Fiscal and monetary response to COVID-19, Monday market panic in Southeast Asia
- Indonesia announced IDR 10.3tn fiscal stimulus, mulls another one, while Bank Indonesia cut the key rate by 25bps and mulls another cut- Thailand announced THB 400bn fiscal package, mulls another package. BOT cut the key rate by 25bps and we expect it to cut the rate again on Mar 25
- South Korea announced KRW 20tn support package and KRW 11.3tn supplementary budget. BOK kept the key rate at 1.25%, but it will likely cut by 25bps next time due to the Fed's rate cut
- Malaysia announced MYR 20bn fiscal stimulus (under former PM Mahathir), but the new PM Muhyiddin has not confirmed it. BNM cut the key rate by 25bps and we expect more rate cuts to follow
- The Philippines says it will keep the original expenditure programme despite the falling revenues. BSP cut the key rate by 25bps on Feb 6 pre-emptively, but governor Diokno says the central bank is re-evaluating the impact of COVID-19 on the economy. We think that a 25bp rate cut or holding the key rate on Mar 19 are equally likely
- India's FinMin says govt will announce fiscal stimulus package to boost exports and industry, possibly by end-March, but we think govt has little fiscal space. RBI governor Das says there is room to cut rates, possibly at the next meeting on Apr 3 despite that inflation is above the 2-6% target range
- Pakistan has not announced a fiscal stimulus and has limited options under the IMF programme. SBP is likely to cut the key rate by 25-50bps on Mar 17 due to slowing inflation and GDP growth
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