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Emerging Asia


Philippines: tightening cycle still has some legs

The central bank in the Philippines (BSP) today raised its policy rate by a further 50bps to 3.75%, and gave a strong indication that more rate hikes are likely over the coming months. That said, with inflation set to peak soon and headwinds to the economic recovery mounting, we don’t think the tightening cycle will run much beyond the second half of this year.

18 August 2022

Better news on inflation, as growth disappoints

The recent national accounts data show most countries experienced a difficult second quarter. However, there was some more encouraging news on inflation – which already appears to have peaked in a few countries. With growth set to remain weak, and inflation likely to fall back further over the coming months, we are sticking with our view that the region’s tightening cycles will prove short lived.

12 August 2022

Philippines GDP (Q2)

Economic growth in the Philippines unexpectedly slowed in Q2 and we expect growth to remain subdued in the second half of 2022 as high commodity prices, rising interest rates and weaker global demand drag on the economy.

9 August 2022
More Publications

Lift-off for the Bank of Thailand

Thailand is one of the few countries in the region not to have raised interest rates this year, but that looks set to change on Wednesday. We, along with the majority of other analysts, are expecting a 25bp hike to the main policy rate. Further hikes seem likely later in the year and into 2023 but, unlike financial markets, we are not expecting an aggressive tightening cycle.

“Build, Build, Build” is back, better news on inflation

The president of the Philippines, Ferdinand “Bongbong” Marcos Jr., earlier this week pledged to resume the “Build, Build, Build” infrastructure programme of his predecessor, Rodrigo Duterte. While extra spending on infrastructure is welcome, it is likely to lead to a further widening of the current account deficit and put renewed downward pressure on the peso. Meanwhile, inflation in Vietnam fell last month due to a sharp decline in the fuel price component. We expect this fall to be mirrored across the rest of the region over the coming months as fuel price inflation drops back. EM Drop-In (4th August, 10:00 ET/15:00 BST): Join our monthly online session on the big issues in emerging markets. In this 20-minute briefing, the team will be answering your questions about debt risks amid global tightening, the latest on the inflation outlook and much more. Register now.

Tightening cycles to be short lived as headwinds grow

Further interest rate hikes are likely across the region in the near term, and we have raised some of our year-end forecasts to reflect growing concern among the region’s policymakers about inflation. However, with economic growth likely to slow over the coming months and inflation set to fall back sharply by the end of the year, tightening cycles are likely to be short lived. We think most central banks will be finished hiking rates by early 2023. In contrast, the consensus and financial markets are expecting tightening cycles to continue well into next year.

Philippines: more tightening ahead as BSP turns hawkish

The decision by the central bank in the Philippines to raise its benchmark policy rate by a further 75bp (to 3.25%) at an unscheduled meeting reflects mounting concerns about inflation. Further hikes seem likely, and we are changing our end-year forecast to 4.0%. China Drop-In (Friday, 15th July): Did China’s economy contract in the second quarter? How much stimulus is the government willing to pump in to drive a recovery? Join our China team for a briefing after the release of the NBS Q2 report on Friday. Register here.

Manufacturing PMIs, Korea Trade, Indonesia CPI

Manufacturing PMIs for June fell back mainly due to the weakness of external demand. We think weaker global growth will remain a drag on exports over the coming months and that the region’s industrial sectors face a tough year ahead. EM Drop-In (Thurs, 7th July): Join our economists for their regular monthly briefing on the hot stories in EMs – and those that aren’t getting the attention they deserve. In this 20-minute session, topics will include the outlook for EM FX markets after the recent sell-offs. Register now.

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