- Reports this week suggest that another BSP rate hike in February of at least 50bp is guaranteed...
- ...But Governor Medalla was notably less committal than in the recent past; we’re still expecting a pause.
- The Q4 GDP data before the Board meeting will be crucial, if our below-consensus 4.6% call is right.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- 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
The unwinding of Delta base effects in India led to a tolerable moderation in GDP growth, to 6.3% in Q3.
But statistical discrepancies flattered the headlines, and the bump in consumption is unrepeatable.
The BoT rate, of 1.25%, likely is the terminal level; its 2023 forecasts inadvertently will justify a pause.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
Retail sales in Vietnam sprang back to life in November, breaking from their recent stagnation...
...The job market essentially is as tight as it was pre-Covid, underpinning brisk real wage growth.
GDP growth will still fall sharply this quarter, as Delta base effects unwind and industry ebbs.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
We look for a sharper-than-expected fall in Indian GDP growth, to 3.7% in Q3, from 13.5% in Q2...
...A big reversal in Delta-era base effects will be to blame, masking the first quarterly gain since Q4.
Minimum wages in Indonesia could jump by 10% in 2023, but are merely catching up with market rates.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- GDP growth in Thailand jumped to 4.5% in Q3, from 2.5% in Q2, on the back of a sturdier quarterly gain...
- ...But involuntary restocking was again the biggest driver; excess inventories will be an issue for 2023.
- The revival in tourism is on track, but it’s a cushion— at best—while consumption will soon wane faster.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- India’s budget deficit still looks on track to hit this fiscal year’s 6.4% of GDP target, if not to better it...
- ...Underspending, despite this year’s acute burdens, and the post-Covid revenue pop are both helping.
- Remittances in the Philippines are still soaring in peso terms, but 2023 will be a year of slowdown.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Indonesian export growth fell to a 20-month low of 12.3% in October, and more downside is ahead...
- ...The unwinding of the commodities boom is far from over, and Chinese demand is now softening.
- The rise in India’s trade deficit in October is a minor and brief setback; weak flows are the main issue.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- The stability in Indonesian consumption was one of Q3’s wins; catch-up is still a factor in some sectors.
- The level of unemployment is back to “normal”, but a moderation in sky-high wage growth is coming.
- Indian IP rebounded respectably in September, but it was nowhere near enough to save the Q3 picture.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- GDP growth in the Philippines defied gravity in Q3, inching up to 7.6% year-over-year, from 7.5% in Q2.
- But the revisions—and lack thereof—in the Q2 data markedly flatter both the yearly and quarterly story.
- The debt- and savings-fuelled consumption bounce in Q3 is far from sustainable, even if true.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- GDP growth in Indonesia improved to 5.7% year- over-year in Q3, from 5.4% in Q2...
- ...Domestic demand is holding firm; real wage growth has accelerated substantially.
- Investment is regaining momentum, with more to come, thanks to the commodities boom.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- The consensus for Indonesia’s Q3 GDP appears to be ignoring Delta base effects; we see a punchy 7%.
- CPI inflation surprised to the downside in October, opening the door for a smaller BI hike this month.
- India’s industrial headlines are showing signs of an upturn, but the devil is in the details.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Vietnam’s exports continue to slide, falling well below the trend; no signs of a bounce from imports.
- Ignore double-digit retail sales growth; the level is stagnant and inflation will only worsen.
- Thailand’s final pre-Q3 GDP data dump all but confirms our 4.4% year-over-year forecast.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- The RBI’s meeting this week could be a non-event, if used merely as an exercise in transparency...
- ...But we think the meeting’s purpose is to bring forward an RBI pivot to a smaller—and final—hike.
- A likely poor Q3 GDP would make it hard to justify a December hike; the MPC’s main hawk has turned.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Thai exports rose in September for the first time in months, but not enough to stop a trade hit to GDP…
- …And in spite of the revival in tourism; we have cut our Q3 GDP forecast to a below-consensus 4.4%.
- The SBV hiked by another 100bp to shore up the VND, compelling us to cut our 2023 GDP forecast.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
The SBV last week widened the dong’s daily trading band to ±5%; it last did so in 2015, to ±3%...
...Vietnam’s healthy trade surplus hid a big BoP shock, and FX reserves now are too low.
The growth outlook for 2023 is worsening; the exchange rate shock is only adding insult to injury.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Retail sales growth in Indonesia fell in August, but the coming fuel price hit is likely to be trivial.
- The Philippines’ trade deficit continues to feel downward pressure on both sides of the balance.
- Its unemployment rate in August consolidated the fall in July, but note how participation is flying.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Sales growth in the Philippines hit a four-month high in August, and marginal trends are stabilising...
- ...But the upswing in momentum is built on the back of a costly and unsustainable surge in borrowing.
- The Covid-era savings hole remains the underlying issue; long-run spending intentions are now ebbing.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
