Asia Weekly Briefing: Lunar New Year adds noise and BNM likely to stay on hold
The first central bank in the region to pause rate hikes this year, Bank Negara Malaysia (BNM), is likely to remain on hold this Thursday. And in Japan, the Bank of Japan (BoJ) is likely to maintain its stance on Friday.
Inflation is likely to soften further in the coming months, following an easing of price pressures in the last third of 2022. But we may not see much sign of it in the February CPI data next week.
Easing pressure from inflation is likely to enable monetary policymakers to focus more on the increasingly downbeat growth outlook. We expect other central banks that have stopped hiking in recent weeks (South Korea and Indonesia) to also remain on hold throughout 2023.
The main risk to our view is if external pressures from monetary tightening in the US re-intensify. We now expect the Fed to hike three more times this cycle, by 25bps in March, May, and June.
Aside from Malaysia’s BNM meeting and a host of CPI data this week, the closely-watched “Two Sessions” political event will be held in China, trade data from China and Taiwan will be released, and Governor Haruhiko Kuroda will chair his last BoJ meeting.
China travel recovery: Timings are clear, but magnitude remains uncertain for 2023
The late December announcement of China’s intention to re-open its borders for travel took the international community by surprise, with little time to prepare. Border re-opening fell just before Lunar New Year, which proved to be significantly stronger than the last with domestic travel reportedly at 89% of 2019 levels and an initial surge in both inbound and outbound visits, albeit to levels well below those in 2019.Find Out More
Japan’s structural labour shortage will drive wages higher
Japan's structural labour shortage has deepened. While it may not result in a wage-inflation spiral now, labour scarcity will put upward pressure on wages and inflation in the coming years.Find Out More
Alex Holmes: Declining exports, worldwide implications
Alex Holmes, Senior Economist at Oxford Economics discuss the key drivers of slumping Asia exports and its implication for the global economy.Find Out More