Professional Documents
Culture Documents
Macroeconomic Outlook
1 Asia overview and individual
profiles of key Asia Pacific
economies
Data Pack
2 Fitch Solutions versus
consensus; Key economic data
fitchsolutions.com | fitchconnect.com 2
Asia: Strong Growth, With Trade Risks
Real GDP Growth In India And Frontier Markets Outperforming
% (Av 2018-2019) • Growth in Asia will be underpinned by
strong fundamentals, an improving
8.0
business environment, trade integration,
7.0 reform momentum and strong
demographics.
6.0
China
Malaysia
Japan
India
Philippines
Indonesia
Thailand
Australia
Source: Fitch Solutions
South Korea
fitchsolutions.com | fitchconnect.com 3
China: Policymakers To Cushion Growth Slowdown
Exports Growth Heading For Sharp Slowdown
Current Account And Financial Account Balance, % Of GDP • We expect real GDP growth to slow to
6.7% in 2018, and 6.4% in 2019, from
Exports, % chg y-o-y (3mma) New Export Orders Index (4-Months Advanced) 2017’s 6.9%.
50 56
40
54 • Exports will likely experience a sharp
30 slowdown over the coming quarters as
52
the US-China trade conflict escalates
20 and after what was likely a frontloading
of orders by US importers.
10 50
0
48 • Continued efforts to curb shadow
-10 financing will likely present headwinds
46
to investment growth.
-20
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
of tax cuts, frontloading of infrastructure
spending and easier monetary policy,
cushioning the deceleration.
Source: Bloomberg, Fitch Solutions
fitchsolutions.com | fitchconnect.com 4
India: Growth To Remain Resilient
Real GDP Growth By Broad Industry
% chg y-o-y • We forecast India’s real GDP growth to
accelerate to 7.3% in FY2018/19 (April–
Agriculture Industry Services
12.0 March) and 7.1% in FY2019/20.
Q2FY16/17
Q3FY16/17
Q4FY16/17
Q1FY17/18
Q2FY17/18
Q3FY17/18
Q4FY17/18
Q1FY18/19
• Risks of rising inflation due to a weaker
currency and elevated oil prices.
Source: MOSPI, Fitch Solutions
fitchsolutions.com | fitchconnect.com 5
Japan: The End Of Unorthodox Monetary Policy Not Yet In Sight
Inflation Trend Underscores QQE Continuation
CPI, Bond Yields & Policy Rate, % • We expect Japan’s economic growth to
remain subdued over the coming
CPI ex-Fresh Food (%; LHS) 10-Year JGB Yield (%; RHS) BoJ Policy Rate (%; RHS) quarters, coming in at 1.0% in 2018 and
3.5 1.00
0.5% in 2019.
3.0
0.75
2.5 • The uncertain global trade environment
BoJ’s 2% Target does not bode well for Japan’s export-
2.0
0.50 oriented manufacturers.
1.5
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
keep monetary policy loose for longer.
Source: Bloomberg, Fitch Solutions
fitchsolutions.com | fitchconnect.com 6
South Korea
Weak Employment Outlook To Weigh On GDP Growth
New Jobs Added And Real GDP Growth, % chg y-o-y • We expect South Korea’s economic
growth to remain subdued at 2.5% in
New Jobs Added, 3mma, '000 (LHS) Real GDP, % chg y-o-y (RHS) 2018 and slow to 2.3% in 2019 (versus
2500 10
3.1% in 2017).
2000 8
• Consumption growth will likely weaken
1500 6 as the country continues to face a weak
employment outlook, with an average of
1000 4 just 17,000 jobs created in the last three
months.
500 2
Feb/04
Jun/06
Jan/07
Mar/08
Feb/11
Jun/13
Jan/14
Mar/15
Feb/18
Oct/01
Oct/08
Oct/15
May/02
Dec/02
Jul/03
Apr/05
Nov/05
May/09
Dec/09
Jul/10
Apr/12
Nov/12
May/16
Dec/16
Jul/17
Sep/04
Aug/07
Sep/11
Aug/14
Sep/18
• Hawkish signals from the BoK are
headwinds to economic growth.
