J.P. Morgan - Emerging Asia Regional Reference Pack - Nov 2011

Asia Economic and Markets Research
Emerging Asia Regional Reference Pack

November 2011
Topic EM Asia in perspective EM Asia macro outlook China India Hong Kong Indonesia Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand
Slides 2-4 6-12 13-19 20-22 23 24-25 26-27 28-29 30-31 32 33 34-35 36-37 38-39 41-42 43 Haibin Zhu, Grace Ng Jahangir Aziz, Sajjid Chinoy Lu Jiang Sin Beng Ong Jiwon Lim Sin Beng Ong Matt Hildebrandt Matt Hildebrandt Sajjid Chinoy Grace Ng Sin Beng Ong Matt Hildebrandt Analyst
Dave FernandezAC +65 6882-2461 david.g.fernandez@jpmorgan.com
Vietnam Regional forecasts EM Asia team
See end pages for analyst certification and important disclosures, including investment banking relationships. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making their investment decision.
Agenda
EM Asia in perspective
EM Asia: macro outlook
EM Asia country snapshots
12
JP Morgan forecasts
40
EMERGING ASIA REGIONAL REFERENCE PACK
ASIA ECONOMIC AND MARKETS RESEARCH
Within Global Emerging Markets, Asia dominates; within EM Asia, China dominates
Global GDP (Emerging Markets)
Emerging Europe Africa and Middle East
EM Asia GDP
India Emerging Asia, ex-China and India
Latin America
Emerging Asia
China
EM ASIA IN PERSPECTIVE
China contributes more to global growth than the US + India + Brazil
China will contribute about 40% to 2011 global growth and that will go up again in 2012
Contribution to nominal GDP growth Contribution to nominal global GDP growth

% contribution 60 China 40 20 0
US India Brazil
-20 02 04 06 08 10 12
China & India tend to be less volatile; but rest of EM Asia is highly cyclical and sensitive to DM demand
Aggregate growth projected to be around 7% in late 2011/early 2012, but this masks intra-regional variations
Real GDP
%-ch over 1 quarter, saar 12 10 8 6 4 2
India China
EM Asia ex-China & India 2010 2011 2012
Agenda
12
JP Morgan forecasts
40
EM Asia: Key Themes

GDP carries good momentum: Against a backdrop of poor DM growth, EM Asia GDP growth is holding at 7.1% in 2011 and 6.6% in 2012. Importantly, China & India leadership continues Other cushions (CA and fiscal) remain: CA surpluses continue to winnow down, but stay high with regional average about 3% of GDP in 2011 and roughly 2% in 2012 (Chinas surplus to drop to below 3% of GDP next year, Indias deficit less than -2%). Fiscal deficits still modest, giving policymakers in Asia flexibility that others lack Inflation is rolling down, but still the priority: headline CPI rising to 5.5% in 2011, but rolling down now and expected close to 4% in 2012. However, core is firm Policymakers will continue to use a variety of tools not just policy rates and FX to manage macro risks, including fiscal subsidies and macro-prudential policies FX to appreciate gradually: China will again be a moderating force (USD/CNY 6.3 end-2011). ADXY on track to rise about 4% this year, following +5% in 2010 and +9% in 2009
EM ASIA: MACRO OUTLOOK
Policy rates cuts are not in our forecast: Big picture is that EM Asia growth has outperformed other EM for years and, while post-Lehman rate normalization was faster than Latam and EMEA EM, it has still been gradual. Given other tools available, Asia slow to turn to rate cuts Local bonds inflows relatively resilient even during severe bouts of global risk aversion and not that far from record 2010 pace. Net government bond issuance almost flat (ex China)
Global growth, especially in DM, anemic into 2012, 2H in Asia and globally
Global real GDP forecasts
%q/q, saar Global Developed markets US Euro Japan Emerging markets EM Asia Latin America EM Europe 2010 3.9 2.7 3.0 1.8 4.0 7.3 9.1 6.0 4.5 2011 2.6 1.4 1.8 1.7 -0.6 5.7 7.1 4.2 3.9 2012 2.1 1.0 1.7 -0.3 1.9 4.9 6.6 3.2 2.5 1Q11 2.6 0.9 0.4 3.1 -3.7 7.2 9.0 5.6 3.6 2Q11 1.7 0.7 1.3 0.7 -2.1 4.5 5.7 4.1 1.2 3Q11 3.0 2.4 2.5 1.5 5.5 4.6 5.9 3.1 2.7 4Q11 2.1 1.3 2.5 -0.5 2.0 4.2 5.8 2.5 1.3 1Q12 1.5 0.3 0.5 -1.0 1.8 4.8 7.0 1.6 3.1 2Q12 1.7 0.4 1.5 -1.5 1.5 5.4 6.8 4.4 3.0
Global GDP 2011 growth forecast cut to 2.6%, revised down to 2.1% next year DM forecast only 1.4% in 2011 and 1.0% in 2012 US growth averaging around 1.0% in 1H12; 40% chance of recession
Euro area even worse with negative growth beginning 4Q11; -1.5% by 2Q12 EM GDP growth at 5.7% in 2011, led again by Asia, even though region slows to 7.1% in 2011 and 6.6% in 2012
EM Asias growth likely to disappoint market, due to DM weakness, but regions own buffers (CA surplus, FX reserves, fiscal policy headroom) remain in place
Market expectations for GDP growth are too high
2011 JPM EM Asia EM Asia ex CN, IN China Hong Kong India Indonesia Korea Malaysia Philippines Singapore Taiwan Thailand 7.1 4.4 9.0 5.0 7.6 6.3 3.8 4.0 4.1 4.9 4.6 2.5 Consensus 7.2 4.6 9.1 5.3 7.5 6.4 3.8 4.5 4.4 5.1 4.5 3.7 2012 JPM 6.6 3.5 8.3 3.6 8.5 5.2 4.0 1.5 4.0 1.5 3.0 2.6 Consensus 6.9 4.3 8.5 4.2 7.9 6.1 3.8 4.3 4.6 4.1 3.8 4.0
Fiscal deficits modest
Emerging Asia:fiscal deficit

% of GDP
0 -1 -2 -3 -4 -5 -6 EM Asia ex China and India China India 2010 2011 2012
Current account surpluses still comfortable
Foreign reserves uniformly high

Emerging Asia: foreign reserves
8 month change, eop, US$bn Country EM Asia EM Asia ex CN China Hong Kong India Indonesia Korea Malaysia Philippines Singapore Dec-10 4750 1903 2847 269 297 96 292 106 62 226 382 172 Aug-11 5351 2088 3262 280 322 125 312 136 76 249 400 188 Change 601 186 415 11 25 28 21 30 14 23 18 16
Emerging Asia:current account balance

% of GDP
6 5 4 3 2 1 0 -1 -2 -3 -4 2010 2011 2012
EM Asia
ex China and India
China
India
Taiwan Thailand
We stick with our long-standing call for headline inflation in EM Asia to peak in 3Q
Inflation to moderate after 3Q11
Consumer prices
%oya, average 7 6 5 4 3
China
2 1 2010 2011
EM Asia, ex-China & India
2012
Behind drop in headline inflation lie persistent core price pressures
Emerging Asia ex CN&IN: core inflation

% change 10 %3m/3m, saar Over-year-ago 5
EM Asia: inflation breakdown

% change in CPI index, Jan 2002 to latest 100 Food 80 60 Energy 40 Others
0
20 0
-5 2005
2006
2007
2008
2009
2010
2011
2012
ID
IN
PH
KR
TH
CN
SG
MY
HK
TW
Agricultural prices: rice vs. overall foodstuffs

Index, Jan 2009 = 100 170
EM Asia: food and energy CPI weights

% share of CPI basket: Food Energy 31.0 3.6 46.2 36.2 15.0 30.3 50.0 22.1 26.1 33.0 6.4 5.9 5.4 10.6 5.9 4.9 6.9 9.9 Food (%oya) Last '08 peak 13.4 23.3 8.8 5.3 4.5 5.0 3.9 3.1 1.9 8.8 15.2 20.1 8.2 12.2 17.8 9.2 13.6 15.6 Energy (%oya) Last '08 peak 7.6 7.7 14.1 1.7 13.4 3.9 10.5 11.0 4.9 4.8 9.9 10.4 35.5 22.7 12.4 50.1 15.8 32.2
150 130 110 90 70 Jan 09 Jun 09 Dec 09 Jun 10 Dec 10
CRB foodstuffs
Rice
Jun 11
Dec 11
China India Indonesia Korea Malaysia Philippines Singapore Taiwan Thailand 10
In context of massive post-Lehman policy easing, EM Asia central banks not yet throwing in towel on normalization
Global central bank policy rate forecasts (%)
Change from Official interest rate Latin America EMEA EM Emerging Asia Emerging Markets GDP-weighted average GDP-weighted average GDP-weighted average GDP-weighted average Current 7.90 4.40 5.74 5.88 Sep '08 (bp) -306 -384 -108 -204 Mar 11 7.85 4.11 5.19 5.50 Jun 11 8.24 4.41 5.50 5.82 Sep 11 8.14 4.41 5.76 5.94 Forecast Dec 11 7.53 4.37 5.77 5.81 Change in 2010-2011 (bp) 141 -28 149 105 % Reversal 29 9 59 34
United States Euro area Japan
Federal funds rate Refi rate Overnight call rate
0.125 1.50 0.05
-188 -275 -45
0.125 1.00 0.05
0.125 1.25 0.05
0.125 1.00 0.05
0.125 1.00 0.05
0 0 -5
0 0 0
In DM, we still do not expect a change in Fed funds target until late 2013, while ECB now forecast to reverse its 50bp of hikes in other words, 0% reversal of DMs post-Lehman policy rate cuts In EM, on average, central banks reverse 34% of emergency rate cuts by year-end, led by Asia
Latam and EMEA EM now going in reverse, with JPM expecting rate cuts in Brazil, Mexico, Chile, Peru, Israel, Poland, Romania, Turkey, and South Africa In contrast, EM Asia slow to turn to rate cuts, given range of other tools available, including fiscal policy and selective easing. China and India still see inflation as uncomfortably high. Indonesia only exception and not a leading indicator for rest of region
11
Agenda
12
JP Morgan forecasts
40
12
China: Longer-term, 12th five-year plan turns focus to sustainable growth

