Introducing

Tian Yong Woon

Tian Yong joined Haver Analytics as an Economist in 2023. Previously, Tian Yong worked as an Economist with Deutsche Bank, covering Emerging Asian economies while also writing on thematic issues within the broader Asia region. Prior to his work with Deutsche Bank, he worked as an Economic Analyst with the International Monetary Fund, where he contributed to Article IV consultations with Singapore and Malaysia, and to the regular surveillance of financial stability issues in the Asia Pacific region.

Tian Yong holds a Master of Science in Quantitative Finance from the Singapore Management University, and a Bachelor of Science in Banking and Finance from the University of London.

Publications by Tian Yong Woon

Asia| Sep 09 2024
Economic Letter From Asia: Chipping In
In this week's newsletter, we explore Asia’s manufacturing activity, with a particular emphasis on the semiconductor sector. While that sector continues to expand overall, some economies are experiencing a slowdown in growth (Chart 1). We also assess the growing role of electronics in Asian exports, highlighting Taiwan's significant increase in electronics export share and South Korea's ongoing recovery in this area (Chart 2). Focusing further on the electronics sector, we note an interim stall in global semiconductor sales growth, although it remains robust with double-digit increases (Chart 3). We then delve into specific Asian economies, starting with Taiwan. Here, we identify dual drivers of industrial production: consumer electronics and electronic parts, including semiconductors (Chart 4). Next, we examine Malaysia, which has developed a strong semiconductor ecosystem with expertise in back-end processes and is more recently making headway in front-end areas like chip design (Chart 5). Finally, we consider India’s emerging semiconductor sector, which, despite being in its early stages, is poised for growth thanks to recent initiatives aimed at bolstering domestic prowess (Chart 6).

Asia’s manufacturing complex The manufacturing sector across much of Asia continues to expand, although recent months have seen a deceleration in the rate of growth for some economies. As illustrated in Chart 1, Taiwan's manufacturing PMI peaked at 53.2 in June 2024 but subsequently moderated to 51.5 in August, reflecting a significant slowdown in growth for output and new orders. A similar trend is evident in Southeast Asia (ASEAN), where the PMI has recently edged closer to the neutral level of 50. Within ASEAN, Indonesia has been a notable drag, with its PMI slipping into contractionary territory in July, while Vietnam's PMI has remained above the regional average. In contrast, South Korea's manufacturing sector has shown robust momentum, with output growth reaching a 40-month high in August, thereby supporting the overall manufacturing PMI for the country.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Sep 02 2024
Economic Letter From Asia: State of Play
In this week's newsletter, we examine monetary policy in the Asia-Pacific region. Fed Chair Powell’s recent Jackson Hole remarks have further solidified expectations of an imminent easing cycle. And this has removed a big barrier to many central banks in Asia in their pursuit of a domestic easing cycle as well. Nonetheless, some central banks in the region have already begun implementing interest rate cuts ahead of any Fed moves. We also take a closer look at Japan, which stands out among major economies due to its distinct approach to monetary policy calibration. While Japan is also pursuing monetary normalization, its path remains unique. Additionally, we address key themes in the Asian region, focusing on semiconductor stocks and the electric vehicle (EV) sector. In the semiconductor space, there may be overly optimistic investor expectations, given that extraordinary growth rates are unlikely to be sustainable indefinitely. As for the EV sector, trade measures against Chinese imports are both intensifying and expanding across more economies, reflecting deeper geopolitical entanglements.

Overall, monetary policy in most of the region is shifting towards easing, with domestic inflation under control and major central banks already implementing rate cuts. Japan, however, continues to follow its own course with policy tightening. Meanwhile, uncertainty persists in the semiconductor and EV markets due to evolving investor expectations and escalating geopolitical tensions.

