Entries for 'Asia Pacific'
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.
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.