Infrastructure spending still needed
China: public, private sector, and infrastructure FAI
%oya, 3mma 80 70 60 50 40 30 20 10 0 -10 06 Private sector FAI Public sector FAI Infrastructure and construction FAI
but improving household income also a priority
China: labor income as share of GDP

% share 70 65 60 55 50 45
07
08
09
10
11
12
93
95
97
99
01
03
05
07
09
China: real GDP growth vs government's growth target

%oya
EM ASIA COUNTRY SNAPSHOTS
China: urbanization rate

% 50 40 30
Real GDP growth Government's growth target
16 14 12 10 8 6 98
20 10 00 02 04 06 08 10
13
80
85
90
95
00
05
10
China: No hard landing

GDP growth moderated in 2011 but remained strong
China: real GDP growth
% change, both scales 16 14 12 10 10 8 6 2006 2007 2008 2009 2010 2011 5 0 % oya % q/q, saar JP Morgan forecasts 20 15
Export growth likely to remain soft for coming months
Global IP and China merchandise exports

%oya, both scales 60 40 20 0 -20 -40 04 06 08 10 12 Global IP China merchandise exports JPMorgan forecast 15 10 5 0 -5 -10 -15 -20
Resilient FAI growth supported by public investment
Retail sales dragged by auto sector

China: retail sales value growth
%oya %3m/3m, saar %oya 35 25 15 %3m/3m, saar 5
China: real fixed asset investment and bank loan growth

%oya, both scales
50 40 30 20 10 0 02 03
Fixed asset investment Bank loans (adjusted by PPI)
35 30 25 20 15 10
25 20 15 10
5 -5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
04
05
06
07
08
09
10
11
12
14
China: Credit still difficult to measure, let alone control

M2 money supply growth slowing
China: money supply and loan growth
%oya 40 30 20 10 0 2006 M2 Loans M1
Real estate loans still strong
Mortgage loans and loans to property developers

%oya 60 50 40 30 20 10 0 Loans to property developers 2007 2008 2009 2010 2011 Mortgage loans Real estate-related loans as share of total loans % share 20 19 18 17 16
2007
2008
2009
2010
2011
2012
Sources of social financing Yuan bn 2007 2008 2009 2010 1Q11 2Q11 3Q11 Total social financing 5,917 6,850 14,087 14,275 4,192 3,573 2,036 Loans in local currency 3,630 4,911 9,590 7,934 2,240 1,930 1,510 Loans in foreign currency 290 62 929 414 147 189 141 Entrusted loans 338 426 676 1,127 320 382 367 Trust loans 172 316 437 387 9 82 -7 Bankers acceptance bills 669 110 465 2,326 761 569 -348 Net corporate bond financing 231 556 1,296 1,199 455 204 181 Nonfin enterprise equity 480 337 451 579 156 112 84 Insurance compensation . . . 107 151 169 186 Insurance property inv est. . . . 6 7 14 14 Other financing . . . 0 0 70 100
Total social financing and bank's new loan creation

Trillion yuan 16 14 12 10 8 6 4 2 0
Total social financing
Bank's new loan creation
2002
2003
2004
2005
2006
2007
2008
2009
2010 2011ytd
15
China: Inflation an area of immediate concern

Broader inflation worries beyond food
CPI for food and residence
%m/m, sa Food 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 09 10 11 12 Residence
Pork prices moderate in recent months

Major CPI food items
%oya 60 40 20 0 -20 Pork -40 09 10 11 12 Vegetables Grain
Housing and subcomponent prices tick up

Major CPI residence items
%oya
PPI rose with global commodity prices

J.P. Morgan commodity price index and China PPI
%3m/3m 20 10 0 -10 -20 China PPI J.P. Morgan commodity price index %3m3/m, saar 25 20 15 10 5 0 -5 -10 -15 -20 12
Utilities Renting
10 5 0 -5 -10 -15 -20 07 08 09 10 11 12 Private housing
-30 -40 08 09 10 11
16
but still managed with a basket of policy tools

Open market operations used to managed excess liquidity
After Julys rate hike, no more projected for 2011
PBOC weekly open market operation

RMB bn Net sterilization
China: benchmark lending and deposit rates

% per annum 8 7 6 5 4 3 2 1 JP Morgan forecasts
300 200 100 0 -100 -200 -300

Apr 11 May 11 Jun 11
Issuance
1-year lending rate
1-year deposit rate
Maturing Jul 11 Aug 11
Sep 11
Oct 11
04
05
06
07
08
09
10
11
CNY appreciation most effective in containing import inflation
RRR raised to withdraw liquidity
CPI, PPI and CNY NEER

%oya
China: reserve requirement ratios for financial institutions

%oya, +=appreciation, reverse scale
% 22 RRR for large banks
15 10 5 0 -5 -10
CPI
PPI
-25 -15 -5 5
18 14 10 6 03
17
CNY NEER (six-month lead) 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
15 25
RRR for medium and small banks 04 05 06 07 08 09 10 11 12
Chinas administrative measures could turn more restrictive

Summary of policy changes since 4Q09
Date Policy change The State Council issued an 11-point notice on Jan 10, re-iterating 1. 40% down payment requirement on second-home mortgages 2. require primary units with presale permits to be launched within a certain period in whole to prevent hoarding of units 3. Local governments are responsible for the increase of affordable housing supply to meet the housing demand of the lower-income households The State Council issued new 10-point notice 1. 50% down payment requirement on second-home mortgage; strictly implementing 1.1X PBoC rate for mortgage 2. Banks may stop lending to buyers of 3rd homes 3. 71% of 2010 planned land supply would be zoned for affordable housing; residential land supply is budgeted to be at 180,000hectares, +135% Y/Y; to increase the supply of small/medium sized ordinary housing The State Council issued a notice on policy measures to curb excessive price growth: 1) Suspension of third-home mortgages or above and suspension of mortgages to non-local residents; 2) Unify minimum downpayment for first-time homebuyers to 30% and 50% for second-homebuyers; 3) Accelerate tax reform, mainly the implementation of real estate tax pilot scheme. The State Council issued a notice on policy measures to curb excessive price growth: 1) Increase downpayment requirement for the second mortgaged-home from 50% to 60% 2) HPR should be implemented to all municipal cities and overheated cities (obvious new candidate would be Chongqing) 3) Business tax calculation unified to 5.5% on total sales amount (vs some cities/counties, tax can be calculated on 20% on profit instead) Base lending rate (>5-year loan) Primary prices
10-Jan-10
5.94%
Shanghai: Rmb12,765/sqm Beijing: Rmb19,744/sqm
17-Apr-10
5.94%
Shanghai: Rmb12,331/sqm Beijing: Rmb20,952/sqm
29-Sep-10
5.94%
Shanghai: 12,341Rmb /sqm Beijing: 18,223Rmb/sqm
26-Jan-11
6.40%
Shanghai: 15,525Rmb/sqm Beijing: 19,658Rmb/sqm
Sources: Ministry of Finance, Centaline and JP Morgan estimates
18
China Macro view

China macro highlights
3Q GDP data suggests economy continued moderate growth; real GDP grew 9.1%oya (J.P.Morgan: 8.9%; consensus: 9.3%), following 9.5%oya growth in 2Q. We estimate GDP grew 7.9% q/q, saar in 3Q, unchanged from 2Q, vs. 9.0% q/q, saar growth in 1Q National Bureau of Statistics puts GDP at 9.5% q/q, saar in 3Q, 10.0% in 2Q and 8.2% in 1Q September major indicators suggest continued solid growth in domestic demand is compensating for weak exports: Decent gains in IP, up 1.2% m/m, sa, posting a solid 13.8% oya in September (J.P.Morgan: 13.3%; consensus: 13.4%), compared to 13.5%oya in August. Retail sales beat expectations at 17.7%oya in September (J.P.Morgan: 16.8%; consensus: 17.0%), compared to 17.0%oya in August, likely reflecting the near-term recovery in auto sales, in addition to the support from solid income growth. Fixed investment showed slightly slower growth in September at 24.9%oya, year-to-date by September (J.P.Morgan: 24.7%; consensus: 24.8%), after rising 25.0%oya in the first eight months On the policy front, inflation remains the priority concern of policymakers. Headline CPI inflation figure is still much higher than the governments yearend target of 4%, and negative deposit rates are still remarkable. Downside risk from the external side is increasing, as evidenced in the weaker-than-expected September trade data. We maintain our view that the Peoples Bank of China will keep its policy rate on hold for the rest of the year. In the near term, the Chinese authorities will continue to adopt a selective-easing strategy.
Key macro forecasts

