Entries for 'Asia Pacific'
March 28, 2024
The PBoC's monetary easing is not straightforward as it works on both the pricing and quantity side with numerous policy tools. While overly cautious on the rate cuts, the PBoC's easing on the quantity side has been more aggressive than most realize. More PBoC easing is needed in 2024.
March 27, 2024
After a surprising election result, in which PTI-backed candidates won a majority, a fragile coalition government was formed. We expect appetite for reforms to be weak, which may hinder or prolong negotiations for a new IMF program. The biggest hindrance will come from fiscal consolidation.
March 18, 2024
China's announced headline fiscal deficit of 3.0% of GDP is only the deficit of a narrow fiscal account. The consolidated fiscal deficit in 2024 can be as high as 8.2% of GDP, higher than last year's actual fiscal deficit of 7.0% of GDP.
March 6, 2024
China today bears uncanny similarities to 1990s' Japan in terms of demographics, housing correction, and debt overhang. On the other hand, there are also differences and the fate is not yet written. This note compares China's economy today with Japan's around 1990.
February 28, 2024
Despite the decent real GDP growth of 5.2% in 2023, Chinese investors and consumers are still gloomy. This is because deflation is hurting household incomes, corporate earnings, investor returns, and government taxes, which are all in nominal terms.
February 5, 2024
We believe Beijing still has the policy capacity to push China’s economy towards its growth potential. Though maintaining our above-consensus forecast for 2024 growth at 5.0%, we also caution the downside risk if the demand-side stimulus is inadequate.
January 24, 2024
China's shadow banks, especially the trust companies, are hurt badly by the deflationary economy and housing recession. The financial risk would be much greater if the regulators had not tightened the shadow bank regulations.
January 23, 2024
On January 11, the IMF approved the first review of the 9-month SBA program, releasing US$ 700mn in much needed financing assistance. While financing needs for the remainder of the fiscal year should be covered, a successor IMF program will be needed after the SBA ends in March 2024.
January 16, 2024
Chinese banks are facing mounting challenges amid the below-potential growth. The risks posed by the housing and local government sectors are not systemic. However, the deflation and falling lending rates are hurting banks badly.
January 3, 2024
Schedule for the IIF's 2024 investor trips released.
December 12, 2023
China’s export machine remains competitive, judging from its stable market share, rising product sophistication, and market diversification. Suffering from overcapacity and anemic domestic demand, Chinese producers are lowering export prices and exporting deflation.
November 22, 2023
China's local government debts have long been on people's worry list due to their rapid growth in size and opacity in structure. In this piece, we illustrate the size of the LG debt problem and discuss Beijing's attempts to defuse the bomb of the LG debt.
October 10, 2023
We recently led an investor trip to China where people wanted to kick the tires on the ground. This piece summarizes some of the takeaways.
September 27, 2023
China faces many structural challenges similar to Japan's during its 'lost decades'. However, we think China is facing income stagnation instead of a balance sheet recession like Japan in the 1990s.
July 25, 2023
The IMF recently agreed to a 9-month, US$ 3bn, program, providing Pakistan with a temporary financial lifeline. However, much needed fiscal measures and structural reforms will be put on hold in an election year. Increasing the risk that future tranches of the program may not be disbursed.
July 24, 2023
China's recovery lost momentum in 2Q due to both cyclical and structural woes. We expect GDP to accelerate modestly in 2H thanks to extra fiscal firepower, yet remain below the growth potential.
June 21, 2023
China's exports are facing strong headwinds of weaker global demand. We expect the whole-year exports to fall, failing to drive economic growth this year.
May 5, 2023
China’s economy recovered robustly in 1Q at 2.2% q/q and 4.5% y/y, beating the consensus estimate. We believe the growth is still below potential and can continue expanding for the rest of the year. We revise the whole-year forecast by 0.4 pts higher to 6.0%.
April 27, 2023
Banks in China suffered from rising non-performing loan (NPL) formation in Covid years. Banks are still well-capitalized thanks to the aggressive capital raising in the past years, and business conditions are improving as the economy and loan demand recover.
April 19, 2023
The headline deficit reported by the official budget is nar-rowly defined and thus misleadingly low. We calculate and present the cash-basis consolidated deficit, which is more than twice as large. The large deficit helps to avoid a fiscal cliff like the one in 2021.