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OVERVIEW: Monetary policy could be less restrictive in the coming months
as inflation fears wane and credit growth slows. Policy really isn’t yet tight
enough in India to impact inflation significantly. We have brought forward the
rate hikes we forecast in Malaysia; we don’t expect a change in policy in
Singapore next week. Asian export growth so far this year has been
remarkably strong.
• CHINA: Both manufacturing and non-manufacturing PMIs point to a recovery
of growth momentum and an easing of inflationary pressure. Pressure for
monetary tightening should taper off in the coming few months. Industrial
profits rose an impressive 34%yoy in Jan-Feb.
• HONG KONG: A very strong start to the year supports our well above-consensus
growth forecast for 2011. But inflation is also rising, driving real
interest rates down.