- The SBV’s move to increase the 2022 credit growth quota for more banks to 16% is largely symbolic.
- Sticky core inflation alone is unlikely to force the RBI’s hand into another rate hike in February.
- The jobless rate in the Philippines is now below the pre-pandemic low, but the devil is in the details.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
Indian and ASEAN PMIs show that China’s recent lockdowns are not wrecking supply chains...
...Input price increases continue to moderate markedly region-wide, softening to two-year lows.
Core inflation in Indonesia is showing more signs of stability; a BI pivot to 25bp still is on for this month.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- BI and the BSP yesterday raised their rates by 50bp and 75bp, respectively, in line with expectations.
- The governors of both central banks left some breadcrumbs for a potential pivot to smaller hikes...
- ...BI is sounding more reassured about inflation, and the BSP’s anxiety over the core rate is misplaced.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- In one line: Food inflation turns to friend from foe.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- CPI inflation in the Philippines jumped to a 14-year high in October, all but ensuring another 75bp hike.
- The jump in food inflation likely was a one-off; base effects will now help and global gains are still fading.
- The BSP’s concerns over “broadening” pressures are misplaced, as the core gauge is misleading.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- In one line: A respectable bounce, but beware of extrapolating this to headline IP.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Export growth in Indonesia slowed sharply to 20% year-over-year in September, a 19-month low...
- ...This slump still has plenty of room to run—well into 2023—as the lift from commodity prices unwinds.
- We reckon the GDP boost from trade continued in Q3; our 7% above-consensus forecast stands.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- We expect a consensus-beating 18.0% Q3 GDP for Vietnam this week; thank base effects, nothing else.
- The economy is in a broad-based soft patch, and the likely trade lift is due only to collapsing imports.
- The recent relaxation of credit quotas is too late for 2022; the real battle is with the slump in M2 growth
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Bank Indonesia surprised markets yesterday, hiking its benchmark rate by 50bp, to 4.25%...
- ...But we see no appetite for this to be the norm; BI easily would ditch the focus on core, if convenient.
- The BSP’s ongoing worries over inflation make no sense, given the global trends in oil and food prices.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- We’re sticking to our call for an imminent BSP pause, despite expectations for another 50bp hike...
- ...The peso and FX reserve issue is a distraction; fundamentally, headline inflation is now rolling over.
- A second straight run-of-the-mill 25bp hike by BI this week is likely; we see no need for bigger steps.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- WPI inflation in India continued to slow sharply in August, with outright deflation now on the horizon....
- ...This should build the case for smaller rate hikes, especially with more cracks showing in RBI unity.
- The trade deficit likely has peaked, thanks to falling oil prices, but don’t expect any help from exports.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- CPI inflation in India surprised slightly to the upside in August, refuelling calls for a 50bp rate hike...
- ...But we’re sticking to our 25bp call; the jump in food inflation likely is a one-off, and core is steady.
- The July crash in industrial growth was more than a base effect story, as output clearly is stagnating.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Inflation in the Philippines slowed unexpectedly in August, with non-core headaches finally easing.
- We continue to expect a BSP pause this month, but the peso’s demise—in its eyes—is a risk factor.
- India’s PMI numbers for August offer much-needed reassurance on both the growth and inflation.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Indonesia’s fuel price hikes, à la 2014 in size, likely will mean a front-loading of BI’s tightening cycle.
- Inflation in Thailand hit a new multi-year high in August, but prolonged and rapid disinflation is nigh.
- The price sub-indices of the ASEAN-wide PMI continue to show that the worst of the crisis is over.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Base effects are flattering Thai consumption, but the inflation bite is coming, lasting well into 2023.
- Food prices, the largest driver of the rise in inflation in Indonesia, appear finally to have turned a corner.
- India’s urban unemployment rate fell further in Q2, to a series low, despite the economy’s soft patch.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- GDP growth in India disappointed in Q2, jumping merely to 13.5%, despite huge Delta base effects.
- The headline should collapse in Q3, especially with the drag from oil prices persisting until early 2023.
- The road ahead for consumption and investment will be rockier, rising inflation and credit costs aside.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
