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, a Master of Science in Analytics from the Georgia Institute of Technology, a Bachelor of Science in Mathematics from the Singapore University of Social Sciences, and a Bachelor of Science in Banking and Finance from the University of London.

Publications by Tian Yong Woon

Asia| Jul 27 2026
Economic Letter from Asia: Triple Threat
In this week's Letter, we trace three threats converging on Asia's inflation outlook. The first is renewed US tariffs, with the latest salvo of duties imposed over alleged forced labour issues. That move is widely seen as a replacement for the now-expired Section 122 tariffs, with only mild incremental effects from the new Section 301 duties. Set against that, the US effective tariff rate has pulled back from its 2025 highs in recent months (chart 1). The second is the Strait of Hormuz, where the re-escalation of US-Iran tensions has once again reduced shipping volumes to a trickle. Crude oil prices have been driven up as a result (chart 2). It could have been worse, were it not for China's sharply reduced crude imports over the period (chart 3). Arguably, though, at least part of that reduced intake simply reflected the absence of supply from the Strait. The third is the ongoing El Niño event, which several authorities have warned will likely be the largest on record (chart 4). It risks disrupting food crop yields, among other effects, channelling a price shock through food supply. Together these pressures threaten to upend the pullback in commodity inflation seen in recent months (chart 5), once again complicating policymaking. As an aside, we also explore economy-specific political developments that are brewing or could become an issue further down the road. One is the recent resignation of Indonesia's central bank governor, which came amid protracted rupiah weakness (chart 6) and concerns about fiscal health.

Tariff trouble Recent US forced labour tariffs have revived concerns, pushing the tariff theme back to the fore. The US imposed additional Section 301 duties of 10% or 12.5% on imports from 60 investigated economies, effective 24 July 2026. These followed USTR investigations into those economies' failure to impose and enforce prohibitions on goods produced with forced labour. They took effect the same day the temporary 10% Section 122 global surcharge expired by statute, and are seen as its replacement. Yet overall US effective tariff rates, calculated as duty as a percentage of the respective dutiable value, have pulled back significantly from their 2025 highs (chart 1). That retreat began with the numerous bilateral trade deals the US eventually struck with many of its trading partners. It went further in February, when the Supreme Court struck down President Trump's tariffs imposed under the International Emergency Economic Powers Act (IEEPA). That ruling dented the overall impact of US tariffs on its trading partners, with possible tariff refunds still in the works. Cutting the other way, the Section 122 surcharge had partially raised overall rates while it ran. Even so, some estimates suggest the new duties will only marginally increase US effective tariff rates on its trading partners.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jul 20 2026
Economic Letter from Asia: Two Speed Ahead
In this week's Letter, we examine China's increasingly two-speed economy, where robust AI-driven exports mask faltering domestic demand and a stalled rebalancing. Q2 GDP growth slowed to 4.3% y/y from 4.8%, dragging the year-to-date (ytd) rate towards the lower bound of its 4.5% to 5% target (chart 1). Beneath the headline, a two-speed split has widened, with external-oriented sectors holding up while more inward-focused prints such as retail sales and fixed asset investment weaken (chart 2).

Exports have kept climbing even as rebalancing stalls, with the export share of GDP rising to about 21% and consumption stuck near 40% (chart 3). With consumption hard to lift, tilting away from exports would sacrifice China's main growth driver, making rebalancing a difficult path. That export strength owes much to the AI boom, as integrated circuits added nearly 6.5 ppts to June's 27% y/y growth (chart 4). Part of the surge, though, likely reflects importer front-loading ahead of expected tariff hikes and the coming holiday seasons. Domestically, however, growth in retail sales had floundered, dragged down by autos, furniture and appliances, while trade-in subsidies likely delivered only one-off, front-loaded gains (chart 5). All while a fragile consumer climate, unsettled by the ongoing property crisis, continues to hold spending back. That crisis runs deep, with property price declines now into a fifth year and no clear bottom in sight (chart 6).