Monetary policy Central banks in the Asia-Pacific region are increasingly transitioning towards easing monetary policy, though policy rates have largely remained stable in recent months (Chart 1). Nonetheless, some economies have already begun reducing interest rates. For example, China cut its rates further in July to boost demand and support struggling sectors like the property market and household sector. In August, New Zealand's central bank implemented its first rate cut in four years and signalled the possibility of further easing. Additionally, the central bank of the Philippines also lowered its policy rate in August, becoming the first Asian central bank to do so in this cycle, aside from China. Recent comments from Federal Reserve Chair Jerome Powell, who stated in his Jackson Hole speech that “the time has come” for the Fed to begin lowering rates, have bolstered expectations for increased monetary easing in the Asia-Pacific region. Powell’s remarks align with the broader trend of most major central banks shifting from tightening policies to easing measures.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Aug 26 2024
Economic Letter From Asia: China, Rate Decisions, and the Carry Trade
In this week's newsletter, we explore several key and current issues in Asia. China’s recent data has continued to disappoint, following its weak performance in Q2, with monthly readings still reflecting an uneven recovery. Additionally, the property sector remains troubled, with no end in sight for its struggles and house prices continuing to fall. Given these developments and with only a few months left in the year, China's prospects of achieving its 5% growth target appear increasingly uncertain. We also examine the state of Japan’s carry trade. Recent weeks have shown signs of stabilization after the volatility that followed the Bank of Japan's (BoJ) meeting. Finally, we review last week’s interest rate decisions in South Korea, Indonesia, and Thailand, where policy rates were kept unchanged across the board. The decision to maintain the status quo reflects various domestic considerations. However, central banks are also influenced by external factors, such as the anticipated path of US interest rates. In this context, Fed Chair Powell indicated in his recent Jackson Hole speech that the Fed plans to begin its rate cut cycle in September. This development may prompt central banks in Asia to consider similar actions soon.

China China’s recent economic data have been increasingly disappointing, as depicted in Chart 1. For instance, Q2 GDP growth of 4.7% y/y fell short of expectations. Latest monthly data have been more mixed: industrial production and fixed asset investment slowed further in July, while the unemployment rate increased and retail sales growth strengthened. This highlights the uneven nature of China’s economic recovery, with weak consumer sentiment and persistent challenges in the property sector. In response, Chinese authorities have implemented a range of measures to boost demand. These include interest rate cuts in July, and targeted initiatives to stimulate demand and address excess supply in the property market. While these actions may provide some immediate relief, more comprehensive reform initiatives could offer a better path to long-term economic stability. Given the ongoing challenges, China's prospects of achieving its 5% growth target appear increasingly uncertain.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Aug 19 2024
Economic Letter From Asia: Taking Stock
In this week's edition, we assess the recent economic developments across the Asian region. We find that there has been a noticeable shift in both investor and economist sentiment: optimism is rising about the economic outlook for economies such as India, but toward others, such as Japan, the market has become more cautious. We also explore the growth drivers of various Asian economies, highlighting potential vulnerabilities. Economies heavily reliant on export-driven growth face different risks compared to those with comparatively diversified growth drivers, including from private consumption. This discussion leads to the topic of twin deficits—current account and fiscal—that certain economies continue to grapple with. Although such deficits are not always an immediate concern, they can often become focal points for investors. On the fiscal front, many Asian economies are expected to run deficits this year. However, recent news of significant government spending plans in Indonesia and Thailand, alongside Malaysia’s efforts to cut subsidies, will likely influence the fiscal outlook for these nations. Lastly, we flag recent trends in investor flows, and the revival of foreign investment in India and outflows from China.

These movements underscore the dynamic nature of the region, with India remaining a favourite among economists and investors, while concerns persist about prospects in China and Japan. Taiwan and South Korea are also experiencing a revaluation of their investment potential, particularly regarding the technology sector. Overall, the landscape in Asia remains fluid, with ongoing shifts in economic sentiment and investor behaviour, especially regarding government spending in Southeast Asia.

