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.

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.

We expect a stronger recovery in capital flows to Asia relative to other EMs in 2021. FDI remains an important driver, with India and Indonesia as the largest recipients. Relatively robust inflows and c/a adjustments in ‘20 allow for reserve accumulation. A reemergence of COVID-19 and geopolitical factors are the key risks to the outlook.

Many EM central banks started QE-like programs at the height of the COVID-19 crisis. This coincided with questions arising with respect to the financing of widening deficits. However, actual government bond purchases remain limited so far, including in Asia. Domestic investors appear to have stepped in to buy up additional sovereign issuance.

We analyze external adjustments in EM Asia following the COVID-19 shock. Cross-border flows are shifting considerably in many countries in the region. The global recession weighs on exports and weak domestic demand on imports. Other sources of FX inflows have come under significant pressure as well in H1. This includes both international tourism revenues and workers’ remittances.

Vietnam has further integrated into regional supply chains. It has benefited from US trade diversion away from China, and production reallocation and investment by Chinese firms. The key risk is the US changing its policy stance towards Vietnam.

High import content in export production and investment is evident across the region. Recent import compression should support current account positions amid weak exports. However, the multiplier effects of import plunge on investment will likely depress GDP growth.

Trade tensions raised fears of slowing global trade. We develop a model to track US trade in real time, based on detailed weekly customs information. The picture is more positive than in Asian data, as US trade stabilized in real terms in early 2019. We think that global trade fears are overblown.

Economic growth is poised to maintain a steady path after improving last year. Expansionary fiscal spending and a low policy rate will support domesti.

President Moon's administration faces multiple challenges, while seeking to reshape foreign relations. North Korea's latest missile launch and ongoing.

Bank of Korea (BOK) increased its benchmark policy rate by 25bp to 1.5%, the first hike since 2011. Stronger growth, curbing of household debt, and up.

President Moon's ambitious agenda is focused on achieving sustainable growth of 3% a year by addressing structural challenges, including lifting wages.

The rising trade surplus with the US and the large current account surplus prompted the Trump administration to call for a review of the KORUS FTA and.

US national security concerns remain paramount following stepped-up nuclear and missile tests by North Korea.' While the US has not ruled out military.

The military threat from the North, following its stepped-up missile and nuclear development program, has gone well beyond the Korean peninsula to pos.

Passing Through Testing Times Our recent visit found President Moon's new government challenged by heightened external political tensions and pressur.

Newly-elected President Moon Jae-in is following through on his campaign promise to use fiscal stimulus to boost job creation and the economy by propo.

Mr. Moon Jae-in won the recent historic presidential election, ending the protracted political crisis culminating in the Constitutional Court upholdin.

Impeachment Upheld, but Next Government Will Face a Challenging Time The recent decision by the Constitutional Court to uphold President Park's impea.

The political crisis, structural impediments and weak exports are weighing on the economy. The Constitutional Court is expected to uphold last Decembe.

Political Aftershocks ' The impeachment of President Park, if upheld by the constitutional court as appears likely, should end months of political tu.

*Rising tide floats all boats-but for how long? *EM flows surge after dovish ECB, weak payrolls *Global Economic Monitor-still looking for lift *China.

The ruling party has lost its majority in recent parliamentary elections. While we do not expect a derailment of ongoing reforms, the pace could slow.

After months of relative resilience compared to other Asian markets, Korean financial markets have been under pressure over the last couple of weeks.

Growth is still slow, but some recent data suggest the economy may have begun to stabilize in the third quarter. The government is using fiscal stimul.

The government is struggling to raise growth prospects which have been held back by slowing regional demand, increasing competition from Japan, advers.

Equity markets assess relative growth prospects Global outlook - looking for upside China - mixed signals Korea -' BOK stands pat despite yen concerns.

The economy turned up in 2013, but remains subdued by structural impediments such as over-reliance on exports, public sector inefficiencies, excessive.

Diminished sensitivity of the banking system to changes in global liquidity conditions has helped limit the impact of the latest bout of global financ.

Slow growth, low inflation and weak external demand finally prompted the central bank to cut the policy rate after a seven-month hiatus. The latest mo.

The honeymoon most newly-elected candidates enjoy on first taking office has eluded President Park Geun-hye. Financial markets are taking the latest d.

The domestic stock market is distinguished from the rest of the region and most of the world by its poor performance so far this year. The fundamental.