- 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
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
- CPI inflation in India plunged to 6.8% in October, from 7.4% in September, thanks to food prices...
- ...Base effects were helpful, but the turnaround is also indicative of very benign trends at the margin.
- WPI inflation fell to a 19-month low of 8.4% in October, and deflation is just two quarters away.
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
- 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
- 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
- Bank Indonesia raised the seven-day reverse repo rate by 50bp, to 4.75%, in line with expectations...
- ...But it remains firm that such big moves won’t be the norm; we expect a return to 25bp next month.
- BI’s concerns over inflation have eased, and we reckon the IDR poses little threat to the outlook.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Inflation in Thailand plunged to 6.4% in September, thanks mainly to a statistical quirk in utilities...
- ...But food disinflation will soon take hold in a big way, ensuring a sustained drop in the headline rate.
- Philippine inflation rose further last month, to 6.9%, but growth will soon be a bigger issue for the BSP.
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
