Entries for 'Asia Pacific'
May 20, 2022
China's State Council unveiled a plan to promote retirement savings, which is sorely needed, given inadequate public and employer pensions. This new retirement savings plan will help deepen China's financial markets and reduce volatility.
May 13, 2022
China’s FX market has grown and changed significantly. This China Spotlight looks into China’s FX market structure and how it shapes the RMB exchange rate.
April 29, 2022
Despite weak domestic demands, we expect a moderately narrower current account surplus in 2022, due to rising energy prices. Moreover, under the relatively stable headline numbers, the structure of China's current account is undergoing significant changes.
April 20, 2022
Russia’s war on Ukraine has caused a strong surge in commodity prices, as well as uncertainty regarding global growth and the outlook for inflation. We have revised down our growth forecast for the ASEAN-5 and South Korea. Rising inflation will prompt central banks to begin policy normalization in ’22. Current account dynamics will be driven by relative exposure to commodities. Risks stem from an uncertain outlook for China and higher energy prices.
April 7, 2022
The direct impact of the war in Ukraine on China's economy is minor due to the relative sizes of these economies. However, the indirect impact of global consumer and investor confidence can be profound and complicated. We expect the war to reduce China's GDP growth by 0.2 points.
April 1, 2022
China’s 2022 budget seems rather tepid with a narrower fiscal deficit and flat new debt. Once the deficit in the government fund account and special transfers are considered, the consolidated fiscal deficit could reach 8.1% of GDP in 2022, lending strong support to economic recovery.
March 25, 2022
China's local government (LG) bonds have ballooned since 2018 as LGs were given ever greater bond quotas to finance deficit spending. The recent real estate slump exacerbated the risks as local governments depend heavily on land revenues. LGs are increasingly reliant on CG-LG transfers.
March 9, 2022
Russia’s invasion of Ukraine has triggered a number of severe sanctions. China, an important partner, has maintained a deliberately neutral stance. While Russia-China trade is important, financial links remain minimal. China could mitigate Russia’s loss of access to global payment systems. Furthermore, with 40% of reserves frozen, holdings in China are critical. The Bank of Russia (CBR) may need to get creative with FX interventions.
February 22, 2022
China’s economy slowed down markedly in 2H2021 due to energy shortages, tougher regulations, and a housing slump. Though policies are turning more supportive of growth, the outlook for 2022 is still highly uncertain. We expect China’s GDP to grow about 5% in 2022.
February 17, 2022
Despite having over $2 tln of net foreign assets per IIP, China runs over $100 bln investment losses a year. This China Spotlight looks at the reasons behind this. China earned a reasonable return on its foreign assets but paid a hefty cost for its foreign liabilities.
January 31, 2022
This note explains the interest rate tools at PBoC’s disposal and China’s interest rate transmission mechanism.
January 25, 2022
China’s latest census revealed an alarming deceleration in population growth. The birth rate in 2021 fell to a 72-year record low. The rapidly aging population is having a profound impact on savings, investment, and economic growth. This note looks into China's demographic challenge.
January 6, 2022
Beijing took a series of bold regulatory and economic policies in 2021. Though good for long-term sustainability, the intensity of these policies is hurting near-term growth. Better communication and some policy easing can relieve the near-term pains.
January 4, 2022
2021 was a tumultuous year for China’s economy, which was disrupted by the housing slump, energy shortage, and regulatory storms. We expect policies will be significantly more pro-growth in 2022.
December 22, 2021
Once a key driver of China's economic growth, real estate is now seen by many as a cancer of the economy. Real estate and construction together account for 14.5% of China's GDP and 20% of employment. This note examines the role of real estate, particularly housing, in China's economy.
November 29, 2021
China’s total foreign assets doubled in the past 11 years to $9 tln by mid-2021. However, considering the size of China’s GDP and the investments in its own assets in HK, China’s financial integration with the world still has a long way to go.
November 19, 2021
Inflation is rising due to higher food and energy prices, deglobalization, and supply chain disruptions. In addition, the recent increases in global CPI stem from widespread monetary easing and expansionary fiscal policy. Inflation may exceed central bank targets through 2022 and into 2023.
November 1, 2021
The result of higher oil prices is a shift in purchasing power from oil consumers to producers. Oil exporters are getting a boost to their terms of trade, leading to wider CA and fiscal surpluses. Higher energy prices will hurt several EMDEs that remain heavily dependent on petroleum imports.
October 29, 2021
The recent financial distresses among Chinese property developers are inevitable given the excessive leverage and tightening real estate policies. Careful resolution of developer debts is needed to ring fence risks while minimize moral hazards.
October 20, 2021
We have revised our 2021 growth outlook for ASEAN+ from 4.5% to 3.6%. This is mostly due to lockdowns weighing on manufacturing and services. However, ASEAN+ countries have more policy space to respond to shocks. Non-resident capital flows are projected to rebound this year to $228 bn. FDI and portfolio debt are key drivers but 21H2 will likely see a slowdown. Nonetheless, we expect flows above pre-pandemic levels in 2021 and 2022.