Source: Statistics Korea, Fitch Solutions
fitchsolutions.com | fitchconnect.com 7
Hong Kong: Trade And Property Market Woes
Real GDP Expenditure Breakdown
% chg y-o-y And Percentage Point Contribution • We expect Hong Kong’s deceleration in
Private consumption Government consumption Gross Capital Formation growth to remain in place over the
Net Exports GDP coming quarters.
12
10
• Following a cooling of real GDP growth
8 to 3.5% y-o-y in Q218, from the revised
peak of 4.6% y-o-y in Q118, we are
6
forecasting growth to come in at 3.6%
4 in 2018 and slowing to 3.0% in 2019.
2
Sep-12
Dec-12
Sep-13
Dec-13
Sep-14
Dec-14
Sep-15
Dec-15
Sep-16
Dec-16
Sep-17
Dec-17
Mar-11
Jun-11
Mar-12
Jun-12
Mar-13
Jun-13
Mar-14
Jun-14
Mar-15
Jun-15
Mar-16
Jun-16
Mar-17
Jun-17
Mar-18
Jun-18
• Rising interest rates will likely dampen
consumer spending and also soften the
very expensive housing market.
Source: Censtatd, Fitch Solutions
fitchsolutions.com | fitchconnect.com 8
Taiwan: External Challenges On The Rise
Official Manufacturing PMI And Expectations For Next Six Months
Diffusion Index • Taiwan’s export-oriented manufacturing
sector is already feeling the averse
Official Manufacturing PMI Expectations Over The Next Six Months
75 impact from the escalation in US-China
trade tensions and businesses are
70 pessimistic over the next six months.
65
60
• We believe that the ongoing slowing
economic momentum is likely to
55 intensify in 2019, and we forecast real
50
GDP growth to slow to 2.3% in 2019,
from 2.7% in 2018.
45
Oct-14
Oct-15
Oct-16
Oct-17
Apr-13
Apr-14
Apr-15
Apr-16
Apr-17
Apr-18
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
• Consumption growth is also likely to
indirectly be negatively impacted.
Source: Wind, Fitch Solutions
fitchsolutions.com | fitchconnect.com 9
Indonesia: Growth Recovery To Remain Capped
Near-Term Private And Government Consumption To Remain Robust
Real GDP By Expenditure, % chg y-o-y • We forecast the economy to grow by
20 6.0 5.2% in 2018, and 5.3% in 2019, from
Private Consumption Government Consumption
Fixed Capital Formation Exports 5.1% in 2017.
18 Imports Overall (RHS) 5.8
fitchsolutions.com | fitchconnect.com 10
Malaysia – Investment Growth To Remain Subdued
Softening Investment To Weigh On Growth
% • We forecast real GDP growth of 5.1% in
GDP, % chg y-o-y 4-Quarter Moving Average Gross Fixed Capital Formation, % chg y-o-y
2018, a significant deceleration from
8.0 2017’s 5.9%.
7.0
• Investment growth has been the main
6.0 cause of the slowdown in H118 and we
do not expect a recovery in H218, given
5.0 continued policy uncertainty.
4.0
• We expect this moderation to continue
3.0 in 2019 amid increased external
uncertainty, reflected in our 4.5% real
2.0 GDP growth forecast.
1.0
• The 2019 budget relies more on oil
0.0 revenues, instead of significant
Q114
Q214
Q314
Q414
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q217
Q317
Q417
Q118
Q218
revenue-raising policies, posing risks to
fiscal consolidation.