2004-08 Real GDP, % change Consumption Investment Net trade Consumer prices, % oya % Dec/Dec Government balance, % of GDP Merchandise trade balance (US$ bn) Exports Imports Current account balance % of GDP International reserves, (US$ bn) Total external debt, (US$ bn) Short term Total external debt, % of GDP Total external debt, % of exports Interest payments, % of exports
1. Contribution to growth of GDP.
2009 9.2 4.4 8.4 -3.6 -0.7 1.9 -3.3 244.6 1198.8 954.3 280.5 5.6 2416.0 428.4 210.5 8.1 27.2 0.5
2010 10.4 3.9 5.6 0.9 3.3 4.6 -2.1 247.3 1573.5 1326.2 285.1 4.8 2884.8 548.6 332.3 8.3 25.8 0.6
2011f 9.0 4.5 4.4 0.2 5.5 4.6 -1.9 257.7 1875.8 1618.2 285.3 4.0 3384.8 625.6 412.3 8.3 26.6 0.6
2012f 8.3 4.5 4.7 -0.9 3.7 3.7 -2.3 215.8 1999.2 1783.4 229.7 2.8 3734.8 640.6 432.3 7.6 27.0 0.6
11.5 2.9 6.4 2.2 3.5 2.9 -0.6 216.5 995.2 778.6 240.0 8.1 1199.1 320.6 122.6 10.3 25.6 0.6
19
India: grappling with the growth-inflation trade-off (1)

Activity is slowing but not collapsing Rural Wages have surged over the last year...
Real rural wages have surged since 2010... % oya
IP growth continues to moderate

% oy a, 3mma 15 10 5 0 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 IP-ex cap goods IP
30 20 10 0 -10 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05
Nominal wage growth
Real wage growth
Jun-06
Jun-07
Jun-08
Jun-09
...and are likely to prop up consumption growth

% oya, 3mm a 20 15 10 5 0 -5 -10 -15 -20 Jan-08 May-08 Sep-08 Jan-09 May-09 Real rural wage growth
Inflation likely to moderate on favorable base effects
IP consumer non-durable
% oya 12 10 8 6 4 2 0 Jan -10 M ar -10 M ay-10 Ju l-10 Sep -10

Jan-11 May-11
Headline
Forecast
Core
20
Jun-10
N o v-10
Jan -11
M ar -11
M ay-11
Ju l-11
Sep -11
N o v-11
Jan -12
M ar -12
Sep-09
Jan-10
May-10
Sep-10
India: grappling with the growth-inflation trade-off (2)

Inflationary expectations still high FY12 budget targets large consolidation
India: budget targets largest consolidation in decades
but inflationary expectations continue to stay high percent 15 13 11 9 7 5 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 1Y ahead inflation expectations ppt increase over current inflation ppt 3 2.5 2 1.5 1 0.5 0
% GDP Deficit (budget definition) Deficit (incl off budget bonds, excl asset sales) 7 5 3 1 -1 -3 FY99 FY01 FY03 FY05 FY07 FY09 FY11 Stimulus
9 8 7 6 5 4 3 2 1 0
Slippages likely but not as large as feared by the market
High-beta INR under-performs the region
Rs bn JPMe -106.25
FY12E $100 322 418 741 333 327 80
$110 550 501 1,051 473 498 80
$115 664 542 1,206 543 583 80
INR continues to under-perform the region

% +=appreciation since August 2011 3 -2 -7 -12 2-Aug-11 17-Aug-11 1-Sep-11 16-Sep-11 1-Oct-11 16-Oct-11 31-Oct-11 INR
Auto fuels Cooking fuels TOTAL SUBSIDY Upstream share Govt. share Downstream share
465 470 934 421 434 80
ADXY
21
India Macro view

India macro highlights Economic activity is currently slowing, and poised to slow further in coming quarters, in response to sustained monetary tightening over the last year and a significant attempted fiscal consolidation this year. We expect growth to slow to 7.6 % oya in FY12 underpinned by solid consumption growth and surprisingly resilient export growth, even as the private investment cycle is pushed out further. The RBI raised policy rated by 25 bps at its October review its 13th hike over the last 18 months but signaled a near-certain pause in December; it also indicated that if inflation were to 7% by March 2012 more rate hikes would not be warranted. Though headline inflation is expected to stay high till December it will likely moderate from December helped by large, favorable base; the likelihood of more rate hikes till March is therefore low but we do not envision any rate cuts in the foreseeable future, given that inflation could tick back up once the fleeting base effects wear off The FY12 budget effectively targets a fiscal consolidation of 1.3% of GDP, the largest attempted consolidation in decades; while most in the market expect significant slippage (~ 1 % of GDP), we believe that the slippage will be contained to 0.2-0.4 % of GDP , thereby still delivering a significant consolidation INR continues to under-perform the region as global uncertainty still lingers. The underperformance reflects INRs high-beta characteristic during times of global stress as India is the only CAD country in the region reliant on external capital flows. However, if global sentiment improves on a sustained basis, a relatively sharp mean reversion of the INR still cannot be ruled out by year-end.
Key macro forecasts

Fiscal years beginning April 1
2004-08 8.7 6.1 3.8 -1.3 5.7 6.2 6.1 -4.9 -71.7 134.9 206.6 -13.1 -1.3 203.4 179.3 31.5 17.1 67.5 5.9
2009 8.0 4.4 2.9 0.7 10.9 15.0 2.4 -6.8 -118.4 182.2 300.6 -38.4 -3.0 259.1 262.3 60.9 18.7 70.9 5.6
2010 8.5 4.9 5.1 -1.6 12.0 9.5 9.6 -4.7 -130.5 250.5 380.9 -44.3 -2.8 286.6 296.8 69.9 17.5 62.8 4.9
2011f 7.6 4.6 4.8 -1.8 9.0 8.7 8.8 -4.8 -159.0 280.0 439.0 -59.0 -2.9 307.0 323.8 85.9 16.4 57.5 4.9
2012f 8.5 4.0 5.0 -0.5 7.8 7.0 7.5 -4.6 -199.0 336.0 535.6 -69.0 -3.0 309.6 340.3 95.9 14.6 50.6 5.0
Real GDP, % change Consumption Investment Net trade Consumer prices, %oya % Dec/Dec Wholesale prices, %oya Government balance, % of GDP Merchandise trade balance (US$ bn) Exports Imports Current account balance % of GDP International reserves, (US$ bn) Total external debt, (US$ bn) Short term Total external debt, % of GDP Total external debt, % of exports Interest payments, % of exports
22
Hong Kong Macro view

Hong Kong macro highlights Economic growth moderated in 2Q11, declining 2.0%q/q, saar, following 1Q11s strong print of 13.0%q/q 2Q GDP at 5.1%oya vs. 7.5%oya in 1Q. Growth largely supported by real private consumption and fixed investment, while net exports still a drag. We expect Hong Kongs exports to remain on the soft side as the main drag for Hong Kongs GDP growth. 2011 GDP forecast at 5.0%oya vs. 2012F at 3.6%oya (previous forecast: 4.0%oya). Although steady improvements in the labor market and income conditions continue to support solid consumption and investment growth, inflation and property prices likely to be drags on domestic demand. Headline CPI at 5.8%oya in September (J.P. Morgan: 6.0% consensus: 5.4%), compared to 5.7%oya in August. Moderation in sequential figure driven by the governments provision of a two-month rental waiver for public housing tenants, as well as an electricity charges subsidy. Food prices continue to print on the strong side: 6.8%3m/3m in September. Despite soft external demand, consumer spending likely to remain on a steady growth trend with solid labor market conditions and strong tourism inflows. The governments HK$6,000 grant to its permanent residents of age of 18 or older will boost domestic demand towards end of the year and into early 2012.
Key macro forecasts

2004-08 Real GDP, % change Consumption* Inv estment* Net trade* Consumer prices, %oy a % Dec/Dec Producer prices, %oy a Gov ernment balance, % of GDP Ex change rate, units/$, eop Merchandise trade balance ($ bil.) Ex ports Imports (CIF basis) Goods and serv ices balance % of GDP International reserv es, ($ bil.) * Contribution to grow th of GDP. 6.2 3.0 1.0 2.3 1.8 2.0 2.8 2.9 7.77 -14.8 315.7 330.5 22.8 11.9 143.3 2009 -2.7 0.6 0.5 -3.7 0.6 1.5 -1.7 0.8 7.75 -26.9 321.8 348.7 18.0 8.6 255.8 2010 7.0 4.1 2.5 0.3 2.3 2.9 6.0 -1.5 7.77 -43.0 394.0 437.0 13.9 6.2 268.7 2011f 5.0 4.0 1.6 -0.6 5.2 5.1 1.5 -0.7 7.80 -52.1 439.7 491.8 17.2 7.2 303.7 2012f 3.6 3.5 0.8 -0.6 4.6 4.4 1.0 -0.4 7.80 -68.7 464.1 532.8 22.5 8.9 333.7
Hong Kong: Real GDP growth rates

% change, both scales 15 10 5 0 -5 -10 04 05 06 07 08 09 10 11 %q/q, saar %oya JP Morgan forecast 15 10 5 0 -5 -10 -15
23
Indonesia Macro view

Indonesia macro highlights Growth momentum expected to slow in 2012, in line with a broader slowing in external demand and an easing in commodity prices Indonesia subsidies on motor gasoline to keep CPI modest in 2012, with electricity prices expected to increase 10% in 2Q12, adding 0.2-0.3%pts to sequential inflation. Food prices remain the wildcard and this will depend on regional weather conditions. Full year inflation is expected to average 4.1%oya and 4.4%oya, eop against an eop inflation target of between 3.54.5%oya for 2012 Bank Indonesia widened its policy rate band in September through widening the lower bound from 100bps to 150bps thereby lowering the O/N interbank rate by 50bps. Bank Indonesia (BI) surprised the market with a 25bp rate cut at its October meeting, leaving the policy rate at 6.50% BI rate forecast to reach 6% by 1Q12, with downside risk which assumes a 1% real policy rate
Key macro forecasts

