- 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
- 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
- Thailand’s fast disinflation looks set to stall, for now; we still see a BoT hold this month, but it’ll be close.
- The Philippines’ volume of net sales index remained firm in September, but don’t rely on it for Q3 GDP.
- The jobless rate still is struggling to return to the pre-Covid level, despite sky-high participation.
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
- Thailand’s customs trade deficit continued to widen sharply in August, due to the slump in exports...
- ...But shipments should soon stabilise, and the U-turn in surging imports has only just started.
- The SBV’s unexpected rate hike on Friday was more about exchange rate management than inflation.
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
- 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
- Short-term trends in the Philippines’ volume of net sales index continued to deteriorate in July...
- ...The inflation squeeze on households will peak this quarter, but so too should the lift from remittances.
- Unemployment is nearing the pre-Covid level, but participation rates are also extremely elevated.
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
Bank Indonesia defied the consensus yesterday, as we expected, enacting its first rate hike, to 3.75%...
...But we’re sticking to our below-consensus view for just one more hike this year; policy is quite tight.
The Board can also rely credibly on sustained fiscal support, with consolidation well ahead of schedule.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