Source: Bloomberg, Fitch Solutions
fitchsolutions.com | fitchconnect.com 11
Philippines: Growth Momentum Will Struggle To Recover
Widening Of External Deficit Not Offset By Increase In Financing
Current Account And Financial Account Balance, % Of GDP • We forecast real GDP growth in the
Philippines to come in at 6.3% in 2018
8.0 Current Account Financial Account and 2019, from 6.7% in 2017.
6.0
• Growth will likely be supported by the
4.0 government’s expansionary fiscal
stance, particularly in infrastructure.
2.0
fitchsolutions.com | fitchconnect.com 12
Thailand: Still Robust Growth But Political Risks Lurking
Real GDP Growth And Business Sentiment
% chg y-o-y And Index • We forecast Thailand’s real GDP
Headline Real GDP Growth, % chg y-o-y (LHS) Business Sentiment Index (RHS) growth to come in at 4.5% in 2018, its
6 58 fastest rate since 2012, driven by strong
private consumption growth and a large
57
5 investment pipeline, before moderating
56
to a still-resilient rate of 3.9% in 2019.
4
55
3
• Private consumption growth is likely to
54
benefit from rising consumer
2
confidence, while investment will likely
53 be supported by infrastructure
1 investment. Monetary policy remains
52 accommodative and supportive.
0 51
• With elections set to take place by May
-1 50 2019, there is risk of disruptive
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Mar-13
Jun-13
Mar-14
Jun-14
Mar-15
Jun-15
Mar-16
Jun-16
Mar-17
Jun-17
Mar-18
Jun-18
demonstrations, weighing on investor
confidence.
Source: Bloomberg, Fitch Solutions
fitchsolutions.com | fitchconnect.com 13
Singapore: Growth To Persist Into 2019
Real GDP Growth By Production
% chg y-o-y • We forecast Singapore’s real GDP
growth to soften to 3.3% in 2018 and
GDP Manufacturing Construction Services 2.8% in 2019 (from 3.6% in 2017).
50
-30
• Existing macro-prudential measures are
Jul-08
Jul-09
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Nov-08
Nov-09
Nov-10
Nov-11
Nov-12
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
likely to weigh on real estate activity
and mortgage loan growth.
Source: Bloomberg, MTI, Fitch Solutions
fitchsolutions.com | fitchconnect.com 14
Vietnam: Manufacturing Powerhouse To Sustain Growth
Still Room For Vietnam’s Tourism Share To Grow
Tourism Contribution, % Of GDP • Vietnam is likely to remain a regional
outperformer, with real GDP growth of
35
Direct Contribution Total Contribution 6.9% in 2018 and 6.5% in 2019.
30
• The manufacturing sector continues to
25 be the main growth engine and will
likely remain well-supported by the
20
government’s ongoing efforts to further
15 liberalise trade and streamline
bureaucracy.
10
World
Laos
Cambodia
Brunei
Philippines
Malaysia
Thailand
Indonesia
Southeast Asia
Singapore
Myanmar
• The tourism sector has immense
potential and will help to underpin
robust growth in the tertiary sector.
Source: WTCC, Fitch Solutions
fitchsolutions.com | fitchconnect.com 15
Australia: 2018 Economic Outperformance To Ease
Private Capital Expenditures By Industry
% chg y-o-y and pp contribution • We forecast Australia’s real GDP to
grow by 3.0% in 2018 and 2.5% in 2019
40
Mining Manufacturing Others Total
from 2.2% in 2017.
30
• Rising global trade tensions to weigh on
export sector, with the slowdown in the
20
Chinese economy weighing on mining
exports.
10
Sep-2004
Sep-2005
Sep-2006
Sep-2007
Sep-2008
Sep-2009
Sep-2010
Sep-2011
Sep-2012
Sep-2013
Sep-2014
Sep-2015
Sep-2016
Sep-2017
Mar-2003
Mar-2004
Mar-2005
Mar-2006
Mar-2007
Mar-2008
Mar-2009
Mar-2010
Mar-2011
Mar-2012
Mar-2013
Mar-2014
Mar-2015
Mar-2016
Mar-2017
Mar-2018
• That said, robust hiring momentum and
rising wages will provide some support
private consumption.
