22 January 2024Deutsche BankResearch Asia Economics Asia Macro Insight Date A positive turn in the semi cycle is likely to see a notable rise in advanced Asian economies' growth, although geopolitical tensions in the Middle East pose greater downside risks to them than to others in the region. Despite elevated external risks, inflation has fallen faster than expected in Asia, supporting a more dovish policy tilt by the region's central banks. BI and BSP are calibrating the timing of their rate cuts, while BoK has turned neutral, although its policy easing is likely to kick off in July – together with MAS. While BoT holds firm against pressure, BNM may strike a more dovish tone on growth, given downside surprise. Although the PBoC did not cut earlier this month, as widely anticipated, but we see it doing so eventually. Our prevailing view remains that Asian central banks will start cutting rates in the mid-year, with Asian FX unlikely to appreciate against the US dollar on a sustained basis until the Fed's policy pivot. Taiwan's election result has not prompted us to recalibrate our outlook for that economy; we also do not see a compelling reason to rethink our view on any of the others at this juncture. Indonesia is next in line for an election (on 14 February), followed by South Korea (10 April) and India (April/May). Instead, the US election has greater potential to provoke a rethink of our view on the region.Table of contentsOverview2China3India 6South Korea and Taiwan10ASEAN12Inflation & Growth indicators17Economic & Financial Forecasts18Macro Charts19Monetary Policy Charts21Juliana LeeChief Economist+65-6423-5203Yi Xiong, Ph.D.Chief Economist+852-2203 6139Kaushik DasChief Economist+91-22-7180 4909Deyun OuResearch AssociateDeutsche Bank AG/Hong KongIMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. MCI (P) 041/10/2023. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.The last mile Distributed on: 21/01/2024 23:01:04 GMT7T2se3r0Ot6kwoPa22 January 2024Asia Macro InsightPage 2Deutsche Bank AG/Hong KongThe last mile is the hardestA positive turn in the semi cycle is likely to see a more notable rise in advanced Asia economies' growth. Singapore's positive growth surprise supports our view, although geopolitical tensions in the Middle East pose greater downside risks to advanced Asia economies than to others in the region.Figure 1: Asia vs. trend-3-2-101232017201820192020202120222023Adv Asia Z-scoreGrowthCPISource : CEIC and Deutsche Bank ResearchFigure 2: ASEAN vs. trend-3-2-10123201820192020202120222023Vietnam Z-scoreGrowthCPISource : CEIC and Deutsche Bank ResearchFigure 3: Adv Asia vs. trend-3-2-101232017201820192020202120222023Adv Asia Z-scoreGrowthCPISource : CEIC and Deutsche Bank ResearchDespite elevated external risks, inflation has fallen faster than e...
