Entries for 'Asia Pacific'
September 30, 2021
China's post-Covid stimulus was more restrained than after the great financial crisis (GFC) even though the Covid shock was about twice that by GFC in terms of the damage to GDP growth.
September 29, 2021
In this note, we update out view on inflation and monetary policy in emerging markets. Rising inflation, even if partially transitory, has forced the hand of EM central banks. We expect inflationary pressures in many countries to peak in the next six months. Slowing growth, favorable base effects, and lower commodity prices will be the drivers. However, rate hikes were also prompted by expansionary fiscal policy in some cases. Furthermore, tightening global liquidity in 2022 may add pressure on central banks.
September 8, 2021
ASEAN-5 countries experienced strong, export-driven growth in 2021H1. However, the COVID Delta variant is already affecting business sentiment. With vaccination rates still low, we expect growth to slow markedly in H2. Lockdowns in the ASEAN-5 are also beginning to affect global value chains. We expect monetary and fiscal policies to remain supportive into next year.
September 3, 2021
We expect real GDP growth to remain around 4% in FY2021/22. Monetary policy remains accommodative. Adequate net capital inflows will offset the widening CA deficit, increasing FX reserves. We expect further fiscal consolidation supported by ongoing reforms under the IMF EFF arrangement.
August 5, 2021
We expect consumption and manufacturing investment to pick up in 2H and support the recovery process, while the tailwinds of exports and real estate will taper off in 2H. We expect China’s GDP to grow by 5.4% and 8.6% y/y in 2H and the whole year 2021, respectively.
July 22, 2021
Domestic consumption lagged export growth in China’s post-COVID-19 recovery. This is in part because stimulus policies have targeted businesses instead of households. Surging household debt, uneven income and wealth distribution across China have tamped down consumption rates.
June 30, 2021
We use VAR models to decompose the effect of commodities and FX on EM inflation. Turkey and Russia, for different reasons, appear most exposed to exchange rate shocks. Headline inflation in South Africa and Brazil appear to be driven by energy prices, while price dynamics in Indonesia are more responsive to non-energy commodities. We expect tight stances in Brazil, Mexico, Russia, Turkey to keep expectations anchored.
June 29, 2021
Since 2008, local governments (LG) have accounted for 80% of the increase in China’s government debt. Containing LG debt has become a policy priority given their limited fiscal resources and growing indebtedness.
June 23, 2021
This note investigates the forces that have contributed to China’s debt burden since 2009. We found that the lever-age ratio, defined as debt relative to GDP, was driven by different forces at different times. China’s three deleveraging attempts garnered mixed results.
May 25, 2021
China’s economic ties with Latin America grew at 19% compound annual rate over the past two decades thanks to China’s growing appetite for commodities. This note discusses the latest trade and investment developments since a detailed examination of data helps show the changing and nuanced picture.
May 12, 2021
The COVID-19-induced collapse in international tourism was unprecedented. Even in an optimistic scenario, tourism revenues will remain subdued in 2021. As a result, the economic recovery in countries such as Thailand will be slower. Furthermore, external pressures are set to rise as imports rebound strongly.
May 5, 2021
ASEAN countries will bounce back from the COVID-19 shock this year. However, the pace of the recovery varies due to uneven pandemic control. Supply chain disruptions subside, and ASEAN exports are rising sharply. Fiscal and monetary policy stances will likely remain supportive this year.
April 26, 2021
In 2020, China’s large current account surplus was mostly offset by similarly large capital outflows. Given FDI and portfolio surpluses, capital outflows were categorized in the Other Investment account, and more specifically, as China’s external loans and deposits.
April 20, 2021
China's stock market has typically been thought of as volatile, driven by capricious retail investors. The market has improved markedly in the past few years, thanks to greater participation of domestic and global institutional investors. This note examines the growth of China's A-share market.
March 10, 2021
Foreign investors are aggressively buying Chinese bonds but are concentrated in sovereign and quasi-sovereigns. Bond inflows in 2020 were driven by index inclusion, attractive local yields, and a strengthening RMB. This note discusses the allocations of foreign investment and the type of inflows.
February 10, 2021
We expect Frontier Asia to remain broadly resilient to the COVID-19 shock. Loose monetary and fiscal policies will extend into ‘21 and support growth. However, tourism will continue to weigh on growth and current accounts. Trade tensions and growing debt are the key risks to their economic outlook.
February 1, 2021
China’s exports were remarkably resilient in 2020, thanks to strong demand for PPE and WFH products. Export’s contribution to China’s economic growth in 2020 was greater than the headline number indicated. China’s exports are likely to be more balanced in 2021 as vaccination reopens global economy.
January 13, 2021
Tensions and disputes between the U.S. and China are likely to continue, possibly resulting in further sanctions. We focus on lessons learned from the U.S. sanctions policy towards Russia, and what those could mean for U.S. sanctions towards Hong Kong or China.
December 22, 2020
The PBoC halted its emergency easing as early as April, but continued to support the economy via fund-for-lending schemes and subsidies to bank loans. This note summarizes PBoC actions this year, with particular attention to the emergency funding schemes.
December 16, 2020
China's core CPI stayed at 0.5% in the past five consecutive months. This note investigates the drivers of China's inflation. We find that the output gap was the main culprit of disinflation in 1H due to the COVID-19 lockdown. Low oil prices and RMB appreciation further depressed domestic prices.