2004-08 Real GDP, % change Consumption Investment Net trade Consumer prices, % oya % Dec/Dec Wholesale prices - manufacturing, % oya Government balance, % of GDP Merchandise trade balance (US$ bn) Exports Imports Current account balance % of GDP International reserves, (US$ bn) Total external debt, (US$ bn) Short term Total external debt, % of GDP Total external debt, % of exports Interest payments, % of exports
2009 4.6 4.1 -0.7 1.2 4.8 2.8 2.8 -1.6 30.9 119.6 88.7 10.6 2.0 63.6 172.9 41.9 30.4 117.9 3.5
2010 6.1 2.7 2.7 0.8 5.1 7.0 4.4 -0.6 31.6 158.1 126.4 6.7 0.9 92.9 201.3 57.0 26.5 103.2 2.7
2011f 6.3 4.4 2.7 -0.8 5.5 3.8 10.0 -1.6 35.3 194.6 159.3 6.2 0.7 113.2 199.8 60.0 24.1 91.5 3.7
2012f 5.2 2.7 1.2 1.2 5.2 6.0 7.0 -1.8 33.0 218.6 185.6 -0.5 0.0 98.2 191.8 61.5 20.1 80.9 3.5
5.7 2.9 2.5 0.4 9.1 9.3 15.0 -0.7 24.6 103.8 79.2 4.6 1.2 42.6 140.3 24.9 37.3 111.6 4.8
Fiscal position is expected to remain healthy in 2012 around an estimated IDR40 tn of carry over funds from 2011. 2012 could see a modest revival in infrastructure outlays and this could affect both the balance of payments and fiscal outlays the forecast assumes limited follow-through Balance of payments position is expected to be less supportive in 2012 with capital flows forecast to slow relative to 2011. Bank Indonesias reaction function, given modest inflation, is not expected to lead to a replay of the 1H11 FX appreciation of the IDR and is forecast to base around recent ranges of between 8750 to 9250 during 2012.
Indonesia: BI rate and CPI

%oya and %p.a.
20 15 10 5 0 2006 2007 2008 2009 2010 2011 2012

CPI BI rate
24
Indonesia continued
Indonesia: capital inflows to lead to income outflows Indonesia has experienced a surge of inflows into the republic, reflecting a combination of portfolio and foreign direct investment flows . This has not only changed the composition of the balance of payments but has also increased the net international investment liability of Indonesia, which has risen to US$289 bn at the end of 2010 from US$169 bn in 2007 One by-product of this large NII liability stock is the rising income outflow which has narrowed the current account despite the trade surpluses. For 2012, the current account is expected to shift to a deficit position of around US$0.5-1.0 bn, reflecting the rising deficit in the income balance which will mean that the overall balance of payments will have to lean increasingly on the capital account. That said, the recent bout of risk aversion has shown the effectiveness of the Crisis Management Protocol (CMP) in mitigating the impact of fixed income outflows and could well signal a shift in the boom-bust cycle of the FX rate to external shocks
Balance of payments supported by capital account
Balance of payments
US$ bn, nsa 10.0 8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 04 Overall Capital account Current account
05
06
07
08
09
10
11
12
Invisibles moving increasingly into deficit
Income payments
US$ bn, BoP terms 1 Others
The structure of the NII and support from the CMP, the FX rate should not much under-perform the rest of the region during bouts of risk aversion. This would mark a welcome change from its recent history.
0 -1 -2 -3 -4 -5 04 05 06 07 08 09 10 11 12 Direct investment Portfolio
25
KoreaMacro view
Korea macro highlights Key macro forecasts
2004-08 Real GDP, % change Consumption Investment Net trade Consumer prices, % oya % Dec/Dec Producer prices, % oya Government balance, % of GDP Merchandise trade balance (US$ bn) Exports Imports Current account balance % of GDP International reserves, (US$ bn) Total external debt, (US$ bn) Short term Total external debt, % of GDP Total external debt, % of exports Interest payments, % of exports
Real GDP growth slowed for two quarters as higher food prices and financial market volatility dampened both domestic consumption and investment. We still expect a modest pace of reacceleration of growth in 4Q. Exports outlook remains under cloud, but the shipments to China and other Asian countries are expected to stay firm to offset the continued slowdown in the exports to Europe. Post Japan-quake substitution effect will also work in favor of Koreas exports for some more quarters. Domestic inflation appears to have peaked already, with food prices having turned down as the weather condition normalizes. Prospective disinflation is expected to work favorably for consumers purchasing power. Fiscal policy is expected to turn supportive in 4Q, with spending progress having slowed in 2011, even when tax revenues outperformed the target. The full-year 2012 budget plan itself would not be so expansionary, but the government will fasten the pace of spending in the first half, also with continued discretion for off-budget activities.
2009 0.3 0.7 -3.2 2.8 2.8 2.8 -0.2 -1.7 37.9 358.2 320.3 32.8 3.9 269.9 345.4 149.2 40 74 2.4
2010f 6.2 2.6 3.5 0.1 3.0 3.5 3.8 -0.5 41.9 464.3 422.4 29.9 2.9 301.9 373.4 153.2 35 64 2.0
2011f 3.9 2.2 1.4 0.3 4.1 3.4 6.2 0.5 24.9 536.0 511.1 21.1 1.9 326.9 380.4 155.2 33 58 1.7
2012f 4.0 2.4 1.4 0.2 3.1 3.6 3.5 1.5 17.5 624.7 607.2 16.2 1.3 334.9 365.4 154.2 29 50 1.5
4.2 1.9 1.2 1.1 3.2 3.1 3.8 1.5 29.3 342.1 312.9 18.0 2.0 222.3 237.6 109.2 24 52 3.3
Korea: real GDP

% change annualized 20 %q/q, saar 10 0 -10 -20 2006 2007 2008 2009 2010 2011 %oya
26
Korea - continued
Korea macro highlights
Manufacturers inventories stayed at relatively high-levels, but outside of producers, inventory condition does not look burdensome. In 3Q, overall inventories rose only modestly, suggesting that non-manufacturers have actually shed the inventories quite aggressively. Forward-looking indicators are not uniformly weak. Most of all, both business and consumer confidence has been slowly improving. Construction orders too have started picking up and will play a relatively more important role in the coming quarters. Policy makers focus will gradually shift away from inflation, but more in terms of fiscal option, limiting their reliance on monetary policy and fx tools until growth conditions at home and abroad deteriorate much further. We expect the Bank of Korea to stay pat until mid-2012. Any hints of a turn to an easing bias will require further deterioration of growth condition at home and abroad, while any action to hike further needs better confidence in the medium-term growth path of the Korea economy. Koreas external condition remains far healthier than in 2008, with banking sectors short-term debt down while the BoKs fx reserves moved up.
Korea: manufacturing inventory and shipments

Index, 2005=100, sa 150 140 130 120 110 100 90 2005 2006 2007 I-S ratio 2008 2009 2010 2011 1.0 0.9 0.8 2012 Shipments Inventory I-S ratio 1.3 1.2 1.1
Korea: CPI
%oya 6 5 4 3 2 1 2005 2006 2007 2008 2009 2010 2011 Core Headline
27
Malaysia Macro view

Malaysia macro highlights Main near-term event will be the general elections which are expected to be held between 2H11 and 1H12. Outcome will determine policy priorities in the next few years. Expectation remains that a good result will be if at least 2 states come back into the BN fold this could provide incumbent PM mandate to pursue 1Malaysia policies. A positive outcome lays the groundwork for the 2011 forecasts for Malaysia, especially with respect to domestic demand and also for further fiscal rationalization of the subsidy schemes.. Aside from politics, with commodity income effects remaining positive, the spillover into domestic demand has helped offset the recent slowing in electronics production; this has also been a factor in buffering consumption, which has also benefited from firm credit expansion. This firmness in domestic demand has likely kept core consumer prices ticking higher. The interplay of domestic demand and inflationary risks is forecast to keep the central bank firmly on hold until inflationary risks abate, which itself will to a degree take its cue from the commodity complex and credit availability. Aside from monetary policy, fiscal policy is on balance turning more restrictive into 2012, with the budget deficit expected to narrow by 0.7%-pt of GDP, with 2.0% of that narrowing coming from lower expenditures and the other 1.3%-pts from lower revenues. The net impact would be to lower the financing requirements and thus also reduce net issuance in 2012. Key macro forecasts
2004-08 Real GDP, % change Consumption Investment Net trade Consumer prices, % oya % Dec/Dec Producer prices, % oya Government balance, % of GDP Merchandise trade balance (US$ bn) Exports Imports Current account balance % of GDP International reserves, (US$ bn) Total external debt, (US$ bn) Short term Total external debt, % of GDP Total external debt, % of exports Interest payments, % of exports
2009 -1.6 0.9 -2.9 0.4 0.6 1.0 -7.3 -7.1 40.2 157.2 117.0 31.8 16.5 95.5 76.5 30.8 39 38 1
2010 7.2 3.6 7.1 -3.5 1.7 2.1 6.0 -5.6 41.8 198.7 156.9 27.3 11.5 105.5 73.0 32.3 31 31 1
2011f 4.0 3.3 0.7 0.0 3.0 2.4 5.0 -5.2 37.6 221.2 183.5 22.4 9.0 109.3 65.0 32.3 28 25 2
2012f 1.5 1.0 -0.2 0.7 3.0 3.0 5.0 -4.5 35.3 241.5 206.2 21.4 7.2 121.8 75.0 32.3 24 24 2
5.8 5.2 1.0 -0.4 3.1 3.1 5.8 -4.0 37.6 161.0 123.4 26.2 15.8 82.4 61.2 20.2 36 31 1
Malaysia: exports
US$ bn, 2mma, change from over year ago 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0 -2.5 05 06 07 08 09 10 Commodities Others
Electronics
11
12
28
Malaysia continued
Malaysia macro highlights Over the course of 2011, core inflation has been ticking up in sequential terms even as food and energy prices have been more volatile. This steady uptick in core prices may well reflect lagged effects between core and supply-side prices or may reflect demandside factors. Nonetheless, it suggests that monetary policy will remain on hold until there is further evidence of a sustained easing in underlying domestic prices. Until then, the policy rate is expected to remain at 3% indefinitely. Unlike the recent easing in nominal monetary conditions, fiscal policy remains on a tightening bias with overall expenditure expected to contract 2.0%-pts of GDP from 2011 and the primary deficit expected to narrow by 0.7%-pt of GDP. While the budget has included some transfers to households, its impact is expected to be modest relative to the broader consolidation. The resulting narrowing in the deficit will also reduce the financing requirements, with total net domestic debt financing expected to decline to 4.8% of GDP (MYR43.6 billion) from 5.4% in 2011.
Malaysia: sources of inflation

