virus and with …
18th May 2020
In response to the rapidly worsening outlook for the economy, Pakistan’s central bank (SBP) today slashed its key policy rate by a further 100bp to 8.0%. With the economy in freefall and the authorities struggling to contain the spread of the virus, more …
15th May 2020
Vietnam’s central bank (SBV) today cut its main policy rate by 50bp to 4.5%, and further rate cuts are likely given the poor economic outlook. Although life in the country appears to be slowly returning to normal after the lockdown came to an end late …
12th May 2020
With its lockdown being extended again today, the Philippines faces at least two more weeks before the economic recovery will begin. We think GDP will contract by 6% this year, which would make it one of the hardest-hit countries in the region from the …
Except for India’s, banking sectors across Emerging Asia went into the crisis in good shape. The economic recession now underway will cause a sharp rise in non-performing loans (NPLs), but most banks are well-placed to absorb the losses. This reduces the …
11th May 2020
Bank Negara Malaysia (BNM) today cut its policy rate from 2.50% to 2.00%, and with the outlook for growth very poor, we think the central bank will ease policy again in the coming months. Of the 20 analysts polled by Bloomberg, 14, including ourselves, …
5th May 2020
Government debt will increase sharply across the region this year. For most countries this will not be a problem. The situation is most worrying in Pakistan and Sri Lanka where debt relief will be needed to put finances on a sustainable footing. Most …
4th May 2020
Malaysia reopened most of its economy today following nearly seven weeks of lockdown, but with consumer behaviour unlikely to return to normal quickly and global demand very weak, the economy is still set to contract sharply this year. The decision to end …
Vietnam has started to lift some of the shutdown measures that were introduced to slow the spread of the coronavirus, but this won’t prevent the export-dependent economy from slowing sharply this year. The decision to relax some restrictions on the …
24th April 2020
Most countries in Emerging Asia are net importers of oil, so would usually stand to gain from a big drop in prices. But that benefit won’t materialise until consumer spending recovers. For Malaysia, which is the region’s only major net oil exporter, the …
23rd April 2020
Taiwan’s success at containing the coronavirus outbreak at home will not prevent the economy from falling into a huge recession this year. We think the economy will shrink by 5% this year, which would be by far the biggest contraction on record. Taiwan …
22nd April 2020
The impracticality of social distancing for many will make it hard for countries in South Asia to contain the coronavirus. Failure to contain the disease would have dreadful humanitarian consequences and would also lead to much slower economic recoveries …
Output should start rising again in most countries in Asia in the third quarter of the year as lockdown measures are eased. But economic recoveries will soon run into constraints resulting from subdued demand and impaired balance sheets. A full recovery …
20th April 2020
The central bank in the Philippines (BSP) today cut its policy rate by 50bp at an emergence meeting, and with economic activity in the country collapsing, we doubt this will be the last move from the Bank. Today’s decision came unannounced, but it was no …
16th April 2020
The scale of job losses and falls in incomes caused by coronavirus containment measures across the world – but particularly in the US and the Gulf – is likely to weigh heavily on remittance inflows into Asia. A drop in remittances would increase the risk …
Adept handling of the current crisis has helped President Moon’s party to emerge from today’s National Assembly election with a majority, which should help breathe new life into his reform agenda. While the near-term economic outlook will depend on how …
15th April 2020
Bank Indonesia (BI) today left interest rates unchanged at 4.5%, but the cut to the reserve requirement ratio (RRR) and dovish comments in the press conference suggest that further rate cuts are likely. The decision was a surprise. Having cut rates at its …
14th April 2020
The Bank of Korea’ (BoK) left rates on hold at 0.75% today and announced plans to purchase government bonds. There is scope for quantitative easing to have an impact, but there are limits to how effective it can be. As such, the role of supporting the …
9th April 2020
In recent days several governments from across the region have announced shutdowns or tightened measures already in place. The economic impact of these measures will be huge, with service sectors set to bear the brunt. We think shutdowns will lower GDP in …
1st April 2020
Inflation will fall sharply across the region over the coming months as the effect of currency falls and supply-side disruptions are outweighed by the impact of falling oil prices and a slump in demand. A few countries are likely to experience deflation, …
31st March 2020
The Monetary Authority of Singapore (MAS) loosened policy today by reducing the slope of its policy band, and even though the outlook for growth and inflation is very downbeat, we don’t expect further loosening in the months ahead, given the limitations …
30th March 2020
Today’s massive fiscal stimulus package won’t prevent Singapore from falling into a deep recession in the first half of the year, but it should ensure that the economy is well-placed to bounce back strongly when the global economy starts to return to …
26th March 2020
The slump in the rupiah poses a major threat to Indonesia because of the country’s high level of foreign currency debt. So far, the response of the central bank has been to step up its intervention in foreign exchange markets, but if the decline in the …
24th March 2020
