DNB sees sluggish recovery in China; India may maintain steady growth

The Chinese central bank in September announced funding to boost the stock market, support share buybacks and assist the struggling property sector. However, additional demand-side measures, particularly fiscal easing, may be necessary to improve the growth outlook, the DNB report noted.

Australia and Japan are seeing slower but steadier growth, with policymakers focused on managing inflation without stifling recovery.

India, buoyed by a robust rural recovery and upcoming festive season, looks set to maintain steady growth, though the central bank remains conservative in its rate outlook, said the report.

Meanwhile, the outlook for Singapore and Hong Kong hinges on financial market stability, with growth likely to remain subdued as inflationary concerns persist.

The US Federal Reserve's (Fed) 50 basis points rate cut in September will influence monetary policy decisions across the APAC region, likely leading to lower regional interest rates. However, the effects will likely vary based on specific market conditions.

Countries like China and Indonesia may benefit from lower global yields, allowing central banks to adopt a more dovish stance to stabilise growth, the report noted.

However, the Fed’s actions complicate the trajectory for central banks like the Bank of Japan, which has been tightening after years of negative rates. A strengthening yen could delay further rate hikes in Japan as global rate differentials shrink.

The reaction of APAC central banks will depend on inflation trends and country-specific nuances.

Inflation is receding across the region. Australia, despite slowing inflation, is likely to keep rates on hold as its central bank monitors core inflation.

With inflation cooling faster in Indonesia and New Zealand, both countries have already begun cutting rates.

Fibre2Fashion News Desk (DS)