China’s Q2 GDP China's Q2 GDP results disappointed when posted last week, with growth slowing to 4.3% y/y from Q1's 4.8%. That drop dragged the y/y ytd growth rate towards the lower bound of the 4.5% to 5% target for the year (chart 1). The reading followed a run of soft monthly data, leaving investors increasingly concerned about domestic growth. Even so, China continues to benefit from more robust growth in its externally oriented sectors. This increasingly two-speed dynamic, alongside a persistent lack of economic rebalancing, remains a concern for investors. It has left them looking to Chinese authorities for signs of fresh stimulus to keep the economy on track for its full-year target. We return to these themes in later sections.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jul 13 2026
Economic Letter from Asia: The AI Underbelly
In this week's Letter, we examine the underbelly of the AI boom, the risks that sit beneath its optimism. Start with the public mood: American concern about AI has grown alongside adoption over the past three to four years (chart 1). Those worries span mass job displacement, misuse of top-end models by bad actors, and fears of being left behind. The first of these is already surfacing: in June, AI was again the most cited reason for announced US layoffs, with year-to-date AI-linked cuts above 100,000 (chart 2). Technology led all sectors in overall cuts, though the data do not isolate how many were AI-driven. Among those hit, the young are arguably the most exposed to these labour effects. They enter a labour pool swollen by displaced professionals, just as AI masters the entry-level tasks where they would start. India and Indonesia illustrate the stakes on youth NEET, the share not in education, employment, or training, both above 20% and among Asia's highest (chart 3). Beyond the labour market, the same optimism reshapes asset prices. The rally has lifted AI-related valuations to historic highs and concentrated a few names in cap-weighted indexes (chart 4). That raises correlation and the risk of a sharper index fall should the rally unravel. The same concentration runs through economies via exports, from Taiwan's advanced chips to South Korea's memory (chart 5). Its footprint is physical too, and cuts both ways: data-centre investment has lifted growth in Johor, Malaysia (chart 6) while straining local power and water. None of this argues against riding the AI wave, which still promises real productivity and welfare gains. Rather, these are caveats that investors and policymakers must keep in view, since the story is not all upside.

AI-related concerns AI adoption has exploded over the past three to four years, and Americans' concerns have risen alongside it (chart 1). That is understandable, given how advanced and broad AI's proven applications have become. They now span everyday tasks and subject-specific work across fields such as finance and production, as well as tech and development, the sector AI was born in. Major concerns run from mass AI-induced job displacement to a more recent fear, that top-end models fall into the wrong hands and are used by bad actors. A further worry is distributional: AI advances are powerful and could deliver leaps in productivity, yet they may also leave many people behind. Those most exposed include workers already displaced from their jobs and people facing scarcer basic resources as AI demand competes for them. Others simply lack equitable access to AI tools or their benefits.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jul 06 2026
Economic Letter from Asia: Woah, We’re Halfway There
In this week's Letter, we trace how an energy shock and a resilient AI upcycle shaped Asia through the first half of 2026 and weigh the risks that may define the second. The year opened hopeful on AI, though some feared stretched valuations, before the US-Iran conflict and a closed Strait of Hormuz shook the mood (chart 1). A later MoU eased energy prices and inflation fears, yet valuations largely held on AI optimism, despite bouts of reassessment. The oil surge hit import-reliant emerging Asia hardest, leaving India, Thailand and the Philippines doubly exposed through their Middle East sourcing (chart 2). Pass-through inflation, subsidies that some governments later pared back, and currency pressure followed, though resuming Strait traffic should ease these strains. Rising inflation then boxed in policymakers, straining already-stretched fiscal positions and limiting more pro-growth monetary policy stances in some economies (chart 3). Our latest Blue Chip survey found a slim majority reassessed the risk balance after oil fell, though the shifts stayed mild versus the June survey (chart 4). Most still rank upside inflation risk above downside employment risk, even as a slightly larger share now see the balance as more even. AI remains the region's key offset, with Taiwan and South Korea riding a sharp rise in memory and chip exports (chart 5). Malaysia and Thailand instead draw data centre FDI, so Asia gains from the buildout phase rather than the West's hoped-for productivity gains. We close on an uncertain second half, where a possible Super El Niño could revive food-driven inflation even as energy pressures fade (chart 6). Beyond that, an AI reassessment, fresh geopolitical flashpoints, trade tensions and the US midterms could each reshape the outlook.

