- March 29, 2021
- Posted by: admin
- Category: Centennial Asia Insights
Highlights from the CAA Weekly Table:
Regional overview
- Don’t underestimate the risk of protectionism: The Biden Administration has signalled a tough position on trade issues. As the American external deficit grows this year and next, the US is likely to employ more aggressive trade-related measures. These are likely to include accusations of currency manipulation against Asian exporting nations, higher tariffs and the possibility of a border adjustment tax.
- A new wave of COVID infections has set back the region. Indonesia, India and the Philippines have seen caseloads rise to multi-month highs. However, vaccination rates are now likely to accelerate as nations finally receive their first tranche of the vaccines. Several countries have also expressed a willingness to open their borders so as to kickstart tourism.
- Taiwan’s economy has got off to a flying start, with industrial production soaring in early 2021. Policy makers in China, Singapore and Thailand are likely to adopt a pragmatic, data-driven approach to monetary policy which is unlikely to change markedly in the near term.
Political flashpoints – watch North Korea
- Recent media reports raised concerns about China making a military move on Taiwan sooner rather than later. We doubt that. A more imminent risk is North Korea where the economy is in crisis and the leadership desperately needs a foreign crisis to distract its people.
- On a more positive note, India and Pakistan appear to be engaged in a peace process which should reduce the risk of a flare-up between the two nuclear-armed neighbours.
Assessing Asia’s post-pandemic fiscal headroom
- India, Malaysia and the Philippines have the least fiscal headroom after accounting for the tax base, the debt ratio, the debt burden and the external debt of the economies.
- Economies with less fiscal headroom tend to encounter a higher cost of borrowing.
Table 1: Z-scores for fiscal headroom in Asia
| Economy |
Tax base (% of GDP) |
Debt ratio (% of GDP) |
Debt burden (% of revenues) |
External debt (% of GDP) |
Z-scores, The higher the better |
10Y Yields (%) |
| TH |
15.43 |
52.13 |
5.59 |
6.47 |
6.03 |
1.77 |
| CN |
15.19 |
73.69 |
4.85 |
7.13 |
2.97 |
3.23 |
| VN |
15.52 |
54.30 |
8.31 |
18.30 |
2.28 |
2.39 |
| ID |
8.31 |
39.36 |
18.43 |
5.63 |
0.87 |
6.75 |
| AVG |
12.68 |
59.46 |
15.42 |
12.15 |
– |
4.02 |
| PH |
13.93 |
57.04 |
13.32 |
17.79 |
-1.21 |
4.50 |
| MY |
10.91 |
62.15 |
15.33 |
16.24 |
-1.90 |
3.37 |
| IN |
9.50 |
77.56 |
42.10 |
13.49 |
-9.04 |
6.13 |
Source: Centennial Asia Advisors. Only 2019 data is available for Vietnam’s external debt.
The CAA Weekly is currently available only for our subscribers. Please email contact@centennialasia.com for subscription enquiries.
