>Asia Economics (ANZ)

Highlights

• Our macro view remains unchanged from last month:

* The acute weakness of Q4 2008 has largely carried over into 2009; we expect only a modest improvement in Q1.
* An exception is China, where the massive stimulus effort continues to gain traction. However, we are still focused on an inflection point—it is too early to declare a recovery.
* Any growth will be domestic-led this year, with fiscal stimulus plans beginning to help. The ASEAN group will continue to outperform the more export-dependent NIEs.
* USD-AXJ is expected to re-test cyclical highs, with USD-SGD breaking the 1.56 barrier after the MAS adjusts its policy band in April. KRW should out-perform in 2009, but the road ahead is filled with pot-holes.
* Asian rates will remain vulnerable to swings in risk appetite. Ample scope for more rate cuts and worries about supply maintain the bias for steeper curves generally.

To see full report: ASIA ECONOMICS