The year thus far We began the year on a relatively hopeful note, buoyed by AI optimism and market valuations that reflected it, although some investors worried that valuations had become overstretched. The geopolitical mood shifted quickly in early January, however, when US military forces captured former Venezuelan leader Maduro, though the event did little to move markets (chart 1). A far greater shock came when the US-Iran conflict erupted in late February, closing the Strait of Hormuz and dealing a negative blow to global energy supplies. More recently, the US and Iran have reached a Memorandum of Understanding (MoU) aimed at ceasing hostilities and resuming trade flows through the Strait. This has allowed energy prices to ease, softening policymakers' concerns about energy-driven inflation. Even so, equity valuations have largely remained underpinned by AI optimism, albeit with interim bouts of reassessment and price retracement. This drew on repeated reports of strong growth along the AI supply chain, and on signs that supply could not keep pace with demand. This continued even as AI models with leapfrogging capabilities reached the public. At several points, the US government stepped in to rein in public access to some models, given security concerns about such immense capabilities falling into the wrong hands.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jun 29 2026
Economic Letter from Asia: Oil Down, Emerging Risks
In this week's Letter, we explore the significant pullback in oil prices that followed the US-Iran memorandum of understanding and consider its broader economic implications. The agreement saw a fragile ceasefire ensue and a gradual resumption of shipping flows through the Strait of Hormuz (chart 1). We acknowledge that this major pullback will certainly be welcome to policymakers across the region and beyond. Previously elevated energy prices had added to the fiscal burdens of governments and sharpened the dilemma facing central banks (chart 2). That dilemma pits the need to rein in inflation against the risk of choking off economic growth. That said, while one source of inflationary pressure seems to be ebbing, another looks to be emerging on the horizon. It stems from a potential "Super El Niño" event, which meteorologists have been warning about for some time now. Asia sits at the centre of such risks, as past strong El Niño events have directly and adversely affected crop production (chart 3). The impact is not limited to potential surges in headline inflation via food supply shocks, especially in Asia. It extends directly to growth as well (chart 4), given the nontrivial share of GDP that agriculture still commands in many Asian economies (chart 5). Should price pressures simply rotate from energy to food, government subsidies may follow suit (chart 6). Central bankers, for their part, may find themselves unable to ease off the tightening pedal just yet. Some Asian economies, however, would still manage to offset such a growth shock through other engines. Electronics and semiconductors, buoyed by the current AI upcycle, offer one such cushion for the more fortunate. For others, lacking such offsets, the agricultural hit may simply have to be borne in full.

The US-Iran conflict and oil prices The recent memorandum of understanding between the US and Iran, aimed at working towards a final deal, has already brought visible relief to crude oil markets (chart 1). This relief has held despite the renewed tensions that have followed the agreement, which markets seem to have largely looked past. The easing in prices should go a long way towards unwinding the inflation concerns that elevated oil prices had previously stoked. Much of the pullback reflects anticipation of the substantial supply now expected to return to global markets. Yet some shipping trackers, such as the IMF's, already point to a marked pickup in traffic through the Strait of Hormuz. Even so, those volumes still remain well below the levels seen before the conflict began in the region.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jun 08 2026
Economic Letter from Asia: Risk Reversal
In this week’s Letter, we take stock of the latest Blue Chip Financial Forecast (BCFF) survey results and connect them with recent regional developments across Asia. Panellists have raised their policy rate forecasts relative to the pre–Middle East conflict baseline (chart 1), as inflation concerns intensify and several Asian central banks tighten policy (chart 2). Meanwhile, stronger US jobs data have strengthened the higher-for-longer rate narrative, tempering AI-driven equity gains in the US and Asia (chart 3).

Turning to country specifics, the sharp rise in South Korean equities masks a more nuanced picture, where sustained foreign investor outflows have eventually weighed on the market and contributed to weakness in the South Korean won (chart 4). India has experienced a similar pattern, with a range of rupee supportive measures already introduced, although their effectiveness remains too early to assess (chart 5). Indonesia has likewise seen persistent foreign capital outflows alongside a weakening rupiah, with foreign participation in its government bond market declining to a worrying trickle (chart 6).

Blue Chip Financial Forecast (BCFF) survey Looking at the latest Blue Chip Financial Forecast (BCFF) survey results, chart 1 shows that panellists have significantly revised upward their policy rate forecasts since the March survey (conducted at the end of February), reflecting the inflationary implications of the ongoing conflict in the Middle East and the continued closure of the Strait of Hormuz. Such revisions are understandable, as the disruption to one of the world's most important oil shipping routes has constrained global oil supply. With supply reduced while demand remains broadly unchanged, oil prices have risen sharply, feeding through to higher inflation and increasing the likelihood of further monetary policy tightening, or at the very least, a slower pace of policy easing. Among the economies covered by the survey, panellists have revised up their policy rate expectations for Australia by the largest margin, followed by the United Kingdom and the euro area.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jun 02 2026
Economic Letter from Asia: Two Halves, Emerging Risks
In this week’s Letter, we examine a tale of two halves between China and India, highlighting the contrasting relationship between economic fundamentals and currency performance in Asia’s two largest emerging economies. In China, a recent run of softer economic data has pointed to slowing growth (chart 1), yet the Chinese yuan has remained one of the region’s strongest-performing currencies this year (chart 2). India presents the opposite picture: economic growth prospects remain among the brightest in Asia, but the Indian rupee has continued to face downward pressure amid persistent foreign investor outflows and a marked decline in central bank foreign exchange reserves (chart 3).