%-pt contribution to m/m, nsa inflation 0.6 0.5 0.4 0.3 0.2 0.1 0.0 -0.1 Ex food and energy Energy Food
Feb 10 May 10 Aug 10 Nov 10 Feb 11 May 11 Aug 11
Malaysia: government bond ownership

MYR bn, change from over-year-ago 50 40 30 20 10 0 -10 -20 05 Financial institutions Pension and insurance Foreign
Of note, since 2009, foreign participation in the local fixed income markets has dwarfed that of local institutions, which have, by contrast, been reducing overall exposures to government securities Local financial institutions, which were large net buyers in 2009, became net sellers in 2010 and are expected to continue trimming, especially in the face of rising loan deposit ratios, which climbed to 0.83 in August from 0.78 at the end of 2009.
06
07
08
09
10
11
12
29
Philippines Macro view

Philippines macro highlights Key macro forecasts
2004-08 Real GDP, % change Consumption Investment Net trade Consumer prices, % oya % Dec/Dec Wholesale prices, % oya Government balance, % of GDP Merchandise trade balance (US$ bn) Exports Imports Current account balance % of GDP International reserves, (US$ bn) Total external debt, (US$ bn) Short term Total external debt, % of GDP Total external debt, % of exports Interest payments, % of exports
Sentiment has improved dramatically since Aquino took office. Aquinos popularity has fallen slightly since winning the election in mid 2010 but remains high. Appointment of competent technocrats and positive signals to market has been encouraging. Achievements so far include indictments of tax evaders, narrowing of fiscal deficit, and restructuring of government liabilities. However, challenges such as improving the investment climate, alleviating poverty, and reducing poverty remain. Fiscal progress has been greatest success; 2010 deficit narrowed to 3.7% of GDP from 3.9% in 2009 but is forecast at 1.5% of GDP this year. Revenue generation is occurring but more progress is needed for sustained fiscal consolidation. Difficulty in spending this year is partly responsible for narrowing of deficit, which is good for debt metrics but limits badly needed investment in infrastructure and social services
2009 1.1 2.7 -1.6 0.1 4.2 4.5 -1.4 -3.9 -8.9 37.6 46.5 9.3 5.5 37.9 64.9 9.5 39 92 4 0
2010 7.6 2.8 5.4 -0.6 3.8 3.6 -5.0 -3.7 -10.4 50.7 61.1 8.5 4.2 55.4 73.7 13.7 35 80 3 0
2011f 4.1 3.6 0.7 -0.2 4.7 4.0 4.0 -1.5 -13.6 58.6 72.3 7.5 3.2 70.4 74.4 12.7 32 75 3 0
2012f 4.0 3.6 1.6 -1.1 3.5 4.0 4.5 -2.5 -15.4 66.3 81.7 6.8 2.6 82.4 77.4 12.7 29 69 3 0
5.5 4.1 -1.5 2.8 6.2 6.2 7.1 -1.8 -8.2 44.7 52.9 4.0 3.2 22.5 63.5 10.5 51 92 4 0
Philippines: government budget deficits
Medium term fiscal plan is for 2% of GDP deficit by 2013. Debt to GDP to decline from 55% to 45% over 5 years if targets are met. Since Aquinos inauguration, all three ratings agencies have upgraded the Philippines. More upgrades to follow if BoP remains solid, growth strong, and fiscal improvement, particularly revenue generation, persists
Year-to-date, PHP bn 50 0 -50 -100 -150 -200 -250 -300 -350 Jan 10
2011 2009 2010
Mar 10
May 10
Jul 10
Sep 10
Nov 10
30
Philippines continued
Philippines macro highlights
Current account structurally in large surplus (3-5% of GDP) from remittances and rise of BPO sector. The Philippines overtook India as the largest voice-only service provider and was named top BPO destination by IBM. BPO exports in 2010 are estimated at US$7.5 bn and are expected to rise to $9bn this year (50% of remittances). BSP has stayed pat at recent meetings following 50bp of rate hikes and 200bp of reserve requirements (RRR) increase earlier in the year. BSP has completely reversed the easing in the RRR during the last recession but the policy rate is still 50bp lower. Outlook is on hold but with inflation likely to slow to bottom end of 3-5% inflation target range BSP could ease in 2012 if growth falters The economy expanded only 2.5%q/q, saar in 2Q but this still left growth lower than expected at 4.9%oya. The economy should be more resilient than most in the region to the global slowdown as long as remittances are resilient and underpin consumer spending, and because government spending is likely to pick up
Philippines: current account components

Component receipts as % of current account receipts 100 80 60 40 20 0 60 65 70 75 80 Services and income Current transfers 85 90 95 00 05 Goods exports
Philippines: CPI inflation

%oya 14 12 10 8 6 4 2 0 Forecasts Upper and lower bounds of inflation target range
Due to the lack of meaningful subsidies in the Philippines the squeeze to consumer spending from higher inflation was apparent in 2Q private consumption. Inflation is expected to slow in coming quarters, which should also provide a boost to consumer spending. A big risk to the inflation outlook reflects weather-related flooding in the Philippines and in Thailand, which could lift food prices.
02
04
06
08
10
31
Singapore Macro view

Singapore macro highlights 3Q GDP print suggested that the economy expanded 1.3%q/q, saar last quarter (or 5.9%oya) due almost exclusively to growth in the biomedical sector Given softening across global PMIs and other activity indicators, we have revised down our full 2011 GDP forecast to 4.9% (previously 5.1%) and to 1.5% for 2012 (previously 4.0%). Inflation in Singapore has risen of late after having slowed between January and May. Inflation rose 5.5%oya in September from 4.5% in May. Supply side pressures from COEs and housing are the main drivers of the pickup in inflation. CPI was flat on the month (sa), leaving it up 5.5%oya in September. Housing prices continue to push higher despite stricter macroprudential controls. Core inflation (ex accommodation and private transport) has eased in recent months by a few tenths of a percentage point but has been sticky in a range of 2.1% to 2.3%oya since April
Key macro forecasts

2004-08 Real GDP, % change Consumption Investment Net trade Consumer prices, % oya % Dec/Dec Producer prices, % oya Government balance, % of GDP Merchandise trade balance (US$ bn) Exports Imports Current account balance % of GDP International reserves, (US$ bn)
2009 -0.8 0.4 -5.8 4.6 0.6 -0.5 -13.9 1.1 29.2 273.0 243.8 34.9 19.0 187.5
2010 14.5 2.8 1.2 10.5 2.8 4.6 4.7 3.5 46.7 358.0 311.4 49.5 22.2 219.5
2011f 4.9 2.5 1.4 1.0 5.3 5.2 3.0 5.0 49.5 417.3 367.8 53.6 20.4 247.5
2012f 1.5 2.2 0.0 -0.7 3.5 2.8 3.0 5.0 50.0 478.9 428.8 55.5 19.4 272.5
7.1 1.7 4.9 0.5 2.3 2.5 5.5 8.8 36.7 270.4 233.7 32.3 21.5 140.4
Singapore: real GDP levels

Index, 1Q08=100 120 110 100 90 GDP
The MAS reduced the slope of the SGD NEER at its October policy meeting, citing increased uncertainty in the external outlook. However, given the recent rise in CPI inflation and stickiness of core inflation the MAS maintained a less aggressive steepening slope of the band.
Ex pharmaceuticals
2008
2009
2010
2011
32
Sri LankaMacro view

Sri Lanka macro highlights
GDP growth is expected to remain strong and print close to 8% in 2011 as the economy benefits from significantly increased resource utilization, post conflict. 2Q growth printed at 8.2 % -- up from 7.9 % in 1Q driven by higher investment growth After remaining elevated and sticky over the last few months, headline and core inflation have begun to moderate over the last two months, allaying fears that the economy is overheating. The 2011 budget starts the process of structural tax reform even though it falls slightly short of some key tax-base broadening measures; the targeted reduction of the fiscal deficit from 8% of GDP to 7.0% is, however, broadly expected to be achieved on account of buoyant GDP growth. FX appreciation is likely to be muted again in 2011 as the current account deficit widens and the BoP surplus shrinks and the CBSL continues its policy of intervening in the FX market Recognizing the improved growth and fiscal consolidation prospects, Fitch upgraded Sri Lankas sovereign ratings to BB- from B+ while Moodys and S&P maintained their rating at B1 and B+ but upgraded their outlook These improved credit assessments contributed to the island economys most recent $1 billion dollar bond issuance being oversubscribed 7 times. The debt was sold to yield 6.25% or 332 bp over US treasuries, lower than the 373 bp spread over US treasuries implicit in the previous issuance
Key macro forecasts

