Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

PK Basu has 34 years experience covering Asia's economies and markets (equities, fixed income and currencies), including 20 years covering the global economy. He was Chief Economist (SE Asia & India) at Credit Suisse First Boston for 5 years, and Chief Asia (x-Jpn) Economist at Daiwa Securities for a similar period. Among other roles, he was global head of research at Maybank Kim Eng, Malaysia equity research head and chief ASEAN economist at Macquarie, Chief Economist at ICICI Securities, ASEAN economist at UBS and the first chief economist at Khazanah Nasional (where he was co-head of research, and led all agri-business initiatives). PK Basu started his career in the Asia Service of WEFA (Wharton Econometrics) in Philadelphia in 1990, rising to be Director of their Asia Service in June 1994. 
PK's book, "Asia Reborn: A continent rises from the ravages of Colonialism and War to a New Dynamism" won the Tata Literature First Book Award (non-fiction) for 2018. It is the first single chronicle of the modern economic and political history of the whole of Asia (from Iraq and Turkey to Korea and Japan, and everything in between), told from an Asian perspective.

Chief Economist & Political Strategist

REAL-Economics.com

Macroeconomics

Non-oil/gas exports and imports, the missing element in Indonesia's economic recovery, jumped on the growth bandwagon in August, as cement and car sales stayed robust. The 100bp reduction in BI's lending facility (repo) rate last month amounted to a significant monetary easing, especially given banks' high 93% loan-deposit ratio. With inflation well below target at 2.8% YoY, we expect a 25bp cut in the new official policy rate this week, and another one before year-end, helping to spur 5.8% real GDP growth in 4Q 2016 and more in 2017.With the July cabinet reshuffle further improving the policy-making capacity and political standing of the government, the fiscal challenges are likely to be addressed more effectively. After a big surge in the fiscal deficit in 1Q 2016, revenues rebounded in May-June, helping to lower the fiscal deficit to 1.5% of GDP in 2Q 2016. Although the year-to-date deficit of 3.2% of GDP implies a need for some fiscal restraint in the rest of 2016, the tax amnesty scheme is likely to augment revenues, especially in the Sept-December period -- and even more so in 1Q 2017, with some of them being permanent gains.Indonesia should finally return to 6% real GDP growth in 2017, as the improving revenue picture enables accelerated infrastructure spending, while metal-smelting leads a manufacturing (and export) revival. For this year, however, the continued rebound in cement and car sales indicate a broad-based improvement in private consumption, and six months of non-oil imports outpacing non-oil exports are indicative of a modest improvement in infrastructure investment. FDI realizations (commitments) of US$14.07bn in 1H 2016 were up just 1% YoY, but remain at a much higher level than at anytime before 2012. All the ducks are falling in place for a sustainable pickup in economic growth. Although valuations are less compelling than two months ago, we recommend staying Overweight Indonesia.

Non-oil/gas exports and imports, the missing element in Indonesia's economic recovery, jumped on the growth bandwagon in August, as cement and car sales stayed robust. The 100bp reduction in BI's lending facility (repo) rate last month amounted to a significant monetary easing, especially given banks' high 93% loan-deposit ratio. With inflation well below target at 2.8% YoY, we expect a 25bp cut in the new official policy rate this week, and another one before year-end, helping to spur 5.8% real GDP growth in 4Q 2016 and more in 2017.With the July cabinet reshuffle further improving the policy-making capacity and political standing of the government, the fiscal challenges are likely to be addressed more effectively. After a big surge in the fiscal deficit in 1Q 2016, revenues rebounded in May-June, helping to lower the fiscal deficit to 1.5% of GDP in 2Q 2016. Although the year-to-date deficit of 3.2% of GDP implies a need for some fiscal restraint in the rest of 2016, the tax amnesty scheme is likely to augment revenues, especially in the Sept-December period -- and even more so in 1Q 2017, with some of them being permanent gains.Indonesia should finally return to 6% real GDP growth in 2017, as the improving revenue picture enables accelerated infrastructure spending, while metal-smelting leads a manufacturing (and export) revival. For this year, however, the continued rebound in cement and car sales indicate a broad-based improvement in private consumption, and six months of non-oil imports outpacing non-oil exports are indicative of a modest improvement in infrastructure investment. FDI realizations (commitments) of US$14.07bn in 1H 2016 were up just 1% YoY, but remain at a much higher level than at anytime before 2012. All the ducks are falling in place for a sustainable pickup in economic growth. Although valuations are less compelling than two months ago, we recommend staying Overweight Indonesia.     

VinaCapital Vietnam Opportunity Fund (VOF LN)

Vietnam Enterprise Investments (VIETENI KY)

North Bangkok Power Plant Block 1 Infrastructure Fund (EGATIF TB)

North Bangkok Power Plant Block 1 Infrastructure Fund

Indonesia: The Recovery Is Here, and Will Be Aided by More Monetary Easing