Growth Growth expectations for Asia have shifted significantly from earlier in the year, as illustrated by the changes GDP forecasts shown in Chart 1. For example, perceptions about India’s economic prospects have improved markedly, especially after its elections concluded smoothly and reform optimism increased. As a result, India is now projected to be the world’s fastest-growing major economy for the year, according to our latest Blue Chip Economic Indicators (BCEI) survey and IMF forecasts. In the meantime, advanced Asian economies such as South Korea and Taiwan have seen significant upgrades to their growth outlooks due to the technology upcycle and strong demand for AI-related semiconductor chips, key exports for these countries. However, Japan’s economic growth expectations have deteriorated, with the latest BCEI survey suggesting no growth for the year. Nevertheless, investor perceptions might shift more positively in light of Japan’s unexpectedly strong Q2 GDP report released last week.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Aug 12 2024
Economic Letter From Asia: Regional Repricing
In this week's newsletter, we delve into recent developments in Asian financial markets. These developments follow the recent spike in volatility triggered by the Bank of Japan’s (BoJ) July decision and the disappointing July US jobs report. Although some calm has returned to Asian markets, a repricing of assets seems to be underway, as investors reassess investment themes and the economic prospects for Asian economies. Most importantly, the carry trade themes are now shifting. Traditionally cheap funding currencies, such as the yen, are becoming more expensive as interest rates rise. Meanwhile, higher-yielding currencies, like the US dollar, are facing the prospect of reduced yields. Additionally, the technology theme is being reassessed, as evidenced by the significant selling in semiconductor-heavy equity indices for Taiwan and South Korea.

Beyond equity markets, we explore shifts in the relative currency performance of Asian economies. Notably, the Malaysian ringgit has shown a standout performance, with the rupiah having strengthened as well. We then examine the economy-specific factors driving these currency changes, including economic prospects and government measures. Overall, the interplay between global tech demand, monetary policy, and earnings is likely to continue shaping investor preferences in the near term. Investors will need to stay attentive to the key drivers of these themes, including inflation, geopolitical pressures, supply chain issues, and trade frictions.

Asian equities Echoing broader global developments, Asian equity markets have faced turbulence in recent weeks, initially triggered by volatility in Japan following the Bank of Japan’s (BoJ) hawkish July policy decision, and further exacerbated by a disappointing US labour market report for July. Although some stability has returned, volatility remains elevated. Overall, Asian equities initially dropped more than 10% since late July, recovering about half of those losses last week. Delving deeper, the sell-offs were more severe in specific economies and sectors, particularly within semiconductor-heavy indices in South Korea and Taiwan (see Chart 1). This trend reflects a broader reassessment by investors who now question whether semiconductor valuations have become overstretched after a prolonged rally.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Aug 06 2024
Economic Letter From Asia: On the RBA
In this week's newsletter, we focus on Australia in light of the Reserve Bank of Australia's (RBA) decision earlier today. While the RBA has chosen to maintain its current policy rate, as many economists had anticipated, this decision reflects a complex assessment of the Australian economy. On the one hand, inflation remains significantly above the RBA’s target, and any premature easing could risk reigniting price pressures. On the other hand, the household sector continues to show signs of weakness, with flagging consumption growth and lingering issues with housing affordability. As such, an additional rate hike could further strain this sector. Nonetheless, many Australian economists suggest that the balance of risk may lead the RBA to eventually lower its policy rate rather than pursue further tightening. However, the current consensus is for any initial rate cut to likely only occur early next year. In addition to inflation and household sector issues, we also analyse the current state of Australia's labour market, trade dynamics, and overall growth outlook.