Source: Australia Bureau Of Statistics, Fitch Solutions
fitchsolutions.com | fitchconnect.com 16
New Zealand
Decline In Business Confidence To Weigh On GDP Growth
Business Confidence Index And Real GDP Growth, % chg y-o-y • We expect New Zealand’s economic
Business Confidence Index (LHS) Real GDP, % chg y-o-y (RHS)
growth to weaken to 2.7% in 2018 and
80 7.0 2.3% in 2019.
6.0
60
• Business confidence remains poor, with
5.0
40 the index coming in near-multi year
4.0 lows of -38.3 in September, which will
20
3.0 weigh on investment growth.
0 2.0
• Continued depreciatory pressures on
1.0
-20 the NZD coupled with high levels of
0.0 household indebtedness will also weigh
-40
-1.0 on consumption growth.
-60
-2.0
-80 -3.0
• Macroprudential housing measures
coupled with unaffordable house prices
Sep-01
Sep-02
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
31/9/18
will reduce the incentive for housing
investment.
Source: ANZ, Bloomberg, Fitch Solutions
fitchsolutions.com | fitchconnect.com 17
2 Appendix
Fitch Solutions Macro Research Vs Consensus
2018 Real GDP Growth, % End-2018 Exchange Rate
Bloomberg Consensus Consensus Last
Country Fitch Solutions Consensus Last Month Currency Fitch Solutions Bloomberg Consensus Month
Australia 3.0 3.2 3.2 USD/AUD 0.70 0.72 0.72
Bangladesh 7.7 7.9 6.9 BDT/USD 84.50 - -
China 6.7 6.6 6.6 CNY/USD 6.85 6.90 6.85
Hong Kong 3.6 3.6 3.6 HKD/USD 7.82 7.84 7.85
India 7.3 7.5 7.4 INR/USD 73.00 73.25 72.00
Indonesia 5.2 5.2 5.2 IDR/USD 14,800.00 15,078.50 14,906.50
Japan 1.0 1.1 1.1 JPY/USD 113.00 112.00 112.00
Macau 5.0 - - MOP/USD 7.99 - -
Malaysia 5.1 5.1 5.1 MYR/USD 4.20 4.15 4.13
Myanmar 6.6 - - MMK/USD 1,388.73 - -
New Zealand 2.7 2.8 2.8 USD/NZD 0.65 0.66 0.66
North Korea 5.0 - - KPW/USD 143.00 - -
Pakistan 5.4 5.4 5.4 PKR/USD 127.00 - -
Philippines 6.3 6.4 6.5 PHP/USD 54.80 54.30 54.00
Singapore 3.3 3.3 3.2 SGD/USD 1.38 1.37 1.37
South Korea 2.5 2.8 2.8 KRW/USD 1,150.00 1,120.00 1,120.00
Sri Lanka 3.7 3.8 4.0 LKR/USD 174.00 - -
Taiwan 2.7 2.7 2.7 TWD/USD 30.80 30.85 30.80
Thailand 4.5 4.4 4.4 THB/USD 32.90 32.70 32.95
Vietnam 6.9 6.9 6.8 VND/USD 23,400.00 23,400.00 23,400.00
Source: Bloomberg, Fitch Solutions. Last Updated: November 1 2018
fitchsolutions.com | fitchconnect.com 19
Fitch Solutions Macro Research Vs Consensus
2018 Average Inflation, % End-2018 Policy Interest Rate, %
Bloomberg Consensus Consensus Last
Country Fitch Solutions Consensus Last Month Country Fitch Solutions Bloomberg Consensus Month
Australia 2.1 2.1 2.1 Australia 1.50 1.50 1.50
Bangladesh 5.8 5.8 5.8 Bangladesh 6.75 - -
