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

Car and cement sales are rebounding, the export contraction is easing, the challenging fiscal situation will improve with the tax amnesty, valuations are fairly cheap, and interest rates will fall sharply. Stay Overweight. With inflation likely to stay in the 3-3.5% range this quarter, we expect a 25bp rate cut next week, and a further 75bp by October, in order to lower the unusually high real interest rate (over +3% currently). The 175bp of rate cuts will enable real GDP to grow 5.3% this year, and accelerate further into 2017. The 4qma of the fiscal deficit reached 2.95% of GDP at the end of 1Q 2016, and the deficits have been larger in April-May 2016. The ambitious tax amnesty program should spur many wealthy overseas Indonesians to reconsider investing in their erstwhile home, taking advantage of the low penalty ahead of tighter enforcement by 2018. If the response is stronger (aided by the inclusive approach of Jokowi's strengthened PDI-P coalition), growth in the second half of Jokowi's term would be transformed, and more investment-led.In particular, we expect part of the pipeline of 50+ smelting projects (alumina plants, copper- and nickel-smelters) to begin coming on-stream in 2H 2016 and 2017, bolstering the manufacturing sector (the medium term key to the success of Jokowi's presidency). Just as the ban on exports of unprocessed timber logs in the early-1980s helped spur the pulp/paper/furniture/rayon industries over the next decade, similarly the 4-year ban on exports of unprocessed mineral ores is finally close to bearing fruit.

Car and cement sales are rebounding, the export contraction is easing, the challenging fiscal situation will improve with the tax amnesty, valuations are fairly cheap, and interest rates will fall sharply. Stay Overweight. With inflation likely to stay in the 3-3.5% range this quarter, we expect a 25bp rate cut next week, and a further 75bp by October, in order to lower the unusually high real interest rate (over +3% currently). The 175bp of rate cuts will enable real GDP to grow 5.3% this year, and accelerate further into 2017. The 4qma of the fiscal deficit reached 2.95% of GDP at the end of 1Q 2016, and the deficits have been larger in April-May 2016. The ambitious tax amnesty program should spur many wealthy overseas Indonesians to reconsider investing in their erstwhile home, taking advantage of the low penalty ahead of tighter enforcement by 2018. If the response is stronger (aided by the inclusive approach of Jokowi's strengthened PDI-P coalition), growth in the second half of Jokowi's term would be transformed, and more investment-led.In particular, we expect part of the pipeline of 50+ smelting projects (alumina plants, copper- and nickel-smelters) to begin coming on-stream in 2H 2016 and 2017, bolstering the manufacturing sector (the medium term key to the success of Jokowi's presidency). Just as the ban on exports of unprocessed timber logs in the early-1980s helped spur the pulp/paper/furniture/rayon industries over the next decade, similarly the 4-year ban on exports of unprocessed mineral ores is finally close to bearing fruit.   

Rebound Will Be Spurred by 100bp of Rate Cuts