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We held online Drop-In sessions this week to discuss how we factor the US election into our thinking on the macro and market outlook for the US and other parts of the world. See here for a recording of the session focused on the US and here for the rest …
24th October 2024
A victory for Donald Trump in the US election would probably result in higher US Treasury yields and a stronger dollar. That’s an environment in which central banks in EMs with strained balance sheets (notably Turkey) could hike rates and others that are …
Having stormed to victory in February’s presidential election, Prabowo Subianto, a former army general and the current defence minister, will take over from Joko Widodo on Sunday (20 th October). Since his election victory, Prabowo has made a number of …
15th October 2024
The Bank of Korea today cut interest rates by 25bps (to 3.25%), but tried to dampen speculation that it would cut rates at its final meeting of the year in November. With growth struggling and inflation low, we think it is too early to rule out another …
11th October 2024
GDP growth in Vietnam rebounded strongly in the third quarter of the year and we expect growth to remain robust in the near term, helped by strong export demand. Data published over the weekend showed that GDP growth accelerated in the third quarter to …
7th October 2024
Inflation in Thailand is the lowest not just of any country in Asia, but across the emerging world. (See Chart 1.) The headline rate in August fell to just 0.4% y/y, while the core rate was 0.6%. (See Chart 2.) We expect inflation to rise a little over …
1st October 2024
The September PMIs from Asia generally declined from the previous month. And while the PMI surveys aren’t always a good guide to the hard activity data, their recent signals are consistent with our expectation for manufacturing activity in Asia to …
We recently held a series of Asia-focussed roundtable discussions with clients in London, covering an array of topics including the impact of Fed easing, the US election, global fracturing and China’s stimulus blizzard. This Update answers several of …
The Fed’s upcoming monetary easing cycle will probably provide less of a tailwind to EMs than is widely thought. While it’s likely to give some central banks (such as in the Gulf, Mexico and Indonesia) a green light to lower interest rates, EM rate …
12th September 2024
Inflation in Korea fell back sharply last month, supporting our view that the central bank will cut interest rates at its next meeting in October. Inflation data published today showed that the headline rate fell from 2.6% y/y in July to 2.0% in August. …
3rd September 2024
The Bank of Korea left rates on hold again today but sounded very dovish. With policymakers now more confident about achieving their inflation target and domestic demand set to remain weak, we think the BoK will start to cut rates in October and that the …
22nd August 2024
Signs of a thaw in frosty relations between India and China don’t point to a fundamental realignment in India’s position in a fracturing global economy. But they highlight a growing theme of some EMs tactically courting investment from China to put …
13th August 2024
The outbreak of political violence and the sudden resignation of Prime Minister Sheikh Hasina has rocked Bangladesh today. But provided that peace and stability is restored relatively soon, the economy is unlikely to suffer major long-term effects. Sheikh …
5th August 2024
Fears of a US recession have rattled EM equity markets at a time when EM economies themselves are showing more pronounced signs of weakness. Most EM currencies have held up well, suggesting a dovish tilt may come from EM central banks – particularly those …
Newly-published data show that the Philippines has entered a demographic sweet spot that could provide a big boost to economic growth. But this will only happen if enough new jobs can be created for the wave of young people that will enter the workforce …
16th July 2024
A narrowing of the current account deficit and a decline in the share of government bonds held by non-residents means the rupiah is much less exposed to sudden shifts in global risk appetite than in the past. This should ensure that the currency performs …
11th July 2024
The Bank of Korea left its policy rate unchanged today at 3.5%, but dropped clear hints that interest rate cuts would be coming soon. With growth set to struggle and inflation likely to fall further, we are maintaining our view the central bank will cut …
Exports from Taiwan, Korea and Vietnam have surged over the past 18 months, thanks to strong demand for AI-related products and friendshoring. In contrast, shipments from the rest of the region have struggled. We expect this divergence to continue over …
10th July 2024
A La Niña could bring with it favourable growing conditions for crops in South East Asia, and help to put downward pressure on food prices across the region. It adds to the reasons to think the upcoming rate-cutting cycle in the region will be more …
8th July 2024
The PMIs from Emerging Asia picked up strongly last month, but we doubt this will last given the subdued outlook for global demand. Meanwhile, the decline in inflation in Indonesia last month supports our view that the central bank will cut interest rates …
1st July 2024
The State Bank of Pakistan (SBP) kicked off its easing cycle today with a 150bps rate cut, and while further cuts are likely, ongoing negotiations with the IMF for a new long-term loan deal mean that the pace of further loosening is likely to be …
10th June 2024
Narendra Modi will begin his third term as India’s Prime Minister with a weakened mandate and that will make the passage of contentious economic reforms more difficult. But he will still be able to work as the head of a stable coalition, and the broader …
4th June 2024
The manufacturing PMIs for Emerging Asia remained weak in May but have been a poor guide to the hard data on activity over the past year anyway. However, the PMIs have been a decent guide to price pressures and the latest data suggest the risk of a …
3rd June 2024
The Bank of Korea left its policy rate on hold today (at 3.5%) and appeared to indicate that interest rates would not be cut until it was confident that inflation would fall back to target. Given our view that price pressures will ease further over the …
23rd May 2024
The political turmoil in Vietnam, which has led to a number of key leaders being sacked from their posts, is undermining the country’s reputation for stability, which until now has been one of its key selling points to foreign investors. The political …
20th May 2024
