Entries for 'Asia Pacific'
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.
December 9, 2020
We expect Brent oil prices to average $47/b in 2021, but upside risks are significant. Low interest rates, a weaker US$, tighter supply, and strong demand from East Asia are boosting non-fuel commodity prices.
December 7, 2020
Currently, the digital RMB (DCEP) is designed to be strictly cash-like with no interest payment and distributed by commercial banks to minimize the risk of disintermediation. Its impacts on banks, monetary policy, and RMB globalization depend on how the design will evolve.
November 15, 2020
China’s surveyed UR provides more reliable labor data than before. Its survey method is consistent with global norms, and its coverage is reasonably comprehensive. An aging population, expanding services sector, and lower labor force participation help explain the stable unemployment rate.
October 27, 2020
The Hong Kong Autonomy Act (HKAA) stipulates potentially highly damaging sanctions. At the extreme, the U.S. may disconnect China’s banks and corporates from the U.S. Dollar. Should the conflict escalate, we worry about unintended consequences for global markets.
October 21, 2020
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.
September 23, 2020
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.
August 12, 2020
China’s economic recovery in 2Q2020 was mainly driven by manufacturing and construction, thanks to effective pandemic control and policy support. Increases in household income and consumption are needed to make the recovery more sustainable. We expect the economy to grow by 2.2% for the whole year.
July 29, 2020
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.
July 28, 2020
The ASEAN region is now China’s largest trading partner, top tourism destination, and a key investment partner. However, the depth of these relationships vary among the individual ASEAN member states. We expect economic integration to continue in the region.
July 14, 2020
A recent PBoC survey revealed information regarding Chinese household balance sheets. Chinese households’ net worth is surprisingly large thanks to high savings rates and rising home values. The under-allocation in financial assets means poor liquidity yet great potential for diversification.
June 24, 2020
EM are experiencing an unprecedented and synchronized growth slowdown in ‘20. Restrictions remain in place in many countries, as the health crisis is far from over. The fiscal response has been uneven in EM, with some running out of policy space. Most EM central banks cut rates aggressively, and QE has become part of the toolkit. Asset price recovery and a modest return of capital flows should provide support.