- In one line: Ignore the inflated headline, but households had a decent Q1.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- In one line: Compelled by the US’ tariff war, and allowed for by a resumption of sub-1% inflation.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
Underneath the surface; a weak close to a robust Q1 for Philippine trade
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
FACTORY ASIA—EX-CHINA—IS DOWN, BUT NOT OUT
- …MORE CUTS TO COME FROM THE RBI AND THE BSP
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- The BoT enacted a second straight 25bp rate cut, to 1.75%, in the wake of the US’s tariff aggression…
- …We think it has left the door open to, but also set the bar high for, extra cuts; for now, we see no more.
- Our final GDP forecast for Q1 sees only a minor slip in headline growth to 2.9%, from 3.2% in Q4.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Thai exports continued to soar in Q1, on the back of US tariff front-loading, which leapt in March…
- …But their boost to GDP growth should be counter-balanced markedly by much more destocking…
- …While service exports likely will impose their first big drag post-Covid, given falling Chinese tourists.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
Bigger US front-loading drives Thai export growth to a 3-year high
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- India’s flash PMIs for April were solid, albeit backed seemingly by unsustainable export front-running.
- The year-over-year change in the PMIs still points to sub-6% GDP growth; a warning to rosy consensus…
- …The RBI’s consumer survey shows that the recovery in planned spending is starting to top out.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Bank Indonesia stayed on hold this month, but—rightly—downgraded its 2025 growth forecasts…
- …Consumption is still struggling to increase more meaningfully, and confidence is starting to wobble.
- India’s trade deficit ballooned unexpectedly in March, but underlying import demand is flailing.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Ignore Indonesia’s larger-than-expected surplus in March; export growth will be weaker from Q2.
- Expect more downside this month after Indian inflation fell to a five-year-plus low in March…
- …Our food-price tracker indicates downside risks are still intensifying; our 2025 CPI call is now 3.0%.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Doomsday takes on the future of EM Asia ex-China are overblown, even if the “reciprocal” tariffs return…
- …They’d still give the China+1 wave an inadvertent boost; cheap labour won’t disappear overnight.
- Taiwan’s exports softened in March but remain in double digits, as apparent front-loading continues.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- In one line: Easing back on; three more cuts to go, from our vantage point.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- The BSP restarted its easing cycle this month with a 25bp cut, to 5.50%, after February’s shock pause…
- …The Board is no longer behind the curve on CPI, as it slashed its 2025 forecast to 2.3%, from 3.5%.
- We’re maintaining our 2.5% CPI call, for now, and still see 75bp more in rate cuts by year-end.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
Expect at least two more consecutive 25bp cuts from the RBI
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- The RBI voted unanimously for a second 25bp rate cut and a shift in stance to “accommodative”.
- Its softer CPI forecasts now see below-target inflation persisting until the end of this year…
- …Opening the door to at least two more cuts—our baseline—more than the consensus for just one.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
Short-lived, policy-induced deflation in Indonesia is over
How high can Philippine sales go before they hit a ceiling?
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Indonesian CPI returned to the black in March, as the power discounts expired; food will soon U-turn.
- The Philippines’ sales index continues to surge, but a number of consumer sectors are still struggling.
- Food inflation in Taiwan continues to rise, though some of this is exaggerated by base effects.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Seasonally adjusting Vietnam’s quirky GDP data shows that growth improved further in Q1, to 7.3%…
- …But a sharp fall by year-end to sub-5%—at least— looks inevitable, as US tariffs hit exports and capex.
- Outright deflation in Thailand seems set to take hold, again, bolstering our call for an April BoT cut.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
A brief spell of policy-induced deflation is around the corner in Thailand
Very soft, but March should be the low for Philippine inflation this year
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