This note answers some of the most frequently asked questions that we received from clients during a recent online briefing about the latest US tariffs on China. Watch the original briefing here . What has been announced? Yesterday was the end of a …
15th May 2024
Increased immigration would be the easiest way for Singapore to offset a decline in the working age population. However, such a move would be politically controversial, and deciding how many foreign workers to allow into the country will be one of the …
14th May 2024
Korea is one of the few countries in the region where inflation is still above target. However, with economic growth set to slow and the government stepping up efforts to bring food prices down, we expect the headline rate to fall back to target by the …
2nd May 2024
The PMIs from Emerging Asia remained weak in April. We think manufacturing activity across most of Asia will remain subdued in the near term but output in Taiwan and Korea is likely to hold up better than that in the rest of the region. The weighted …
In a surprise move, Bank Indonesia (BI) today hiked its main policy rate by 25bps (to 6.25%) and made clear that supporting the currency would remain its key priority over the coming months. But there is a good chance this will be a case of “one and …
24th April 2024
A weak labour market and high interest rates will continue to weigh heavily on Korea’s consumer sector this year. The poor prospects for consumer spending is one of the main reasons we think overall GDP growth will remain subdued. Korea’s recovery from …
22nd April 2024
Recent currency falls and higher oil prices are unlikely to put significant upward pressure on consumer prices across Asia. We continue to expect inflation in the region to remain low over the coming year. Consumer price inflation has fallen back sharply …
Local factors will determine the next moves by most of Asia’s central banks, not the actions of the US Fed. We expect policymakers in Thailand, Vietnam, the Philippines and Korea to lower interest rates later this year, regardless of whether the Fed cuts. …
16th April 2024
The Bank of Korea left its policy rate on hold today (at 3.5%), but kept open the possibility of rate cuts later this year. However, with inflation concerns continuing to linger, we are pushing back the timing of when we think the central bank will cut …
12th April 2024
Vietnam’s banks are likely to remain cautious this year and both credit and GDP growth are likely to come in below trend. The central bank will have to cut rates further to stimulate demand. The health of Vietnam’s banking sector worsened last year due to …
4th April 2024
Taiwan’s chip industry has invested heavily in making its facilities resilient to earthquakes. Disruption to production is unavoidable when a large earthquake strikes, but firms are usually able to return to close to full operating capacity within days if …
3rd April 2024
The PMIs from Emerging Asia remained weak in March. We think manufacturing sectors across most of Asia will struggle in the near term but activity in Korea and Taiwan is likely to remain strong. The weighted average headline PMI for Emerging Asia rose …
1st April 2024
The Central Bank of Sri Lanka today cut interest rates by a further 50bps and hinted at further rate cuts to come. With inflationary pressures under control and the economic recovery struggling, more policy easing is likely before the end of the year. …
26th March 2024
Despite the booming economy, inflationary pressures in Taiwan are likely to remain subdued. Accordingly, we think today’s unexpected rate hike by the central bank (CBC) will prove to be a case of one and done. Today’s decision to raise the policy rate by …
21st March 2024
Donald Trump’s threat to impose a blanket 10% tariff on all US imports would hit Vietnam hard. But provided they were accompanied by a 60% tariff on all imports from China (as Trump has also threated), then Vietnam should benefit from a new round of Trump …
18th March 2024
The February PMIs for economies in Emerging Asia edged down last month and were mostly inside contractionary territory. The outlook for manufacturing in the region remains poor in the near term, with high interest rates and weak foreign demand likely to …
1st March 2024
The Bank of Korea left its policy rate on hold today (at 3.5%) and attempted to push back against expectations for an early rate cut. However, with inflation likely to be back to target soon and domestic demand struggling, we expect easing to begin in …
22nd February 2024
After a couple of years in the doldrums, property construction in Korea is rebounding. The recovery in the sector should provide an important prop to economic growth this year. There are encouraging signs that the worst is over for Korea’s property …
20th February 2024
Pakistan’s general election has thrown the country’s political scene into turmoil, with no party emerging with a majority from Thursday’s poll. A hung parliament may complicate the country’s upcoming negotiations with the IMF over a new long-term loan …
9th February 2024
The PMI data for Emerging Asia offered some encouraging signs but remained quite weak overall for most economies. While parts of the region are likely to see an improvement in activity, we expect global growth to slow in the near term and remain cautious …
1st February 2024
The Monetary Authority of Singapore (MAS) kept monetary policy settings unchanged today but weaker growth and easing concerns about inflation are likely to prompt the central bank to loosen policy in April. The decision to remain on hold today, for the …
29th January 2024
The Central Bank of Sri Lanka left its deposit rate on hold (at 9.00%) today, and gave no hints at what its next move would be. However, with inflation set to remain low and growth likely to struggle, we expect the central bank to resume its rate-cutting …
23rd January 2024
This Update discusses how we think Taiwan’s election this weekend – which could be another flashpoint in Taiwan-China relations – might affect global equity markets, in aggregate and across some key sectors that look particularly exposed. Saturday’s …
12th January 2024
The Bank of Korea left its policy rate on hold today (at 3.5%), but struck a more dovish tone than after previous meetings. With inflation on the way down and growth likely to struggle over the coming months, we expect the central bank to start cutting …
11th January 2024
Note: W e held a client briefing straight after the election weekend to discuss what the vote means for Taiwan and the global economy. View the on-demand recording here . China may respond to a victory for Tsai Ing-wen’s chosen successor in Saturday’s …
10th January 2024