China 2.3 2.2 2.1 China 4.35 - -
Hong Kong 2.2 2.3 2.3 Hong Kong 1.75 - -
India 5.0 4.8 5.0 India 6.75 6.60 6.75
Indonesia 3.4 3.5 3.5 Indonesia 6.00 6.00 6.05
Japan 1.2 1.0 1.0 Japan -0.10 -0.10 -0.10
Macau 3.0 - - Macau - - -
Malaysia 1.4 1.3 1.3 Malaysia 3.25 3.25 3.25
Myanmar 6.0 - - Myanmar - - -
New Zealand 1.3 1.6 1.6 New Zealand 1.75 - -
North Korea - - - North Korea - - -
Pakistan 3.9 4.5 5.0 Pakistan 6.50 - -
Philippines 5.3 5.0 4.9 Philippines 4.75 4.75 4.15
Singapore 0.5 0.6 0.7 Singapore 2.25 - -
South Korea 1.3 1.6 1.6 South Korea 1.50 1.60 1.65
Sri Lanka 4.5 4.5 4.5 Sri Lanka 8.50 - -
Taiwan 1.6 1.5 1.5 Taiwan 1.38 1.40 1.45
Thailand 1.3 1.2 1.2 Thailand 1.50 1.55 1.60
Vietnam 3.7 3.8 3.8 Vietnam 6.25 6.25 6.25
Source: Bloomberg, Fitch Solutions. Last Updated: November 1 2018
fitchsolutions.com | fitchconnect.com 20
Data Pack
Growth Outlook Fiscal Outlook
8 3
7 2
6 1
Average Real GDP Growth, 2018 - 2022 0
5 -1
4 -2
3 -3
-4 Average Budget Balance, % Of GDP (2018-2022)
2 -5
1 -6
0 -7
Japan
Hong Kong
India
Indonesia
China
Thailand
Taiwan
Australia
South Korea
Malaysia
Philippines
Singapore
Hong Kong
Japan
Indonesia
India
China
Thailand
Malaysia
Philippines
Singapore
Korea
Taiwan
Australia
25 Current Account Outlook Demographic Outlook
100
20 90
Population, 15-64 yrs, % Of Total, 2017 2022
80
15 Average Current Account Balance, % Of GDP (2018-2022) 70
10 60
50
5 40
0 30
20
-5 10
Japan
Hong Kong
Indonesia
India
China
Thailand
Philippines
Australia
Malaysia
Taiwan
South Korea
Singapore
0
Japan
Hong Kong
India
Indonesia
Australia
China
Thailand
South Korea
Taiwan
Philippines
Malaysia
Singapore
2018-2022 = Fitch Solutions forecast. Source: National Sources, Fitch Solutions
fitchsolutions.com | fitchconnect.com 21
Data Pack
Per Capita GDP Per Capita GDP
60,000 12,000
GDP Per Capita (USD), 2017 10,000 GDP per Capita (USD), 2017
50,000
40,000 8,000
30,000 6,000
20,000 4,000
10,000 2,000
0 0
Hong Kong
Japan
Australia
South Korea
Taiwan
Singapore
Indonesia
India
Thailand
Malaysia
China
Philippines
Fitch Solutions Risk Indices Manufacturing
100 35
90 Operational Risk Score, 2018 Country Risk Score, 2018 Manufacturing, % of GDP (2017)
30
80
70 25
60 20
50
40 15
30 10
20
10 5
0 0
Hong Kong
Japan
Indonesia
India
China
Thailand
Singapore
Taiwan
Australia
South Korea
Malaysia
Philippines
Indonesia
Japan
India
Taiwan
China
Thailand
Australia
South Korea
Malaysia
Philippines
Singapore
2018-2022 = Fitch Solutions forecast. Source: National Sources, Fitch Solutions
fitchsolutions.com | fitchconnect.com 22
Disclaimer
fitchsolutions.com | fitchconnect.com 23