2003-07 Real GDP, % change Consumer prices %oya Government balance, % GDP Exchange rate, units/$, eop Merchandise trade balance ($ bil.) Exports Imports Current account ($ bil) International reserves, eop ($ bil) Total external debt, eop ($bil) Total external debt, % of GDP 6.4 11.5 -7.1 106 -2.7 6.4 9.0 -0.9 3.1 16.5 51.0 2008 6.0 22.6 -7.0 113 -6.0 8.1 14.1 -3.9 1.8 17.8 44.9 2009 3.5 3.5 -9.8 114 -3.1 7.1 10.2 -0.2 4.9 20.9 49.6 2010f 7.8 5.9 -8.0 111 -5.7 8.0 13.7 -2.0 6.6 24.0 49.9 2011f 7.8 6.5 -7.0 110 -7.1 8.8 15.9 -2.3 7.0 23.0 48.8
Sri Lanka: GDP growth by sector %oyay a 12 10 8 6 4 2 0 -2 Mar-03 Services Industry Agriculture
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
33
Taiwan Macro view

Taiwan macro highlights Taiwans export orders weakened again in September, up 2.7%oya (J.P.Morgan: 4.1%; consensus: 3.5%), compared to 5.3%oya growth in August. Weakening was broad-based, led by significant fall in tech exports and in exports to the US and Japan. September IP weaker-than-expected at 1.6%oya (J.P.Morgan: 5.2%, consensus: 6.1%), compared to the upwardly-revised 4.0%oya in August (before revision: 3.9%oya). Looking ahead, export sector and manufacturing industry will continue to face external headwinds, with J.P.Morgan global manufacturing PMI falling in August to the lowest level since June 2009. The fall in new export orders to inventory ratio in the global manufacturing PMI sends a negative signal about nearterm production growth in the coming months. As such, on-going external headwinds will drag Taiwans export sector and industrial activity going ahead.
Taiwan: real GDP growth
Key macro forecasts

Average 2004-08 Real GDP, % change Consumption* Inv estment* Net trade* Consumer prices, %oy a % Dec/Dec Producer prices, %oy a Gov ernment balance, % of GDP Ex change rate, units/$, eop Merchandise trade balance ($ bil.) Ex ports Imports Current account balance % of GDP International reserv es, ($ bil.) Total ex ternal debt, ($ bil.) Short term Total ex ternal debt, % of GDP Total ex ternal debt, % of ex ports Interest pay ments, % of ex ports * Contribution to grow th of GDP. 4.6 1.0 0.4 3.2 2.0 1.8 5.0 -0.9 32.5 22.0 221.2 199.2 25.3 6.7 266.4 85.9 75.3 22 31 1 2009 -1.9 1.1 -4.2 1.2 -0.9 -0.2 -8.7 -3.6 32.0 30.6 203.4 172.8 42.9 11.4 349.9 79.1 70.0 22 33 0 2010 10.9 2.3 6.2 2.4 1.0 1.2 5.5 -1.5 29.2 26.9 274.3 247.4 39.9 9.2 386.9 89.7 79.3 20 25 0 2011f 4.6 2.4 0.4 1.8 1.6 1.4 4.0 -1.8 29.0 32.6 308.1 275.4 42.7 8.6 423.9 91.8 80.5 18 24 1 2012f 3.0 2.3 0.2 0.6 1.7 2.4 4.2 -2.0 28.3 34.9 317.2 282.3 45.8 8.2 455.9 93.9 81.8 17 24 1
We have recently revised down Taiwans 3Q11 real GDP growth forecast to 1.5%q/q saar, with the forecast for 4Q11 GDP at 3.8% q/q, sa.
% change, both scales 15 10 5 %oya %q/q, saar
J.P.Morgan forecasts 20 10 0
0 -5 -10 2006 2007 2008 2009 2010 2011 -10 -20
34
Taiwan continued
Taiwan macro highlights We continue to look for a broadening base of domestic demand growth in Taiwan this year. ECFA benefits extend across manufacturing and service industries. Steadily falling unemployment and improving consumer confidence support consumer demand growth. Taiwans CPI inflation figures have been modest in this round of growth recovery, especially compared against a number of other economies in the region. Given the recent easing in commodity prices and the steady easing in Taiwans import price index and WPI, inflation pressure is expected to be manageable. Taiwans September headline CPI inflation rate came in at a steady 1.35% over-year-ago (J.P.Morgan: 1.5%; consensus: 1.4%), compared to 1.34%oya rise in August. The Directorate-General of Budget, Accounting and Statistics (DGBAS) recently revised down the official forecast for 2011 CPI inflation rate to a moderate 1.59%oya (compared to the previous forecast of 1.89%oya), while the 2012 CPI inflation rate is expected to ease to 1.21%oya. As expected, the Taiwan central bank raised its discount rate from 1.75% to 1.875%, effective July 1. This was the fifth 12.5bp hike since June last year. On monetary policy, growing uncertainty on global economic outlook, reinforces the likelihood that the Taiwan central bank may halt its modest rate hike cycle during the upcoming quarterly monetary policy meetings to be held at the end of this month and in December.
Global manufacturing PMI and Taiwan real export growth

Index, sa 65 55 45 35 25 03 04 05 06 07 08 09 10 11 12 Global manufacturing PMI - output %3m/3m, saar 60 40 20 0 -20 -40 -60 -80
Taiwan export volume (adjusted by export prices)
China IP and Taiwan's exports to China/ Hong Kong

%3m/3m, saar, both scales 30 20 10 0 0 -10 05 06 07 08 09 10 11 12 -50 -100 China IP Taiwan exports to China/HK
150 100 50
35
Thailand Macro view

Thailand macro highlights
The recent tragic floods in Thailand, which have been the worse seen in the past decade - if not in recent memory, have led to inundations in 30 out of 77 provinces. In particular, the floods are expected to significantly reduce output in two key manufacturing provinces of Nakhon Pathom and Ayuthaya, contributing a combined 6.2% to total national output in 2010. In figuring the lost output, J.P. Morgan has assumed a close to 100% loss in output in these two key manufacturing provinces during October and November with full capacity restored by December. These two provinces are production hubs for autos and the hard disk drive industry; both sectors operate using multiple inputs from ancillary producers. Thus, there is the risk that potential supply chain disruptions may be broader and larger than the headline GDP contributions would suggest Aside from the manufacturing sector, around 3-5 mn tonnes of Thai rice output is expected to have been destroyed against a usual harvest output of 17-18mn tonnes in final quarter of each year. Notably, fourth quarter output usually accounts for more than half of annual output. This loss in income, estimated at US$1.8-3.0 bn, will also impact consumption especially in context of the rice pledging scheme which would have taken effect in October. Aside from the lost income, the output hit is also expected to potentially lift rice prices with a knock-on impact on regional food prices. J.P. Morgan is assuming that the key benchmark Thai grade B rice will reach US$800/tonne from US$619 currently and could lead to inflationary pressures around the region.
Key macro forecasts

2004-08 Real GDP, % change Consumption Investment Net trade Consumer prices, % oya % Dec/Dec Wholesale prices, % oya Government balance, % of GDP Merchandise trade balance (US$ bn) Exports Imports Current account balance % of GDP International reserves, (US$ bn) Total external debt, (US$ bn) Short term Total external debt, % of GDP Total external debt, % of exports Interest payments, % of exports
2009 -2.3 0.1 -5.8 3.4 -0.8 3.5 -3.8 -3.9 19.4 150.7 131.4 21.9 8.3 135.5 75.4 33.1 28.6 39.7 0.6
2010 7.8 3.2 5.1 -0.5 3.3 3.0 9.4 -2.5 14.0 193.7 179.6 14.8 4.6 167.5 96.9 46.8 27.0 36.1 0.5
2011f 1.1 1.2 -1.3 1.1 3.7 4.0 10.0 -3.0 11.8 213.5 201.8 12.7 3.5 182.5 93.5 48.3 26.6 36.1 0.9
2012f 2.6 0.9 0.7 1.1 3.6 4.0 6.0 -3.5 2.6 237.6 235.0 3.4 0.8 195.0 90.1 49.8 22.6 31.5 0.9
4.7 2.3 1.6 0.8 3.9 3.2 7.7 -0.8 1.3 131.7 130.4 3.1 1.4 71.8 67.6 27.9 30.7 39.2 1.1
Thailand: core inflation and policy rate

%oya and %p.a., eop 6 4 2 0 Core CPI -2 01 02 03 04 05 06 07 08 09 10 11 12 Policy rate
36
Thailand continued
Thailand macro highlights With the near-term policy focus on the floods, fiscal policy rather than monetary policy will likely be the key channel for alleviating the impact of the floods. Part of this owes to the upside risk from the raft of measures to lift agricultural and minimum wages in 4Q11 and into 1H12. With core inflation expected to drift higher with the implementation of the governments pro-growth policies, core prices are biased up. However, government pressure on the BoT has been explicit in demanding no further rate hikes and even preferring cuts. Our own forecast is for a steady policy rate through year-end and into 2012 and reflects the risks around the inflation outlook Also in the policy pipeline will be the shift in the inflation target that should be implemented in 2012, if approved by the Minister of Finance and ratified by parliament. This move will also likely be accompanied by a wider target band for headline inflation. How this evolves could lead to further tweaks to the forecast for the policy rate in 2012.
Thailand: commercial bank liabilities

