GDP growth in India likely slowed to 3.4% in Q1, masking stability at the margins after a poor Q4.
We expect capex and trade to drive the quarterly bounce, while consumption stayed mostly firm.
Try not to lose sleep over the collapse in Thailand’s trade balance in April; ASEAN demand is reviving.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
GDP growth in Indonesia was unchanged in Q1, at 5%, but quarterly growth slowed markedly.
A big pullback in government spending is to blame; fiscal consolidation is now well ahead of schedule.
The silver lining is that the Q1 dud in exports marks the low, and we see more to come from investment.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Retail sales in the Philippines mostly brushed off the Omicron wave in January; the catch-up continues.
- We have raised our average inflation forecast for 2022 to 3.5%, still a slowdown from 2021.
- The renewed squeeze from oil prices will fade after Q2; and it's a good thing Filipinos prefer rice.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- India's Q4 GDP report disappointed, as we warned, with investment suffering a big pullback.
- The outlook is tough, Omicron aside, partly as households' spending intentions remain stagnant.
- The surge in oil sparked by the Ukraine conflict is more of a concern for the RBI than growth, so far.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Thailand's Q4 GDP report easily beat expectations, with growth jumping to +1.9%, from -0.2% in Q3.
- We see no Omicron pinch to consumption in Q1, but household spending likely will struggle this year.
- A soft landing in export growth remains on the cards, though inventories will go from hero to zero.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Vehicle sales in ASEAN rebounded partially in 2021, but this was all mostly thanks to policy in Indonesia.
- Production is recovering quickly and is back to pre-Covid levels, suggesting easing chip shortages.
- Expectations for Thailand's Q4 GDP are either overly conservative or the monthly data are lying.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- We continue to believe that the BoT will normalise policy this year, potentially as early as June.
- The high level of household debt eventually will steal the Bank's attention, as will above-target inflation...
- ...Which looks set to last longer than the MPC expects; price pressures are broadening out.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Indonesia's Q4 GDP beat expectations, but statistical noise flattered the quarterly picture.
- The front-loading of spending ahead of the April VAT hike probably will override any Omicron hit.
- Investment is set for a bumper year ahead, with a likely soft landing in export growth posing no threat.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Indonesia's Q4 GDP likely will miss expectations, which probably are relying too much on trade.
- A rebound in household spending from the Delta squeeze will be the main driver quarter-on-quarter.
- Overall, we look for only a modest rise in the year- over-year growth rate to 4.0%, from 3.5% in Q3.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- India's official and unofficial data for Q4 paint markedly different pictures; the latter give hope...
- ...But we are unconvinced, on balance, and will keep to our below-consensus 2.4% GDP growth forecast.
- Merchandise and services trade in Thailand entered 2022 with solid momentum; expect the same in Q1.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Bank Indonesia is more than ready to unwind Covid support, looking at the full reversal of RRR cuts...
- ...But rate hikes are unlikely until mid-year, in spite of BI's hawkish view on the Fed; thank Omicron.
- Loan growth will surpass BI's 2022 forecast soon, and inflation is unlikely to stay a non-issue for long.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Vietnam staged a successful V-shaped recovery in Q4, with GDP more than reversing the first Delta hit.
- Household spending was punchy, and Omicron is unlikely to derail the release of pent-up demand.
- Exports look poised for a fast start to 2022; we have raised our full-year GDP growth forecast to 8.0%.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Consumption in the Philippines is regaining energy, but the Covid situation remains disconcerting.
- Domestic demand, overall, is nowhere near as solid as imports suggest, and exports are still struggling.
- India's soft IP print for October adds more weight to our below-consensus GDP growth forecast for Q4.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
