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Reform of benchmark rates will likely lead to effective rate cut in China

Over the weekend, the People’s Bank of China (PBoC) announced a major change in its benchmark lending interest rate, establishing a closer linkage between banks’ funding costs and their lending rates. Given the notable decline in short-term market interest rates since last year due to the PBoC’s liquidity injections, this likely will lead to a […]

BoJ stays put amid economic headwinds

At its monetary policy meeting on 30 July, the Bank of Japan (BoJ) decided to keep its monetary policy unchanged, as expected. The decision came as the Japanese economy faces strong external headwinds and a downbeat outlook for domestic demand. However, we do not expect the BoJ to make any changes to its current monetary easing framework until H1 […]

China: Q2 growth lowest in decades

Chinese real GDP growth came in at 6.2% year-over-year (y-o-y) in Q2, down from 6.4% in Q1, and the lowest quarterly growth in over two decades. The tertiary sector (mainly services) continued to lead growth, expanding by 7.0% y-o-y in Q2, the same as in Q1. In comparison, growth in the secondary sector (mainly manufacturing) declined to 5.6% […]

Asian manufacturing sector in contraction

The average of manufacturing purchasing manager indices (PMIs) for Asia (excluding Japan) came in at 49.6 in June, down from 49.9 in May. This was the second consecutive month in which this measure fell below the 50 threshold and indicates that manufacturing activity in Asia is contracting. China is the largest contributor to the slowdown, […]

China looks to new policies to boost infrastructure spending

Activity data in May point to continued weakness in Chinese economic momentum, with growth in both fixed-asset investment and industrial production slowing last month. The only positive news came from retail sales, where growth picked up after the slump in April—but this rebound was probably due to seasonal effects. After taking into account special seasonality, […]

Weakening Japanese momentum behind strong GDP figures

The preliminary reading of Japanese GDP for Q1 shows that the economy grew by 2.1% q-o-q annualised, beating the consensus forecast of -0.2%. However, behind the strong headline figures, details of the GDP report reveal some broad-based weakening in momentum. Declining corporate capex and sluggish household consumption both drag on domestic demand. The seemingly strong […]

China growth moderates in April

Latest hard data indicate that China’s growth momentum moderated in April, after a strong Q1. Industrial activity, fixed investment and consumption all weakened in April. In the context of escalating trade tensions with the US, we expect the Chinese government to step up stimulus measures to support growth in the coming months, especially in the […]

China: Q1 growth beats expectations

The National Bureau of Statistics of China published Q1 GDP figures along with some key economic indicators for March. While we had previously flagged the upside risk to our earlier GDP forecast following the rebound in PMIs and strong credit numbers, the latest data releases still surprised to the upside. In light of the strong Q1 results and […]

China: strong credit growth in March again

Chinese credit data surprised on the upside in March, following a surge in January and a sharp fall in February. Monthly total social financing (TSF) came in at Rmb2.86 trillion, much stronger than the market consensus forecast of Rmb1.85 trillion. New bank loans also surprised on the upside at Rmb1.69 trillion, compared with the consensus forecast of […]

India: RBI cuts interest rate again

The Reserve Bank of India (RBI) cut its policy interest rate (RBI repo rate) by 25 basis points (bps) last week, bringing it down to 6.0%. This was the RBI’s second interest rate cut this year under its new governor Shaktikanta Das. With this move, the RBI has fully reversed last year’s rate hikes. Since the change of […]

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