Asia 2012-2013: Regional economies all below trend
but China outlook better than priced
In 2012, we are mostly below trend and
consensus in AEJ ex China, whereas in
China, we are below trend but slightly above
consensus.
We expect rate cuts and other policy easing
measures in most of the region, generally
fairly flat currencies in the near term, before
appreciation later in 2012.
We expect China to continue with the
moderate easing of macro policies that is
already underway, and view the 2012 hardlanding
fears in the market as overblown.
In 2013, the smaller AEJ economies are
likely to recover to around trend as the
external environment improves and policy
easing during 2012 boosts growth.
However, developments in the Eurozone are
likely to remain the dominant force in Asian
markets in the coming months—we expect
more Eurozone bank deleveraging to weigh
on AEJ