Nomura Global Economic Outlook Monthly

Global Markets Research
Global Economic Outlook Monthly 17 November 2023

Economics - EMEA
Research Analysts
The last mile is the hardest Global Economics
Aichi Amemiya - NSI
Growth is cooling but underlying inflation is still too high for the major aichi.amemiya@nomura.com
central banks to contemplate rate cuts. +1 212 667 9347
George Buckley - NIplc
george.buckley@nomura.com
COUNTRY AND REGIONAL ECONOMIC OUTLOOKS +44 (0) 20 710 21800
Ting Lu - NIHK
ting.lu@nomura.com
+852 2252 1306
Forecast summary 2
Our view in a nutshell 3 Kyohei Morita - NSC
Policy interest rates – actuals and forecasts kyohei.morita@nomura.com
4
+81 3 6703 1395
Australia: A slower slowing 5
China: The rising risk of an economic triple dip 6 Rob Subbaraman - NSL
rob.subbaraman@nomura.com
Euro area: Less gloomy on growth 7
+65 6433 6548
Euro area Big 4: A smaller recession & politics 8
Hong Kong: Slower growth ahead 9 Sonal Varma - NSL
sonal.varma@nomura.com
India: Politics coming to the fore 10
+65 6433 6527
Indonesia: Rising political uncertainty 11
Japan: Scrapping YCC and NIRP frontloaded 12
Malaysia: Macro policies stay the course 13
Philippines: Additional tightening off the table 14
Singapore: Higher for longer core inflation 15
South Korea: An export recovery is materializing 16
Taiwan: Strong growth ahead 17
Thailand: Low growth, low inflation 18
UK: A milder recession 19
US: A delayed recession should keep the Fed on hold until Q3 2024 20
Appendix A-1 21
Production Complete: 2023-11-20 07:37 UTC
See Appendix A-1 for analyst certification, important disclosures and the status of non-US analysts.
Nomura | Global Economic Outlook Monthly 17 November 2023
Forecast summary
Fig. 1: Forecast summary table