Beyond China and India, the broader region is also confronting emerging inflation risks. In addition to elevated energy prices stemming from the closure of the Strait of Hormuz, concerns are growing over the potential development of a “Super El Niño” event, which could weaken agricultural output and add further inflationary pressure through the food channel (chart 4). At the same time, the battle between inflation concerns and AI-driven optimism continues to shape market sentiment. Equity markets in major AI beneficiaries such as Taiwan and South Korea have seen their market capitalisations surpass those of several larger developed markets, including Germany (chart 5).

Moreover, the benefits of the current AI investment cycle are not confined to the region’s technology leaders. Economies such as Thailand are also seeing positive spillovers from the current AI investment cycle. In particular, Thailand has recorded a surge in FDI linked to investments in digital infrastructure and AI-related industries (chart 6). Countries across the region are increasingly positioning themselves to participate in the ongoing buildout phase.

China China’s unofficial manufacturing PMI was released earlier in the week, showing a pullback to 51.8 in May (chart 1), though it remained in expansionary territory. The decline mirrors the weakness seen in the official PMI readings and was accompanied by a sharp drop in new export orders, which fell into contractionary territory for the first time in months. These developments come amid a run of disappointing economic data from China, with growth slowing even in the export-oriented industrial sector, generally regarded as a stronger driver of activity than more domestically focused sectors. This perhaps suggests that while China may be relatively insulated from the effects of the Strait of Hormuz closure compared with other Asian economies, such insulation is not complete, and some adverse spillovers are nonetheless becoming apparent.
by:Tian Yong Woon
|in:Economy in Brief
Asia| May 26 2026
Economic Letter from Asia: Fiscal Strains
In this week’s Letter, we examine the ongoing Middle East situation through another lens — namely, the fiscal costs it has imposed on Asian economies and the strains that are already beginning to emerge. While the recent surge in bond yields has largely been attributed to inflation-related concerns, yield spikes in some Asian economies have also arguably been driven by fiscal concerns, as governments step up bond issuance to finance support measures (chart 1).

In India, cracks are beginning to show in its fuel subsidy programme, with fuel prices now being raised as previously subsidised rates appear increasingly unsustainable, underscoring the inherently finite nature of such measures (chart 2). While Indonesia continues to hold the line by keeping Pertalite fuel prices unchanged, hikes in more premium fuel grades, coupled with the government’s broader slate of spending initiatives, have left investors increasingly on edge over the country’s fiscal sustainability (chart 3). In Japan, the cabinet is reportedly seeking to put together an additional budget to help cushion inflationary pressures stemming from the Middle East conflict. Although the Prime Minister has sought to allay concerns over additional bond issuance, broader fiscal concerns remain (chart 4).

Against this backdrop of fiscal strain , inflation risks, and geopolitical instability, it is also important to keep in mind the growth-supportive factors still in place across parts of Asia. In particular, the ongoing AI upcycle continues to support exports in several regional economies (chart 5). Taking these crosscurrents into account, we then turn to the week ahead, where central banks will continue to navigate the trade-off between growth and inflation amid a heavy slate of upcoming data releases, particularly across East Asia (chart 6).

