Asia Monitor

Comprehensive country-by-country macroeconomic analysis, risk appraisals, latest market data and forecasts for Asia

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Key stories from this month's issue...

Economic Analysis - Growth Still On Track To Recover In 2016 And 2017 - SEPT 2016

Australasia & South Pacific July 2016 / Vanuatu / Economy

Vanuatu's economy will recover in 2016 and 2017, following disruptions caused by Tropical Cyclone Pam in March 2015 and an uncertain political environment, and we maintain our 2016 and 2017 real GDP growth forecasts of 3.6% and 3.5%, respectively. The reconstruction of damaged infrastructure and increased tourism activity will provide support to economic growth.

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Economic Analysis - Pragmatic Budget To Provide Little In The Way Of Stimulus - SEPT 2016

China & North East Asia July 2016 / Hong Kong / Economy

Hong Kong's FY2016/17 fiscal programme aims to provide relief to beleaguered households and small businesses amid the economy's ongoing economic downturn, and will largely do so via tax reduction measures. However, the pragmatic budget will not be particularly stimulatory, and we forecast a primary fiscal surplus equivalent to 1.2% of GDP for FY2016/17, versus 1.3% in FY2015/16.

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Economic Analysis - Strong GDP Performance To Allow For Further Monetary Tightening - SEPT 2016

South Asia July 2016 / Sri Lanka / Economy

Although the CBSL stood pat on its interest rate policy at its meeting in June, we expect it to hike rates by an additional 50bps over the coming months in order to tame credit and money supply growth, manage inflation, and strengthen its external position. In addition, the economy's relatively strong performance so far this year will likely spur the CBSL to tighten its monetary policy stance to further strengthen macroeconomic stability.

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Political Risk Analysis - Military To Remain In Power Regardless Of Referendum Outcome - SEPT 2016

South East Asia Vol 1 July 2016 / Thailand / Political Risk

Political tensions are rising in the run up to the August 7 constitutional referendum, with the government cracking down on freedom of expression. We believe that a successful passage of the new charter would be the least disruptive outcome for short-term political stability, while the impending death of the king suggests the ruling elite may further curtail political freedoms over the medium term in order to maintain its grip on power amid a decline in the palace's political relevance.

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Currency Forecast - Lower Fed Hike Expectations To Temper Rupiah's Depreciatory Bias - SEPT 2016

South East Asia Vol 2 July 2016 / Indonesia / Finance

We maintain our expectations for the Indonesian rupiah to weaken in spot terms towards IDR13,600/USD by end-2016 as uncertainty in the global financial markets, yuan depreciation, and a dovish BI will weigh on the unit. The downtrend is likely be sustained into the longer-term due to Indonesia's high income account deficit and higher inflation relative to the US, but rupiah weakness will likely be capped as the US Fed is unlikely to pursue aggressive rate hikes between now and 2017.

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