Weekly Economic Briefings > Emerging Markets Weekly Economic Briefing

We present our key predictions for Asia in 2016. Amid a challenging global backdrop and slowing Chinese growth, we look for a subdued recovery in Asian growth this year. We perceive limited scope for monetary policy easing to support growth and instead expect fiscal policy to shoulder most of the responsibility.Chinese growth is likely to continue to decelerate in 2016, but a hard landing appears unlikely in the face of relatively robust consumption and further macro policy easing that should partially offset the drag from other sectors. More important for the region will be China's choices as to how to shore-up growth. We expect the authorities to lean increasingly on fiscal policy and do not see a major devaluation of the yuan.Despite weakness in nominal exchange rates across Asia, valuations remain stretched for the yuan and the rupee on a trade-weighted basis, precluding the possibility of a broad-based Asian FX rally in 2016. Indeed, we do not look for a strong rebound even in the substantially weaker ringgit, baht and the rupiah against a backdrop of a strong US dollar and fragile domestic fundamentals.