THB bn, over-year-ago change 800 600 400 200 0 -200 05 06 07 08 09 10 Money market 11 12 Deposits Borrowings
Thailand: policy rate and THFIX6m

%p.a. 6 5 4 3 2 1 0 2006 2007 2008 2009 2010 2011 2012 Policy rate THFIX6m
Since 2H10, bank credit had been expanding strongly, with the bulk of the funding coming from mobilizing deposits and borrowings, mainly via Bills of The concern resides with the strong expansion in BEs, which are short-dated, not, and are assumed to be the credit risk of the issuing bank. One measure would be to impose reserve requirements on funds raised through BEsand this seems to be under review for implementation driven by concerns over prudential issues for saversrather than to curtail lending per se.
37
Vietnam Macro view

Vietnam macro highlights Key macro forecasts
2007 Real GDP, % change Consumption Investment Net trade Consumer prices, % oya % Dec/Dec Producer prices, % oya Government balance, % of GDP Merchandise trade balance (US$ bn) Exports Imports Current account balance % of GDP International reserves, (US$ bn) Total external debt, (US$ bn) Short term Total external debt, % of GDP Total external debt, % of exports Interest payments, % of exports 8.5 7.6 14.1 -13.2 8.2 12.6 5.5 -7.3 -10.4 48.6 59.0 -7.0 -9.7 23.5 23.7 0.3 33.2 52.8 6.9 2008 6.3 6.7 2.9 -3.2 23.1 19.9 20.0 -5.1 -12.8 62.7 75.5 -10.8 -11.9 23.9 26.9 0.3 29.8 49.3 9.2 2009 5.3 3.0 0.6 1.7 6.7 6.5 -8.0 -8.5 -8.3 57.1 65.4 -6.1 -6.6 16.4 36.2 0.4 39.0 51.9 9.3 2010 6.8 7.1 1.4 -1.8 9.2 11.8 4.0 -5.7 -7.5 72.0 79.5 -4.9 -4.6 11.8 41.7 0.5 39.2 64.9 6.7 2011f 5.5 5.6 1.2 -1.3 18.9 19.9 4.0 -4.8 -7.0 93.1 100.1 -4.9 -4.1 14.3 47.7 0.5 39.7 60.0 5.6
Usual culprits caused macroeconomic concern again earlier this year: inflation high, trade deficit large, FX reserve levels low, and transparency still lacking Government rhetoric and actions have shifted to stability from growth. The government has acted assertively to reduce credit and money growth, tighten monetary policy, and liberalize fuel and electricity prices. The major item left is to lift the 14% deposit rate cap. Due to tightening and more favorable base effects, inflation in Vietnam has started to slow. After peaking at 23.0%oya in August, inflation slowed to 22.4% in September and 21.6% in October. We forecast inflation to continue to slow, notably so in 1H12. Strong GDP growth, favorable demographics and geography, and low wages leave the longer term story intact for now. FDI is still performing well (FDI approvals are down but disbursements have been stable and large). However, poorly managed monetary policy and volatile high inflation cycles are pushing wages higher. To maintain competitiveness and reduce the trade deficit, the government has devalued VND many times in recent years. These have not been effective as nominal gains have been eroded in real terms by higher inflation.
1. Contribution to growth of GDP, investment includes statistical error. 2. Debt with original maturity of less than one year. 3. Exports of goods, services, and net transfers.
Vietnam: real and nominal effective exchange rates

Index, 2006=100 130 120 110 100 90 80 70 60 2006 2007 2008 NEER 2009 2010 2011 REER
38
Vietnam continued
Vietnam macro highlights
Vietnam: balance of payments
USD mn Current Account (% of GDP) Trade Balance Net Services Net Investment Income Services and Income Net Transfers Capital Account (% of GDP) Net FDI Portfolio investment Other Errors and Omissions (% of GDP) Overall Balance (% of GDP) FX reserve level 2006 -164 -0.3 -2776 -8 -1429 -1437 4049 3088 5.1 2315 1313 -540 1400 2.3 4324 7.1 13384 2007 -6953 -9.8 -10438 -755 -2190 -2945 6430 17730 24.9 6516 6243 4971 -565 -0.8 10212 14.3 23479 2008 -10787 -11.9 -12782 -915 -4401 -5316 7311 12341 13.7 9279 -578 3640 -1080 -1.2 474 0.5 23890 2009 -6116 -6.6 -8307 -1230 -3028 -4258 6448 11869 12.8 6900 128 4841 -13509 -14.6 -7756 -8.4 16447 2010F -4934 -4.6 -7507 -1056 -4427 -5483 8056 17135 16.1 10200 2040 4895 -14281 -13.4 -2080 -2.0 11761 2011F -4850 -4.1 -7050 -800 -4500 -5300 7500 7400 6.3 10500 -5600 2500 0 0.0 2550 2.2 14311
Vietnams structural balance of payment (BoP) strengths and weaknesses are fairly straightforward. The country runs persistent trade deficits that are easily offset by sticky remittance and FDI inflows. The reason for concern stems from shifts in the direction of cyclical capital flows that are fickle due to the countrys history of high inflation and large and highly dollarized economy. In short, when inflation spikes or devaluation expectations rise, short term capital, largely from local residents, flows from VND assets into gold and USD. When inflation slows, the reverse process occurs and FX reserves rise. FX reserves reportedly have risen $4-$5 billion in recent quarters and are estimated at $12-$14 billion, or 1.5 months worth of imports. Default on sovereign debt is very unlikely given that 90% of external debt is concessional. External payments until 2016 are around only $100 million per year Vinashins financial troubles and greater concern about contingent liabilities exacerbated other macro issues. Not clear if Vinashin is extreme situation or tip of the iceberg. Vinashin default was major contributor to Moodys (B1) and S&Ps (BB-) downgrades last Dec. Both have negative outlooks January election of Dung to serve a second term as PM seen as a positive given his relatively reformist credentials
Vietnam: errors and omissions (BoP) and inflation

%oya 30 E&O 20 0 Inflation US$ bn, 2qma, 1q lag 2
10
-2
2007
2008
2009
2010
2011
-4
39
Agenda
12
JP Morgan forecasts
40
40
Regional economic outlook

Regional economic outlook in summary
2010 Real GDP, %-ch over 1 quarter, saar Japan Australia New Zealand Emerging Asia ex China and India China Hong Kong Taiwan Korea India Indonesia Malaysia Philippines Singapore Thailand Consumer prices, %oya, average Japan Australia New Zealand Emerging Asia ex China and India China Hong Kong Taiwan Korea India Indonesia Malaysia Philippines Singapore Thailand 4.0 2.7 1.7 9.1 7.7 10.4 7.0 10.9 6.2 8.5 6.1 7.2 7.6 14.5 7.8 7.0 -0.7 2.8 2.3 4.5 2.9 3.3 2.3 1.0 3.0 12.0 5.1 1.7 3.8 2.8 3.3 2011 -0.6 1.4 2.0 7.1 4.4 9.0 5.0 4.6 3.8 7.6 6.3 4.0 4.1 4.9 2.5 5.0 -0.2 3.6 4.5 5.5 4.0 5.5 5.2 1.6 4.1 8.9 5.5 3.0 4.7 5.3 3.7 2012 1.9 3.5 3.8 6.6 3.5 8.3 3.6 3.0 4.0 8.5 5.2 1.5 4.0 1.5 2.6 -0.6 3.3 2.4 4.2 3.4 3.7 4.6 1.7 3.1 7.8 5.2 3.0 3.5 3.5 3.6 4Q10 -2.4 3.3 2.5 7.9 3.9 11.6 6.1 1.2 2.0 5.8 7.2 9.2 2.0 3.9 5.3 -0.3 2.7 4.0 4.9 3.5 4.7 2.7 1.1 3.6 9.2 6.3 2.0 3.5 4.0 2.9 1Q11 -3.7 -3.4 3.5 9.0 9.3 9.0 13.0 14.6 5.4 8.3 6.8 5.5 7.8 27.2 8.1 -0.5 3.3 4.5 5.3 4.1 5.1 3.8 1.3 4.5 9.0 6.8 2.8 4.5 5.2 3.0 2Q11 -2.1 4.8 0.4 5.7 2.0 7.9 -2.0 0.9 3.6 7.6 5.4 3.2 2.4 -6.5 -0.8 -0.4 3.6 5.3 5.7 4.2 5.7 5.2 1.6 4.2 9.1 5.9 3.3 5.0 4.7 4.1 3Q11 5.5 2.1 2.8 5.9 2.6 7.9 1.0 -0.5 3.0 7.5 6.2 1.0 4.1 1.6 1.8 0.2 3.5 4.9 6.0 4.4 6.3 6.4 2.2 4.8 9.2 4.8 3.1 4.9 5.7 3.9 4Q11 2.0 2.2 4.1 5.8 2.3 8.0 2.5 2.5 4.2 7.1 5.5 1.0 2.4 -3.9 -6.0 -0.1 3.8 3.2 5.1 3.8 4.9 5.2 2.2 3.7 8.7 4.5 2.8 4.6 5.6 3.7 1Q12 1.8 4.1 3.9 7.0 4.7 8.2 4.0 3.5 4.0 8.6 5.0 1.5 2.4 2.0 15.0 -0.3 3.3 2.9 4.5 3.1 4.3 4.6 1.3 2.8 8.5 4.2 3.0 3.3 4.0 3.1 2Q12 1.5 3.4 3.9 6.8 3.9 8.2 5.5 4.0 4.0 9.0 4.5 1.5 7.4 6.1 -1.0 -0.7 3.2 2.4 4.3 3.5 3.8 4.3 2.0 3.1 7.8 5.6 2.4 3.3 4.0 3.6 3Q12 1.3 4.8 5.6 7.3 4.1 8.9 5.5 4.6 4.0 9.5 5.0 1.5 5.3 6.1 1.3 -0.6 3.4 2.3 3.9 3.4 3.2 4.9 2.2 2.8 7.5 5.5 2.4 3.8 3.1 3.9 4Q12 1.3 4.6 4.8 7.3 4.1 8.9 6.0 5.0 4.5 10.0 5.0 1.5 4.1 1.6 1.5 -0.5 3.3 2.1 4.2 3.6 3.5 4.5 2.4 3.5 7.8 5.4 2.5 3.8 2.8 3.7
JP MORGAN FORECASTS
41
Regional outlook: Policy rate and exchange rate forecasts

