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.

External imbalances are headwinds facing the fast-growing economies of Indonesia and the Philippines. We have a constructive view of the CADs in these economies as investment has been an important contributor. Reliance on portfolio and other foreign inflows is the key risk. 

We recently argued systemic risk in EM Asia is contained, "¦ but concentration risk exists in countries like Indonesia. Positioning is heavy in rupiah

The EM sell-off was quite intense in recent months, with major currencies in Asia depreciating significantly. We assess if this is a signal of systemic risk in the region, comparing external risk metrics in the 1997 crisis vs. now. Vulnerability is an order of magnitude lower today. Financing needs are much lower and reserves higher.

Parliament recently approved a small upward revision in the budget deficit for 2017 from the original target of 2.4% of GDP to 2.9%, but the outturn m