East & South Asia Economic Forecast

Economic Snapshot for East & South Asia

bet360备用网址February 26, 2020

East Asian economies set to lose momentum in 2020

East Asian economic growth is expected to slow for the third consecutive year in 2020 as the coronavirus outbreak deepens the Chinese slowdown and disrupts regional supply chains and travel. Accommodative fiscal and monetary policies should support growth, although an intensification of the coronavirus and trade tensions represent downside risks.

South Asia economic growth to pick up in 2020

Economic growth is expected to accelerate in South Asia this year, primarily on stronger growth in India, where authorities are cutting corporate and income tax rates and easing credit conditions. Economic growth should accelerate in Sri Lanka after a tough 2019, although it is expected to decelerate in Bangladesh and Pakistan.

East Asia Monetary & Financial Sector News

bet360备用网址Regional inflation accelerated to 4.8% in January from 4.0% in December, mostly due to price pressures in China, which suffered from supply chain disruptions that exacerbated existing meat shortages following the African swine flu outbreak. This year, average regional inflation is seen accelerating on higher inflation in China, and despite low oil prices.

China’s Central Bank cut interest rates in February in an effort to stimulate the under-strain economy. Close attention will be paid to the Bank of Korea’s next monetary policy decision, expected on 27 February. On average this year, interest rates in East Asia are seen reducing slightly compared to last year.

bet360备用网址Most currencies weakened against the USD in recent weeks amid mounting concern over the extent to which the coronavirus outbreak could hit economic prospects. Looking ahead, currencies are generally seen depreciating this year compared to last year due to slower growth, higher inflation and lax monetary policy.

South Asia Monetary & Financial Sector News

Inflation accelerated to 7.9% in January from 7.5% in December, as price pressures rose in all regional countries barring Bangladesh. This year, inflation is projected to average at a broadly stable rate compared to last year, as low oil prices are seen counteracting demand-pull pressures from faster economic growth.

India’s Central Bank left interest rates unchanged in February, but announced measures to support bank lending. Shortly before, Sri Lanka’s Central Bank cut  rates to support growth, while Pakistan’s Central Bank left rates unchanged. This year, regional monetary policy is seen loosening slightly compared to last year.

bet360备用网址Most currencies in South Asia weakened slightly in recent weeks compared to the greenback, likely on increased risk aversion among global investors as coronavirus worries heightened. This year, currencies are seen, on average, depreciating against the dollar, partly due to robust inflation.

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East & South Asia Economic News

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