2010 Official interest rates, % p.a., end-period United States Federal funds rate Japan Overnight call rate Australia Cash rate New Zealand Cash rate China 1-year working capital Hong Kong Discount window base Taiwan Official discount rate Korea Base rate India Repo rate Indonesia BI rate Malaysia Overnight policy rate Philippines Reverse repo rate Thailand 1-day repo rate Exchange rates, end-period Japan USD/JPY Australia AUD/USD New Zealand NZD/USD China USD/CNY Hong Kong USD/HKD Taiwan USD/TWD Korea USD/KRW India USD/INR Indonesia USD/IDR Malaysia USD/MYR Philippines USD/PHP Singapore USD/SGD Thailand USD/THB 0.13 0.05 4.75 3.00 5.81 0.50 1.625 2.50 6.25 6.50 2.75 4.00 2.00 81 1.02 0.78 6.59 7.77 29.2 1135 44.7 9010 3.08 43.88 1.28 30.04 2011 0.13 0.05 4.75 2.50 6.56 0.50 1.875 3.25 8.50 6.25 3.00 4.50 3.50 75 1.05 0.84 6.30 7.76 28.0 1070 45.5 8400 2.93 41.00 1.18 29.00 2012 0.13 0.05 4.75 3.50 6.81 0.50 1.875 3.75 8.50 6.00 3.00 4.50 3.50 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 4Q10 0.125 0.05 4.75 3.00 5.81 0.50 1.625 2.50 6.25 6.50 2.75 4.00 2.00 81.1 1.02 0.78 6.59 7.77 29.17 1135 44.71 9010 3.08 43.88 1.28 30.04 1Q11 0.125 0.05 4.75 2.50 6.06 0.50 1.750 3.00 6.75 6.75 2.75 4.25 2.50 82.8 1.04 0.76 6.55 7.78 29.41 1097 44.56 8708 3.03 43.43 1.26 30.25 2Q11 0.125 0.05 4.75 2.50 6.31 0.50 1.875 3.25 7.50 6.75 3.00 4.50 3.00 80.7 1.07 0.83 6.46 7.78 28.80 1068 44.60 8577 3.02 43.49 1.23 30.71 3Q11 0.125 0.05 4.75 2.50 6.56 0.50 1.875 3.25 8.25 6.75 3.00 4.50 3.50 77.0 0.97 0.77 6.38 7.78 30.47 1181 49.06 8790 3.19 43.72 1.30 31.17 Current 0.125 0.05 4.75 2.50 6.56 0.50 1.875 3.25 8.50 6.50 3.00 4.50 3.50 75.8 1.07 0.82 6.36 7.77 30.05 1108 49.01 8865 3.10 42.85 1.25 30.50 4Q11 0.125 0.05 4.75 2.50 6.56 0.50 1.875 3.25 8.50 6.25 3.00 4.50 3.50 75.0 1.05 0.84 6.30 7.76 28.00 1070 45.50 8400 2.93 41.00 1.18 29.00 1Q12 0.125 0.05 4.75 2.75 6.56 0.50 1.875 3.25 8.50 6.00 3.00 4.50 3.50 74.0 1.06 0.85 6.20 7.76 28.00 1050 44.50 8350 2.91 40.75 1.17 28.75 2Q12 0.125 0.05 4.75 3.00 6.56 0.50 1.875 3.25 8.50 6.00 3.00 4.50 3.50 73.0 1.08 0.86 6.10 7.76 27.75 1020 44.00 8300 2.88 40.25 1.16 28.50 3Q12 0.125 0.05 4.75 3.50 6.56 0.50 1.875 3.50 8.50 6.00 3.00 4.50 3.50 72.0 1.10 0.88 6.00 7.76 27.50 1010 44.50 8250 2.86 40.00 1.15 28.25
JP MORGAN FORECASTS
42
JP Morgan EM Asia Research
Dave Fernandez Jahangir Aziz Sajjid Chinoy Won Tai Cho Bert Gochet Ying Gu Matt Hildebrandt Yen Ping Ho Lu Jiang Jiwon Lim Grace Ng Sin Beng Ong Abhishek Panda
JP MORGAN FORECASTS
MD, Head of EM Asia Research ED, EM Asia Economics VP, India and South Asia Economics Analyst, Korea Strategy ED, Head of EM Asia Strategy Assoc, China Strategy VP, ASEAN Economics ED, EM Asia FX Strategy Analyst, Greater China Economics MD, Korea Economics ED, Greater China Economics ED, ASEAN Economics Assoc, India Strategy Analyst, EM Asia Economics ED, Chief China Economics
(65) 6882-2461 (1) 202-585-1254 (91-22) 6157-3386 (82-2) 758-5509 (852) 2800-8325 (86-21) 5200-2833 (65) 6882-2253 (65) 6882-2216 (852) 2800-7053 (82-2) 758-5509 (852) 2800-7002 (65) 6882-1623 (91-22) 6157-3387 (65) 6882-2311 (852) 2800-7039
david.g.fernandez@jpmorgan.com jahangir.x.aziz@jpmorgan.com sajjid.z.chinoy@jpmorgan.com won.t.cho@jpmorgan.com bert.j.gochet@jpmorgan.com ying.k.gu@jpmorgan.com matt.l.hildebrandt@jpmorgan.com yenping.ho@jpmorgan.com lu.l.jiang@jpmorgan.com jiwon.c.lim@jpmorgan.com grace.h.ng@jpmorgan.com sinbeng.ong@jpmorgan.com abhishek.x.panda@jpmorgan.com benjamin.shatil@jpmorgan.com haibin.zhu@jpmorgan.com
Benjamin Shatil Haibin Zhu
43
Disclosures
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J.P. Morgan - Emerging Asia Regional Reference Pack - Nov 2011

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Asia Economic and Markets Research

Emerging Asia Regional Reference Pack

Dave FernandezAC +65 6882-2461 david.g.fernandez@jpmorgan.com

Vietnam Regional forecasts EM Asia team

EM Asia: macro outlook

EM Asia country snapshots

EMERGING ASIA REGIONAL REFERENCE PACK

ASIA ECONOMIC AND MARKETS RESEARCH

ASIA ECONOMIC AND MARKETS RESEARCH

China contributes more to global growth than the US + India + Brazil

Contribution to nominal GDP growth Contribution to nominal global GDP growth

ASIA ECONOMIC AND MARKETS RESEARCH

EM Asia ex-China & India 2010 2011 2012

ASIA ECONOMIC AND MARKETS RESEARCH

EM Asia: macro outlook

EM Asia country snapshots

EMERGING ASIA REGIONAL REFERENCE PACK

ASIA ECONOMIC AND MARKETS RESEARCH

EM Asia: Key Themes

ASIA ECONOMIC AND MARKETS RESEARCH

Fiscal deficits modest

Emerging Asia:fiscal deficit

Current account surpluses still comfortable

Foreign reserves uniformly high

Emerging Asia:current account balance

EM ASIA: MACRO OUTLOOK

ex China and India

ASIA ECONOMIC AND MARKETS RESEARCH

EM Asia, ex-China & India

ASIA ECONOMIC AND MARKETS RESEARCH

Behind drop in headline inflation lie persistent core price pressures

Emerging Asia ex CN&IN: core inflation

EM Asia: inflation breakdown

Agricultural prices: rice vs. overall foodstuffs

EM Asia: food and energy CPI weights

150 130 110 90 70 Jan 09 Jun 09 Dec 09 Jun 10 Dec 10

China India Indonesia Korea Malaysia Philippines Singapore Taiwan Thailand 10

ASIA ECONOMIC AND MARKETS RESEARCH

United States Euro area Japan

Federal funds rate Refi rate Overnight call rate

0.125 1.50 0.05

-188 -275 -45

0.125 1.00 0.05

0.125 1.25 0.05

0.125 1.00 0.05

0.125 1.00 0.05

ASIA ECONOMIC AND MARKETS RESEARCH

EM Asia: macro outlook

EM Asia country snapshots

EMERGING ASIA REGIONAL REFERENCE PACK

ASIA ECONOMIC AND MARKETS RESEARCH

China: Longer-term, 12th five-year plan turns focus to sustainable growth

but improving household income also a priority

China: labor income as share of GDP

China: real GDP growth vs government's growth target

China: urbanization rate

Real GDP growth Government's growth target

ASIA ECONOMIC AND MARKETS RESEARCH

China: No hard landing

Export growth likely to remain soft for coming months

Global IP and China merchandise exports

Resilient FAI growth supported by public investment

Retail sales dragged by auto sector