With the growth outlook deteriorating rapidly, the Bank of Thailand today became the sixth central bank in the region to cut interest rates this week. The 25bp emergency rate cut takes the policy rate to a new all-time low of just 0.75%. The decision to …
20th March 2020
Bank Indonesia cut interest rates today, but the slump in the rupiah in recent days means policymakers in the country will need to act more cautiously than other central banks in the region over the coming weeks and months. Today’s 25bp rate cut takes the …
19th March 2020
In response to the rapidly worsening outlook for the economy, Taiwan’s central bank (CBC) today cut its key policy rate today by 25bps to 1.125% and announced other measures to support the economy. However, with growth slowing sharply, further rate cuts …
South East Asia and China are likely to be the worst affected countries by the current crisis, with some places likely to see GDP contract by up to 5% this year. Only a few economies in the region will record positive GDP growth in 2020. The outlook for …
The central bank in the Philippines is likely to ease further in the months ahead after opting to cut its main policy rate by 50bps today. The BSP has not yet introduced loan programmes or targeted support for financial institutions and businesses …
In response to the rapidly worsening outlook for the economy, Pakistan’s central bank (SBP) today slashed its key policy rate by 75bp to 12.5%. With growth likely to slow sharply this year and inflation set to fall back further, more rate cuts are likely. …
17th March 2020
The Bank of Korea today finally responded to the coronavirus outbreak by cutting the policy rate by 50bp and introducing a number of other measures to ease financing constraints. Further measures, including the adoption of quantitative easing, are now …
16th March 2020
The new restrictions on economic activity in Manila will further weigh on the country’s outlook and mean the central bank (BSP) will almost certainly cut interest rates again at its meeting on Thursday, if not before. President Rodrigo Duterte on Thursday …
12th March 2020
Some countries have managed to control the new coronavirus without large-scale quarantines or economic shutdowns. But they have achieved this by preventing the virus from spreading within the community in the first place. The only places that have so far …
11th March 2020
The rising number of new coronavirus infections in Asia beyond China has largely been confined to Korea and Japan. But poor healthcare provision, the density of population and high levels of internal migration in the early stages of the monsoon season …
Malaysia’s new finance minister, Tengku Zafrul, faces the unenviable challenge of dealing with a rapidly deteriorating fiscal position at the same time as the economy is slowing sharply. While the budget deficit is likely to widen significantly this year, …
10th March 2020
Most countries in Emerging Asia are net importers of oil, so would usually stand to gain from a big drop in prices. But with the coronavirus continuing to spread and people increasingly avoiding public spaces, the windfall from lower oil prices is more …
9th March 2020
Korea’s position as a key supplier of high-tech intermediate goods means it plays an important role in regional supply chains. Extended factory closures due to the spread of the coronavirus would cause significant disruption to the global electronics …
The Central Bank of Sri Lanka (CBSL) left interest rates unchanged today, and while it kept the door open to loosening, high inflation and the CBSL’s concern over the rupee limits the scope for further cuts. Having cut rates three times since last May, …
5th March 2020
Bank Negara Malaysia (BNM) today cut its policy rate from 2.75% to 2.50%, and with headwinds to growth worsening, we think the central bank will ease policy again at its next policy meeting in May. 15 of the 24 analysts polled by Bloomberg, including …
3rd March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
The coronavirus itself may not trigger a wholesale reorganisation of supply chains, but it strengthens the argument for companies to reduce associated risks. One response might be to introduce more redundancy into supply chains to lessen reliance on …
The Bank of Korea (BoK) unexpectedly left its main policy rate on hold at 1.25% today. But with the economic cost of the coronavirus mounting, policy support will have to be ramped up soon – we are forecasting a cut in April. Today’s decision was the …
27th February 2020
The political turmoil that has engulfed Malaysia is likely to undermine the government’s response to the coronavirus crisis and could also set back the progress the country has made in tackling corruption. Malaysia’s politics was thrown into turmoil …
24th February 2020
With the number of confirmed coronavirus cases in Korea jumping sharply over the past few days, the Bank of Korea is almost certain to cut interest rates at its meeting next week. The number of confirmed cases of the coronavirus in Korea doubled on …
20th February 2020
Bank Indonesia (BI) today cut its main policy rate by 25bp to 4.75%, but we doubt this will be the start of a prolonged easing cycle given the country’s relatively limited exposure to the slowdown in China and the central bank’s concern over the rupiah. …
With the economic cost of the coronavirus mounting, Singapore’s government opted to loosen policy significantly in its 2020 budget today. Growth is still likely to slow sharply, but the strong fiscal response means that the economy should be able to …
18th February 2020
Factory shutdowns in China are starting to have significant knock-on effects on the rest of the region as companies struggle to source intermediate goods. The garment and electronics sectors are likely to experience the worst of the disruption, while …
13th February 2020
Given the rising economic toll from the coronavirus, worries about rising property prices and high levels of household debt are unlikely to stop the Bank of Korea (BoK) from cutting interest rates at the end of the month. With the economic costs of the …
12th February 2020