The RBA’s August decision The Reserve Bank of Australia (RBA) maintained its policy rate at 4.35%, as widely anticipated. The central bank's decision to keep its stance restrictive, rather than easing, was primarily driven by persistent inflation. The RBA now expects inflation to take longer to return to its target than previously anticipated. Additionally, while growth forecasts for H2 2024 through H1 2026 have been upgraded, a more subdued growth rate is anticipated for H1 of this year. The RBA also highlighted the ongoing uncertainty in Australia’s economic outlook, and acknowledged headwinds via rising unemployment and weak household consumption. Externally, China, Australia’s major trading partner, continues to face economic challenges, with weakened demand impacting commodity prices. On the currency front, the Australian Dollar has shown muted initial reactions to the RBA’s decision, although it has already weakened significantly in recent days due to disappointing inflation data. We will explore these issues in greater detail in the following sections.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jul 29 2024
Economic Letter From Asia: Ahead of the BoJ Decision
In this week's newsletter, we examine the Bank of Japan's (BoJ) upcoming decision scheduled for Wednesday. Recent shifts in market expectations suggest a marked increase in the likelihood of a BoJ rate hike, as priced in by various financial markets. We have observed that while consumer inflation has remained relatively stable for much of the year, there were some upticks in core inflation in May and June. Additionally, price pressures on the producer side have continued to intensify. This suggests that the BoJ’s “virtuous cycle” between wages and prices may be strengthening. This is particularly evident in the increased inflation among service producers with high labor cost ratios. However, it is important to note that these producer price increases have also been influenced by rising costs in other areas, such as transportation. Lastly, we examine the potential outcomes if the BoJ's monetary policy normalization campaign begins to quicken and leads to a stronger yen. We explore various dimensions of this scenario, focusing particularly on how a stronger yen might affect export growth and tourism.

In reality, it's still uncertain whether the BoJ will announce a rate hike this Wednesday, though market expectations are increasingly leaning towards a reduction in Japanese Government Bond (JGB) purchases. One key area of interest is how the BoJ plans to reduce its substantial JGB holdings and the subsequent impact on financial market liquidity and yields. While a “virtuous cycle” between wages and prices seems to be strengthening, evidence of such a cycle between wages and consumer spending is lacking. This is possibly because real wages have continued to decline.

Market expectations Recently, there have been marked shifts in market expectations regarding further monetary policy tightening by the Bank of Japan (BoJ). While an additional rate hike by the BoJ, following its March policy tightening, has long been anticipated, market expectations for this move have only recently intensified. This shift in expectations is evident in Japan’s financial markets, as illustrated in Chart 1. Specifically, the yen has experienced a significant rally in anticipation of an imminent BoJ rate hike. Moreover, Japan’s near-term overnight indexed swap (OIS) rates, including the 1-week OIS vs. TONAR rate, have surged, reflecting increased expectations for a rate hike within the coming week. These developments suggest heightened anticipation of the BoJ's upcoming decision, which is expected to be announced on Wednesday.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jul 22 2024
Economic Letter From Asia: More On China
In this week's newsletter, we return our focus to China, which has recently released its latest economic data and concluded its Third Plenum meeting. While acknowledging disappointing economic indicators, we also recognize China's shift away from pursuing growth for its own sake, moving instead toward prioritizing the quality of its growth. However, we highlight persistent weaknesses in China's property sector, amid continued declines in property prices despite support measures announced earlier this year. Turning to the Third Plenum meeting, which provided limited details and signaled no major policy changes, we emphasize China's renewed emphasis on “Chinese modernization” and "high-quality development". We discuss the country's ongoing challenges, particularly its growing trade surplus with the rest of the world, the resulting trade frictions, and accusations of overcapacity and dumping.

Broadly reviewing our findings, it is evident that China's strategic focus on shifting towards high-quality growth remains steadfast. However, the economy must contend with several challenges. These include uneven growth momentum, escalating debt levels, lingering weaknesses in consumer and business sentiment, potential trade-related actions by other economies, and a fragile property sector. Therefore, we might observe ongoing challenges for the Chinese economy in the near term before growth gains an even footing. It is perhaps in response to these challenges that the central bank decided earlier today to lower several policy rates by 10 basis points each. Namely, the 7-day reverse repo rate now stands at 1.7%, while the one-year loan prime rate (LPR) has been reduced to 3.35% and the five-year LPR to 3.85%.

