Bangkok--6 Dec--HSBC
Following Mr. Trump's presidential election victory in the US, we take a closer look at the implications for US-ASEAN trade
On a more retrospective note, 3Q16 GDP headlines were a mixed bag. Slow growth remained the theme, though the Philippines was an exception
Central banks across the region kept policy on hold as expected in November; FX weakness sees us postponing our rate cut views for Indonesia and Malaysia, and removing them for Thailand
3Q16 GDP headlines a mixed bag. Third-quarter growth in Thailand was a touch softer than market expectations, while Singapore and Malaysia beat consensus forecasts. Nevertheless the underlying theme continues to be one of slow growth, with Thailand expanding 3.2% y-o-y and Singapore contracting 2.0% q-o-q saar. After scratching beyond the surface, Malaysia's 4.3% y-o-y out-turn, too, revealed weak consumption and investment.
The Philippines was the only economy to report good quality, robust growth. The 7.1% y-o-y expansion beat consensus estimates, and resulted in us tweaking our 2016 GDP forecast higher to 6.8% from 6.5%. Significant contributions came from fixed capital investment and private consumption. Investment surged 23% y-o-y, mostly on the back of durable goods and construction, while private consumption rose 7.3% y-o-y, thanks to higher remittance flows and growth in domestic employment.
Central banks across the region kept policy on hold as expected. Concluding its meeting on the day Mr. Trump won the US Presidential election, the Bank of Thailand left its policy rate unchanged at 1.50%. Amidst the financial market volatility that ensued, the Philippines central bank, then Bank Indonesia followed by Bank Negara Malaysia subsequently also announced pauses, at 3.00%, 4.75% and 3.00% respectively.
We have postponed some of our rate-cut views, if not removed them altogether. With HSBC now forecasting further weakness in ASEAN currencies against the US dollar, we have pushed out our rate-cut view for Malaysia to 1Q17. In Indonesia, a cut at the 15 December meeting is possible, though the timing around the Fed is tricky, and financial markets stability will be key. We no longer expect rate cuts Thailand. In the Philippines, although there are upside risks to inflation, we continue to take the view that it will not have to act, since larger term deposit auction volumes are already resulting in incremental tightening.