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 - Fiscal Sustainability Poses Risk To Long-Term Growth - AUG 2016

Australasia & South Pacific June 2016 / Tuvalu / Economy

We remain constructive on Tuvalu's economic growth outlook over the near-term as strong government spending and sufficient fiscal buffers are likely to support growth. Accordingly, we forecast real GDP growth to come in at 2.8% in 2016, and 2.7% in 2017. However, we believe that the island-nation's narrow economic base and irregular revenue sources will pose risks to economic stability and fiscal sustainability over the longer term.

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Economic Analysis - HKMA To Stay The Course As Property Prices Fall - AUG 2016

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

The HKMA is unlikely to remove its macroprudential measures targeting the residential real estate market despite a significant decline in price levels over recent quarters. With affordability ratios still extremely stretched, both the monetary authority and the government will likely hold out for a deeper price correction before making significant adjustments. Meanwhile, we maintain our forecast for headline inflation to cool to 2.0% by the end of 2016, versus a 2.6% y-o-y print in May.

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Economic Analysis - Strong Industrial Sector Growth To Support Economy - AUG 2016

South Asia June 2016 / Sri Lanka / Economy

We expect Sri Lanka's industrial sector growth to remain robust over the coming quarters on the back a more stable political and macroeconomic environment and a softening of the government's stance towards Chinese investment. Accordingly, we have revised our forecast for Sri Lanka's real GDP growth to come in at 5.2% in 2016, up from 4.8% previously, before accelerating to 5.4% in 2017. That said, we believe that the broader economy will continue to face multiple growth headwinds over the coming quarters amid more fiscal and monetary tightening measures.

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Currency Forecast - THB: Modest Strength Likely - AUG 2016

South East Asia Vol 1 June 2016 / Thailand / Economy

We hold a short-term bullish view on the Thai baht as a bullish technical pattern appears to be in play, supported by a large current account surplus and other positive fundamentals. Over the coming years, we should see steady appreciation against the dollar as inflation remains subdued and real interest rates remain higher than in the US.

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Economic Analysis - BI To Step Up Stimulus Measures Over Coming Months - AUG 2016

South East Asia Vol 2 June 2016 / Indonesia / Economy

We believe that BI will lower its benchmark interest rate again by an additional 25bps over the coming months as weak government spending could weigh on Indonesia's fledgling growth recovery. The central bank maintained a dovish tone in its official statement, emphasising the need for additional stimulus measures. A fairly stable rupiah and moderate inflation will provide room for additional easing.

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