Asia Economic Diary:Feb 12-16

The Bank of Thailand (BoT) is likely to keep its policy rate at 1.5% during itsmeeting on 14 February. We expect the BoT’s tone to remain broadly unchanged,albeit the recent relief on the baht comes as a welcome change. We expectsustained above trend growth and normalisation of inflation to eventually lead tohigher BoT rate in 2H.

    We also expect Bank Indonesia (BI) to maintain its policy rate steady at 4.25%when it meets on 15 February. However, we will be listening carefully to any shiftin policy concerns given the recent market moves. While we expect rate hikesby BI to start in Q3, a relatively weaker local currency, vs our forecast, raises thelikelihood of earlier rate hikes.

    We anticipate the Central Bank of Sri Lanka (CBSL) to maintain a policy rate at8.75% when it meets on 16 February, as it takes comfort in ongoing moderationin core inflation.

    Malaysia is likely impress with another strong, well above potential, GDP growthin Q4. We expect GDP growth of 6.3% in Q4, vs. 6.2% in Q3, supported not onlyby exports, but also public spending and investments, although the latter pointsto deterioration in net trade contribution to growth.

    We expect India to see further strengthening of export growth, to 17.1% inJanuary from 12.4% in December. With imports growth at 23.8% in January, vs.

    21.1% in December, we see a narrower trade deficit of USD13.4bn vs. USD14.9bnin the same period. We see India’s CPI inflation moderating slightly to 5.0%yoyin January, from 5.2% in December.

    Indonesia’s export growth is also likely to accelerate to 17.0% in January vs 6.9%in December, while import growth moderate to 16.0% from 17.8%, resulting in atrade surplus of USD1.8bn in January vs. a deficit of USD0.3bn in December.

    In contrast, Singapore’s NODX growth is likely moderate slightly to 1.0% inJanuary from 3.1% in December, largely due to a stronger currency. Meanwhile,