China’s recent dataflow The latest dataflow from China has been largely disappointing. GDP growth slowed to 4.7% y/y in Q2, marking the slowest pace of growth in five quarters (Chart 1). Monthly data releases revealed more specific setbacks: retail sales growth unexpectedly dropped to 2% y/y in June, and industrial production growth cooled to 5.3%. Looking more broadly, however, it can also be argued that China's slowing economic growth was inevitable, given its stage of development and the challenges it faces, such as an ageing population. This is notwithstanding significant leaps in productivity brought about by technological advances. Furthermore, China has been restructuring its economy, shifting its focus from pursuing high growth rates for their own sake to prioritizing the quality of growth. This includes assessing the sources and drivers of growth, a topic we will explore further below in an upcoming segment.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jul 16 2024
Economic Letter From Asia: Trade Shifts in ASEAN
In this week's newsletter, we explore shifts in trade patterns across Southeast Asia. Our analysis reveals considerable changes in the region's export landscape, both in terms of destination markets and product composition. Economies like Vietnam and Thailand are now proportionally increasing their exports to the US, whereas Indonesia has seen a marked rise in shipments to China. Further investigation into ASEAN-6 exports highlights a growing dominance of electronic and electrical products, barring Indonesia. This trend reflects both the current upswing in the electronics cycle and deliberate strategies by regional economies to capitalize on heightened global demand, including for semiconductors.

We also delve deeper into Vietnam, where gains stem from global supply chain shifts and deepening economic integration with China, its geographical neighbour. Our focus then shifts to Indonesia, emphasizing its unique reliance on commodity exports within the ASEAN-6, particularly in its trade relations with China. Lastly, we examine labour and productivity dynamics within the ASEAN-6. We discuss potential challenges arising from rising labour costs, which could impact regional competitiveness. Conversely, we also highlight substantial productivity advances in Vietnam, which contrast with slower progress seen in peers such as Thailand.

Trade shifts by export destination and product The global trade landscape continues to evolve, even in Southeast Asia. Chart 1 illustrates how the trade destination mix among Southeast Asian economies has undergone significant changes compared to the pre-pandemic era. For one, economies such as Thailand and Vietnam have experienced a substantial increase in their share of exports to the US since late 2019. Equally noteworthy, Indonesia has seen a surge in its exports to China during this period. Interestingly, Vietnam and Singapore have also shown an uptick in their share of exports to China, albeit to a lesser degree. These trends challenge, at least for ASEAN-6 economies, narratives of trade diversification away from China. Moreover, the importance of exports to the EU and Japan has declined for the region in recent years.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jul 08 2024
Economic Letter From Asia: Chinese Contexts
In this week's newsletter, we delve into recent developments in China ahead of anticipated economic support measures from the Third Plenum meetings. The economic backdrop in China remains mixed, with cautious signals from forward-looking indicators. On monetary policy, we explore possible reasons behind unchanged policy rates this year, including the central bank’s views toward a depreciating yuan and banks' interest margins. We also look at potential reforms by the central bank, which would more closely align with practices seen in developed markets and enhance its liquidity management tools. Turning to the property sector, persistent challenges are evident despite recent government efforts to provide support. Sentiment remains subdued, reflecting sluggish sales and uncertain market conditions. We also assess the fiscal implications at the local government level, where declining revenues from land sales and high indebtedness pose significant pressures.

