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We held an online Drop-In session today to discuss the Biden administration’s new tariffs on goods from China. (See a recording here .) This Update answers several of the questions that we received about the direct effects of the tariffs and what they say …
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: Join our post-Taiwan election online briefing on Monday, 15th January to find out what the results mean for its economy and for US-China relations. Register here for the 20-minute session. China may respond to a victory for Tsai Ing-wen’s chosen …
10th January 2024
Note: Join our post-Taiwan election online briefing on Monday, 15th January to find out what the results mean for its economy and for US-China relations. Register here for the 20-minute session. In a busy electoral calendar, seven countries in Emerging …
3rd January 2024
The December PMIs for most economies in Emerging Asia stood well inside contractionary territory. The outlook for manufacturing in the region remains bleak in the near term as high inventory levels, softening labour markets at home and renewed weakness in …
2nd January 2024
GDP growth in Vietnam picked up in Q4 but this strength is unlikely to last if, as we expect, exports weaken and commercial banks pull back on lending in response to a sharp rise in non-performing loans. With inflation likely to remain within target, we …
29th December 2023
The front runner in Taiwan’s election, Lai Ching-te, is targeting economic growth of 3.5% if he wins the presidency. We think this will be out of reach. Although productivity growth should hold up well, the rapidly worsening demographic outlook means that …
13th December 2023
Tensions between the Philippines and China have once again flared up in the South China Seas. However, the fact that the Philippines is not closely integrated into China’s economy means the economic fallout from the deterioration in relations with China …
11th December 2023
The November PMIs for Emerging Asia generally nudged up a touch but remained weak overall. The outlook for manufacturing sector in the region remains bleak in the near term as elevated inventory levels, high interest rates and subdued foreign demand weigh …
1st December 2023
In this Global Economics Update , we describe eight of the biggest risks to our economic forecasts for 2024. The unusual nature of this cycle and uncertainties surrounding the transmission of monetary policy mean that the biggest risks relate to central …
30th November 2023
The Bank of Korea (BoK) today left its policy rate unchanged (at 3.5%) for a seventh consecutive meeting, and hinted that interest rates would remain elevated as it continues to clamp down on inflation. While we think interest rates will be left on hold …
One year into his premiership, Anwar Ibrahim has made very limited progress on his key reform objectives. Given his weak position in parliament, we don’t anticipate this will change anytime soon, and we remain downbeat on the country’s medium-term …
22nd November 2023
Economic growth in Singapore rebounded strongly in the third quarter of the year, but we don’t expect this strength to last. A combination of weaker global demand and high interest rates will cause growth to slow over the next couple of quarters. The …
Economic growth in Thailand picked up in the third quarter of the year and we expect the economy to record steady, if unspectacular growth over the coming quarters, helped by looser fiscal policy and a further recovery in the tourism sector. GDP growth …
20th November 2023
GDP figures for Malaysia published today confirmed that the economy rebounded strongly in the third quarter of the year. However, with interest rates set to remain elevated and exports likely to struggle, we doubt this strength will last. Today’s figures …
17th November 2023
An opposition win in Taiwan ’ s upcoming presidential election could lead to a complete or partial reversal of the economic sanctions that China has imposed on Taiwan ’ s economy during Tsai Ing-wen ’ s presidency. The restrictions on tourism are the …
9th November 2023
The October PMIs for Emerging Asia generally dropped back further inside contractionary territory. The outlook for manufacturing in the region remains bleak in the near term as elevated inventory levels and weaker foreign demand are set to curtail …
1st November 2023
Reforms introduced by President Joko Widodo (commonly known as Jokowi) should enable the economy to continue growing rapidly once he steps down next year. The key question as the election approaches is whether his successor will build on the progress he …
24th October 2023
In a surprise move, Bank Indonesia (BI) today hiked its main policy rate by 25bps (to 6.0%) in an attempt to support the currency. But there is a good chance this will be a case of “one and done”. Our forecast is that US bond yields will drop back over …
19th October 2023
The Bank of Korea today left its policy rate unchanged (at 3.5%), and while Governor Rhee left open the possibility of further interest rate hikes, there are signs that some members of the central bank are becoming more dovish. With growth struggling but …
Malaysia budget to weigh on GDP, add to inflation Malaysia’s budget for 2024, which was unveiled in parliament today, envisages a modest tightening of fiscal policy, with the deficit set to narrow from an estimated 5.0% of GDP this year to 4.3% in 2024. …
13th October 2023
Headline inflation has jumped across much of Emerging Asia over the past couple of months on the back of rises in food and fuel prices. This won’t prompt central banks to resume tightening (the Philippines is the exception). However, the rise in inflation …
11th October 2023
The Asian Tiger economies of Korea, Singapore, Hong Kong and Taiwan are likely to be among the biggest beneficiaries of the emergence of new AI technologies. But the boost will not be enough to offset the drag from worsening demographics, and we still …
9th October 2023
The central bank (CBSL) today cut interest rates by a further 100bps. With inflation low and the economy still very depressed, further easing is likely over the coming months. Today’s 100bps cuts take the lending and deposit rates to 10% and 11% …
5th October 2023
The latest activity data from Korea were downbeat. Although industrial production grew strongly, the manufacturing PMIs, along with the export figures and retail sales data, all point to continued weakness. However, with inflation rising again last month, …
The sell-off in bond markets has taken a breather today, helped in part by softer data on the US labour market. However, the scale of the moves over the past week has invoked comparisons to previous financial crises that have been caused by sharp moves in …
4th October 2023
Construction spending in Korea is falling sharply as developers respond to an oversupply of new homes by cutting back on new projects. The sector’s weakness will remain a major drag on economic growth throughout next year. Property prices in Korea dropped …
3rd October 2023
The PMIs for September suggest that manufacturing activity across Emerging Asia remained weak last month. Worryingly, the PMIs point to a further rise in price pressures across the region, with the input and output price subcomponents both rising. The …
2nd October 2023
