亚洲宏观洞察：风向转向鹰派

Asia Asia Macro Insight Shifting Winds in Favor of Hawks Juliana LeeChief Economist Despite geoeconomic headlines and market gyrations, Asia's growth may provestronger than anticipated earlier amid an easing of tech supply constraints andcontinued US-China détente, further supported by more stable local politics in Asiaoffsetting US policy uncertainties. This, coupled with higher food and oil prices andChina's anti-involution push and yuan appreciation, is driving inflation higher,signaling an earlier-than-expected turn in Asia's monetary policy cycle. These shiftsare expected to provide additional tailwinds to regional FX. MAS is positioned as thefirst mover, while an improved growth outlook for South Korea leaves no room foreasing, especially with its president vowing to take "any measure necessary" to rein Kaushik DasChief Economist Yi Xiong, Ph.D.Chief Economist Junjie HuangEconomist Deyun OuEconomist Overview While geoeconomic headlines and market gyrations may raise doubts about ourconstructive view on Asia, data thus far suggest that we may be underestimatinggrowth for this year. This is especially true in the face of easing supply constraints Juliana Lee Source : Haver Analytics, Deutsche Bank Research Coupled with higher food and oil prices, an easing of disinflationary pressure on therest of Asia from China (amid the latter's anti-involution push and the yuan'sappreciation) suggests an earlier than expected decisive turn in Asia's monetarypolicy cycle, providing additional tailwinds to the region's FX. A stronger than Singapore will be the second mover in APAC, following the RBA's recent rate hike.In particular, upward revisions to growth and inflation forecasts hint at a +0.5% p.a.increase in the S$NEER policy slope in April 2026. Despite the government's pro-growth policy bias, President Lee's commitment to "rein in real estate speculation We continue to see BNM's next move to be a rate hike, after an extended pause in2026, although with a risk of it being brought forward to this year if growthmomentum proves stronger than expected. We also see RBI on an extended pause,albeit liquidity management continues, with rate hikes coming in Q2 2027. The SBV Further easing by BI is highly conditional on rupiah stability, while rising inflationelicit greater caution on the part of BSP. The PBoC is likely to refrain from lowering China Yi Xiong steadier pace, stable daily fixings, and lower correlation with USD.Thislikely reflects a careful balancing act between external positions anddomestic economic stability. We reiterate our CNY forecast of 6.7/USD byend-2026 and 6.5/USD by end-2027. Growth driver shifts to services China successfully delivered its 5.0% growth target for 2025.Although real GDPgrowth slowed moderately to 4.5% YoY in Q4 from 4.8% YoY in Q3, annual growthwas maintained at 5.0% owing to strong growth in the first half of the year. NominalGDP growth experienced a slight uptick, rising to 3.8% YoY from 3.7%, a reflection Economic activities in December showed a slight rebound, accompanied by ashift in growth drivers.Our indicator of economic activities increased to 3.5% YoYin December, up from 3.4% in November. The services sector led this improvement,climbing by 0.8ppt to 5.0% YoY, driven by an active financial market and continuedprogress in the AI industry. Industrial production also improved, supported by January PMI readings also suggested a relatively more resilient services sector. Headline manufacturing PMI dropped 0.8ppt to 49.3, a performance weaker thanseasonal averages, though it represented a smaller contraction than last year's1.0ppt decrease, partly due to three additional working days this year. Services PMIsaw a minor dip of 0.2ppt to 49.5, which showed greater resilience compared to Inflation continued to climb.China headline inflation rose by another 0.1ppt to0.8% YoY in December, reaching a 34-month high. This improvement was primarilyled by sustained recovery in food prices, which increased to a 1-year high of 1.1%YoY. Core inflation stayed robust at 1.2% YoY, supported by a strong rebound inconsumer goods prices. Producer-price deflation narrowed by another 0.3ppt to will likely reach 1.5% in 2026, and PPI will likely turn positive by mid-year. Source : Deutsche Bank Research, NBS Source : Deutsche Bank Research, Haver Analytics Growth target for 2026 We now think China’s growth target will likely be set as a 4.5% - 5% range in 2026,based on the above analysis of provincial targets.More than half of all provinces(18 out of 31) have lowered their GDP growth targets for 2026, reducing them by anaverage of 0.5ppt from last year. The median growth target has dropped by 0.25 pptto 5% in 2026, down from 5.25% in 2025 (and 5.5% in 2024). On a GDP-weightedaverage basis, provincial growth targets suggest a 0.2ppt reduction in nationwide This is higher than our previous view of a 4.5% growth target, likely a result ofstriking balance between ensurin