Growth Latest data present a mixed picture about China’s economy. In May, retail sales outperformed expectations, growing by 3.7% y/y, yet industrial production disappointed with a slowdown to 5.6% growth, as depicted in Chart 1. The deceleration in industrial output was driven by a slowdown in the manufacturing sector, with mining providing only partial offsets. Furthermore, growth in fixed asset investment unexpectedly slowed to 4% y/y ytd, largely due to a further sharp decline in real estate investment. Recent data highlight the uneven growth across China's sectors, with persistent pockets of weakness despite the government's recent efforts to implement support measures.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jul 01 2024
Economic Letter From Asia: The Macro on Microchips
In this week's newsletter, we analyze recent developments in advanced Asian economies, highlighting their gains from the upswing in the global tech cycle. Robust demand for AI-related semiconductor products and equipment continues to drive this upswing, bolstering overall economic growth. Additionally, we explore the geopolitical dynamics influencing the semiconductor industry. This includes US efforts to strengthen its onshore chip manufacturing capabilities and China's proactive measures to secure chipmaking equipment, possibly in anticipation of future export restrictions.

Shifting focus from semiconductors, we delve into domestic issues within these advanced Asian economies. Specifically, we address concerns such as the growth of household debt in South Korea and Taiwan. Central banks in these regions are actively addressing these concerns through measures aimed at controlling excessive debt accumulation. Meanwhile, Japan's household sector has shown promising signs of improvement recently.

Developments in Advanced Asia Taiwan’s electronics sector has lately demonstrated strong growth, largely thanks to the current upswing in the global tech cycle. Chart 1 highlights a significant acceleration in the industrial production of semiconductor-related products, such as electronic parts and components, which surged by nearly 30% y/y in May. Moreover, production of other electronic goods, including computers, saw a substantial increase of 31.8% over the same period. Forward-looking indicators such as electronics export orders also point towards robust demand in the near future, having grown 9.2% m/m. Setting aside cyclical considerations, the trajectory of Taiwan’s semiconductor sector is deeply intertwined with global geopolitics. For instance, the US government is actively advancing onshore advanced chip manufacturing capabilities through initiatives like the CHIPS Act. This includes substantial funding to incentivize Taiwan’s TSMC, a global leader in chip production, to establish manufacturing facilities for highly advanced two-nanometer chips within the US. This strategic endeavour seeks to counter the trend of offshoring crucial chip production capacity away from the US in recent decades.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jun 24 2024
Economic Letter From Asia: Inside India
In this week's newsletter, we delve into post-election dynamics in India. Initial market reactions to the election outcome were negative but swiftly reversed, underscoring India's promise as both a high-growth economy and attractive investment destination. In the short term, sentiment indicators signal ongoing growth in India’s pivotal sectors of services and manufacturing. Furthermore, India continues to be projected as the fastest-growing major economy this year by both the World Bank and the International Monetary Fund. Looking ahead, India is poised to leverage its demographic promise via its youthful workforce, a stark contrast to other major economies grappling with rapidly aging populations.

Turning to monetary policy, we note that while the central bank has kept policy rates unchanged in recent months, there is mounting pressure within its decision-making committee to consider rate cuts. On inflation, recent trends show a gradual disinflation driven by easing price pressures in non-core items, despite persistently high food price inflation. Shifting to currency markets, we note once more the Indian rupee’s resilience, which has been supported by central bank intervention and robust foreign reserves.

Market reactions to elections Indian equities plunged and bond yields surged on June 4th, following indications that Prime Minister Modi’s political party (BJP) would secure a smaller parliamentary majority than initially predicted. Among the initial market concerns was some apprehension that the BJP would need to depend on potentially fragile alliances with other parties to advance its reform agenda, a departure from its previous independent governance. However, initial apprehensions eased quickly as Indian equities rebounded and yields retraced, as evidenced in Chart 1. One of the key recent drivers behind rallies in Indian equity markets was the significantly higher involvement of retail investors, particularly in the options markets. This surge in participation has been partly spurred by regulatory measures aimed at enhancing market accessibility for individuals. Additionally, optimism about the longer-term outlook for the Indian economy has also contributed to the equity market rallies.
by:Tian Yong Woon
|in:Economy in Brief