Bond markets Global yields have remained elevated, although some pullback has been seen in recent days (chart 1). Inflation-related concerns arising from elevated oil prices linked to the Middle East conflict remain front and centre and are still widely cited as the main driver of the recent spike in nominal yields. However, other factors are also at play, particularly in certain economies. Contributing to the rise in yields in some economies are fiscal concerns. Regarding the US-Iran situation, hopes for a peace deal have once again been raised in recent days, only to be subsequently dampened, underscoring how little concrete progress has ultimately been made. In addition, fresh US strikes on Iranian missile launch sites and boats highlight the continued fragility of the situation. On balance, the world remains stuck in a state of limbo, holding its breath for a positive peace outcome — particularly the reopening of the Strait of Hormuz — while the economic effects of its closure continue to weigh on the global economy.
by:Tian Yong Woon
|in:Economy in Brief
Asia| May 18 2026
Economic Letter from Asia: After the Summit
In this week’s Letter, we review the key outcomes from last week’s US–China summit, which, while largely symbolic as a reset in bilateral relations, also yielded several notable trade-related agreements (chart 1). We also examine China’s latest monthly data releases, which extended last month’s moderation in growth and further highlighted the increasingly two-speed nature of its economy (chart 2). Turning to Japan, we look ahead to this week’s key data releases. Q1 GDP growth appears likely to be supported by resilient exports, while the domestic picture—reflected in indicators such as household spending—continues to lag (chart 3). On the inflation front, upcoming CPI readings will be closely watched; if price pressures accelerate further alongside continued yen weakness, this could revive a policy dilemma for the Bank of Japan (chart 4). Zooming out, inflation appears to have reasserted itself as the dominant market driver, with nominal yields rising across markets (chart 5). At the same time, AI-related optimism has taken a back seat for now, as equity markets pull back from recent rallies (chart 6).

The US-China summit The highly anticipated US–China summit concluded last week, with few details released immediately afterward. More information emerged early this week, as the White House outlined several key developments. Perhaps most importantly, though largely symbolic at this stage, the two sides agreed to build a “constructive relationship of strategic stability.” While the phrase does not imply any concrete policy actions, it may signal a shift away from the repeated tensions and frictions that have characterized recent interactions. The US and China also agreed that the Strait of Hormuz should be reopened, although no specific measures were announced to achieve this. On more tangible outcomes, the White House said China approved an initial purchase of 200 Boeing aircraft for Chinese airlines and committed to buying at least $17 billion of US agricultural products annually from 2026 to 2028. China also restored market access for US beef by renewing expired registrations for more than 400 US beef facilities and adding new listings, while resuming imports of US poultry.
by:Tian Yong Woon
|in:Economy in Brief
Asia| May 11 2026
Economic Letter from Asia: Of Bits and Barrels
In this week’s Letter, we track the dual drivers of AI optimism and the ongoing Middle East conflict, and how they continue to shape market prices and investor expectations. AI-related enthusiasm has remained a key support for equity markets, particularly in highly exposed indexes in Taiwan and South Korea, while continued oil supply bottlenecks stemming from the closure of the Strait of Hormuz have kept crude prices elevated (chart 1). These dual forces are also evident in the latest Blue Chip Economic Indicators survey. Year to date, all Asian economies have seen upward revisions to inflation forecasts, while the most AI-exposed advanced Asian economy, Taiwan, has recorded a particularly large upgrade to real GDP growth expectations (chart 2). Looking more closely at the monetary policy implications of higher oil prices, this month’s survey shows an increasing share of panellists expecting central banks to resume or extend tightening cycles, marking a modest shift from last month’s results (chart 3). This shift is already partially reflected in recent data, with average inflation across Asia edging higher and several central banks already opting to tighten policy in response (chart 4).

Looking ahead, attention will likely centre on the Trump–Xi summit taking place in Beijing later this week. While any potential for additional Chinese mediation efforts regarding the Middle East conflict will be closely watched, developments on the US–China trade front should not be overlooked given the range of unresolved issues (chart 5). Finally, despite recent headline focus on the Middle East, China has continued to post steady export growth, while also managing to temper excessive domestic producer competition. Together, this has supported a combination of firmer external demand and more stable pricing dynamics—an “all-win” outcome for now (chart 6).

AI vs. the Middle East conflict The divergence between AI-driven equity market optimism and the persistence of elevated crude oil prices amid the ongoing Middle East conflict remains striking. On the one hand, equity markets—particularly in AI-heavy economies such as Taiwan and South Korea (chart 1)—have largely shrugged off concerns over energy supply disruptions. Investors remain focused on the upside potential from the current AI buildout cycle, driven by the rising computational demands of increasingly capable AI models. More recently, attention has shifted toward the scalability and broader applications of physical AI, including humanoid robots, and their potential implications for manufacturing, healthcare, and even household use. On the other hand, crude oil prices remain well above pre-conflict levels. The latest development is the US rejection of Iran’s most recent peace proposal, underscoring that a swift resolution to the US-Iran conflict remains unlikely.
by:Tian Yong Woon
|in:Economy in Brief
Asia| May 05 2026
Economic Letter from Asia: Everybody’s Changing
In this week’s Letter, we take another pulse on recent key developments relating to, and affecting, Asia. The week has once again begun on a hopeful note, following reports that the US will guide neutral vessels through the Strait of Hormuz, signalling a partial easing of trade flows through the waterway. Asian markets, including South Korea and Taiwan, were further buoyed by persistent AI-related optimism (chart 1). A full tally of central bank decisions since February highlights a growing divergence across the region. While most central banks have opted to hold back on tightening, a subset has already moved to raise policy rates in response to inflation pressures stemming from higher oil prices (chart 2). A cross-country comparison of consumer inflation reinforces this divergence, with more pronounced CPI increases in economies such as Australia and the Philippines, where central banks have recently hiked rates (chart 3).

