Entries for 'Asia Pacific'

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%.

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.

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.

China’s gigantic official foreign asset is still a black box. This note looks into the changing structures and management of China’s foreign reserves and other foreign currency assets.

Many are concerned that China's reopening from the Covid lockdowns will be inflationary for the global economy. We argue that such fear is overblown.

China's inbound FDI was surprisingly strong in the past two years, despite its economic woes, precarious policies, rising production costs, travel disruptions by Covid, and friend-shoring by the US. China's economy and supply chains are more resilient than many expected.

Pakistan is on the verge of a balance of payments crisis. However, we believe an agreement with the IMF will be reached in the next few days, releasing much needed financing. Further official aid will be needed in FY23, while a renewed IMF program and debt reprofiling is expected by the end of 2023.

• China's expected 5.5% GDP growth in 2023 will contribute 1 point towards global growth, … • … however, the spillover to the rest of the world through import demand will be limited. • Pent-up consumption demand will be mainly in domestic services. • The likely tepid fixed asset investments cap

We expect China’s GDP growth to rebound to 5%-5.5% this year, thanks to reopening and a low base last year. However, weaker exports, depressed housing, and tight local government finance are strong headwinds.

We discuss external bond recovery value scenarios, … consistent with Sri Lanka’s restructuring targets, … while illustrating the importance of Chine...

• China experienced a record net portfolio outflow of $80 bln last year. • The outflows were predominantly in bonds, suggesting Fed hikes were the main trigger for the outflows.

• Given the weak export and housing prospect, consumption is crucial for economic recovery this year. • Chinese households amassed almost ¥18 tln new deposits in 2022, 80% more than the previous year… • …thanks to higher savings, fewer home purchases, and asset reallocation.

• PBoC was restrained in terms of direct FX intervention amid the intense CNY depreciation this year. • PBoC increasingly deploys monetary and regulatory tools to lean against the wind. • These tools include required reserves on FX deposit and forward contracts, … • …and macroprudential policies

• China's PPI is trending down and diverging from others, a sign of a weak domestic economy and deglobalization. • CPI is subdued due to housing woes and lockdowns. • Despite the domestic weakness, China is not exporting deflation. • CPI may face moderate upward pressure late next year due to food and service prices after reopening.

• RMB experienced a record pace of depreciation this year, … • … driven by Fed hikes and interest rate arbitrage. • The large current account surplus is partly offset by a record large portfolio outflow. • However, the expectation of further depreciation is absent this time, unlike in 2015-16.

China's housing rout will continue to weigh on growth, but a housing-triggered financial retrench can be avoided. Despite deteriorating asset quality and returns, Chinese banks can still make loans. The covid policy will be eased, yet gradually. Thus the sequential growth path in 2023 will be backloaded.

CCA countries have shown remarkable resilience in the face of external shocks. A sharp increase in tourism receipts and remittances, along with high energy prices, led to solid growth. While the terms of trade shock has had diverging effects on the region.

Debt default risk has gone up substantially, as the financing gap has increased.