In the meantime, amid the absence of oil flows through the Strait, many Asian importers have begun sourcing supplies from alternative producers, including the United States (chart 4). At the same time, major oil exporters affected by disruptions in the Strait of Hormuz have been forced to scale back crude production significantly due to storage constraints (chart 5). Looking ahead, attention turns to a three-pronged week featuring regional PMIs, additional central bank decisions (chart 6), and further Q1 GDP releases.

Early-week optimism Asian markets began the week on an optimistic footing, supported by developments in the Middle East. Reports that the US will guide neutral vessels through the Strait of Hormuz have lifted expectations of a partial resumption in trade flows through what has been a severely constrained passage. That said, while any reopening of oil and broader shipping routes is a key factor in easing the supply shock stemming from the conflict, the situation remains far from resolved. Uncertainty persists over both the scale and durability of any recovery in shipping activity. Elevated tensions between the US and Iran—underscored by exchanges of fire as US forces escorted vessels through the waterway on Monday—continue to leave the outlook vulnerable to renewed disruption. Nonetheless, ongoing AI-related optimism has continued to underpin equity markets. Asia stands to benefit disproportionately given its central role in the global AI supply chain, helping keep equity prices elevated across key markets such as South Korea and Taiwan (chart 1).
by:Tian Yong Woon
|in:Economy in Brief
Asia| Apr 27 2026
Economic Letter from Asia: Not Just About the Strait
In this week’s Letter, we cover the latest developments and implications of the Middle East conflict for Asia, while also making space for other important themes, including artificial intelligence (AI). The Middle East conflict remains in a no deal state coming out of the weekend, though some early Monday optimism emerged in Asian markets following Iran’s reported offer to reopen the Strait of Hormuz (chart 1). Nonetheless, as the Strait closure drags on, so too do the fiscal costs of domestic fossil fuel subsidies across Asia, which have been shown to move closely with crude oil prices (chart 2). While such measures offer direct relief by cushioning household energy costs, they remain difficult to sustain over the long haul.

Over the week, we also saw a further fraying in regional monetary policy trends, with the Philippines hiking its policy rate for the first time in about two years amid inflation concerns, while Indonesia stood pat on rates (chart 3). Investor attention is likely to remain fixed on monetary policy this week, with the Bank of Japan due to decide on policy. Expectations for an April hike have faded amid the persistent Middle East conflict, though yen weakness continues to present a source of concern (chart 4). The week also brings China’s latest PMI readings (chart 5), adding to the recent run of hard data accompanying the Q1 GDP release.

Beyond the Middle East conflict, the evolution of AI continues to demand close attention. Before geopolitical tensions took centre stage, AI was the dominant market narrative — and that enthusiasm has hardly faded. If anything, recent developments suggest the story is broadening: use cases are expanding, scalability is improving, and access is widening beyond large corporates to the mass market — increasingly spilling into the realm of physical AI. It may well be this persistent wave of optimism that is helping to underpin equity valuations, even as the geopolitical backdrop darkens (chart 6).

The Middle East conflict About two months in, we remain stuck in the limbo of the US-Iran conflict, which has left the Strait of Hormuz largely closed and much of the world starved of the critical oil flows needed to power the global economy. The back and forth between the US and Iran has persisted in recent weeks, with both sides again failing to reach a peace deal over the weekend, though Monday’s news of Iran offering to reopen the Strait has revived some hope in markets. In truth, commodity and market valuations do not hinge so much on a peace deal itself, but rather on the resumption of oil flows through the Strait, something that could materialise even in the absence of a formal deal, though any agreement that includes and credibly delivers such a reopening would likely be warmly received by markets. Until then, market gyrations are likely to persist, with prices fluctuating in response to each new snippet of news. And until then, the world will continue both to be starved of, while gradually adapting to, the drip feed of oil flows emerging from the Strait.
by:Tian Yong Woon
|in:Economy in Brief