Real GDP (% y-o-y) Consumer Prices (% y-o-y) Policy Rate (% end period)
2022 2023 2024 2025 2022 2023 2024 2025 2022 2023 2024 2025
Global 3.2 3.0  2.3  2.6 8.0 5.2  3.7  3.0
Developed 2.5 1.5  0.5  0.8 7.5 4.7  2.3 2.1
Emerging Markets 3.7 4.2  3.6 3.9 8.4 5.6  4.8  3.7
Americas 2.4 2.4  1.3  0.9 8.2 4.6 3.0 2.8
United States* 1.9 2.4  1.2  0.4 8.0 4.2  2.7  2.5 4.375 5.375 4.625  2.625
Canada 3.4 1.5 0.5 1.4 6.8 3.8 2.0 2.3 4.25 5.00  4.00  3.00
Latin America† 3.4 2.5  1.8  2.2 9.0 6.1 ## 4.2  3.6 ##### #####
Brazil 2.9 3.0  1.6  2.0 9.3 4.7 ## 4.0  3.7 ## ## ##
Chile 2.4 -0.2  2.0  2.4 11.6 7.6 ## 3.5  3.0 ## ## ##
Colombia 7.5 1.3 1.8  2.7 10.2 11.7 ## 5.8  3.8 ## ## ##
Mexico 3.1 3.2  1.8  2.2 7.9  5.6 ## 4.3  3.6 ## ## ##
Peru 2.7 0.5  2.4  2.9 7.9 6.5  3.2  2.5 ## ## ##
Asia/Pacific 3.7 4.5  3.8 4.1 3.6 2.4 2.1  2.3 ##### #####
Japan 0.9 1.7  0.6  0.8 2.5 3.2 1.8  1.6 -0.10 -0.10 0.00  0.00
Australia 3.7 1.9  1.2  1.9 6.6 5.7 3.8  3.2 3.10 4.35 3.60 3.60
New Zealand 2.2 1.1  0.8  2.2 7.2 5.7 3.1  2.2 4.25 5.50 3.50 3.50
Asia ex Japan, Aust, NZ 4.1 4.9  4.2 4.5 3.6 2.2 2.0 2.3 ##### ## ##### ##
China 3.0 5.1  3.9 3.8 2.0 0.3 1.0 1.5 2.00 1.60 1.60 1.60
Hong Kong -3.5 3.2  2.4  2.9 1.9 1.9 1.7  1.8 4.75 5.75 4.00 3.00
India 6.7 6.3 5.5 6.6 6.7 5.6  4.4  4.6 6.25 6.50 5.50 5.50
Indonesia 5.3 5.1 5.3 5.1 4.2 3.6 2.6 2.5 5.50 6.00  5.00  5.00
Malaysia 8.7 3.6 3.8 4.3 3.4 2.6 2.1 2.6 2.75 3.00 3.00 3.00
Philippines 7.6 5.2 5.8 6.1 5.8 6.2  3.8  3.3 5.50 6.50  5.75  5.00
Singapore*** 3.6 0.5 2.0 2.5 6.1 4.6 2.2 0.4 3.03 3.25 2.75 2.75
South Korea 2.6 1.3  1.9  2.1 5.1 3.7  2.3  1.9 3.25 3.50 2.50  2.00
Taiwan 2.4 1.6 2.9 4.4 3.0 2.5  2.0  1.8 1.750 1.875 1.875 1.875
Thailand 2.6 2.4  3.8  3.0 6.1 1.3 -0.2  0.0 1.25 2.50  2.50  2.50
Western Europe 3.5 0.4  -0.4  1.0 8.5 5.8  2.0  1.8 ##### ## ##### ##
Euro area** 3.4 0.4  -0.4  1.0 8.4 5.5  1.8  1.7 2.00 4.00 3.25 2.75
France 2.5 0.8  0.2  1.0 5.9 5.7 2.1 1.7 2.00 4.00 3.25 2.75
Germany 1.9 -0.2  -0.3  1.0 8.6 6.1  2.0  2.2 2.00 4.00 3.25 2.75
Italy 3.9 0.6  -0.4  0.7 8.7 6.1 1.0  1.6 2.00 4.00 3.25 2.75
Spain 5.8 2.3  0.3  1.4 8.3 3.6 2.9  2.0 2.00 4.00 3.25 2.75
United Kingdom 4.3 0.5  -0.1  1.0 9.0 7.4  2.8  2.2 3.50 5.25  4.25  4.00
EEMEA 2.2 2.1  2.1  2.4 28.2  20.2 ## 17.8  10.2 
Czech Republic 2.4 0.0 2.1  2.7 15.1  10.9 ## 2.5  2.1 
Hungary 4.8 -0.5  2.8 3.0 14.5  17.9 ## 5.2  3.7 
Poland 5.1 0.4  2.6  3.4 14.3 11.7 ## 5.7  4.0 
Romania 4.6 2.3  3.4  3.7 13.8  10.5 ## 5.5  4.0 
South Africa 1.9 0.7  1.3  1.7 6.9 5.8 ## 4.8  4.5 
Turkey 5.3 4.0  2.7  3.3 72.0 54.2 ## 52.3  27.5 
Russia -2.1 2.0  1.3  1.1 13.8 5.9 ## 5.6  4.1 
Israel 6.6 3.0 3.2  3.5 4.4 4.3  2.8  2.1 
Note: Aggregates are calculated using purchasing power parity (PPP) adjusted shares of world GDP (table covers about 84% of world GDP on a PPP basis); our forecasts
incorporate assumptions on the future path of oil prices based on oil price futures. Currently, assumed Brent oil prices for 2023,2024 and 2025 are $83.2, $83.6, and $78.4,
respectively. Policy rate for China is 7d reverse repo rate. Consumer prices for euro area countries are HICP measure. *The US policy rate forecasts are midpoints of the 5.25-
5.50% for 2023, and 4.50-4.75% for 2024, 2.50-2.75% for 2025 target federal funds rate range, respectively. **Policy rate for the euro area is deposit facility rate. ***For
Singapore, the policy rate refers to the SORA 3-month compounded average. †CPI forecasts for Latin America are year-on-year changes for December. The ↑↓ arrows signify
changes from the last issue. Reported numbers are in bold. We use Bloomberg Economic Forecasts for Latin America, and EEMEA; rest are Nomura forecasts.
Source: IMF, Bloomberg, Nomura Global economics
2
Our view in a nutshell

United States
• Growth is slowing into year-end, and we expect higher rates and tighter credit conditions to lead to a recession in H2 2024.
• Inflation is slowing but should remain well-above the Fed’s target. “Last-mile” inflation pressures could persist through next year.
• The Fed indicated the hiking cycle has likely ended; we expect rate cuts to start in September 2024 along with a halt of QT.
• Momentum in labor markets is cooling, with a range of measures indicating a slower pace of hiring and gradual increase in slack.
• The pace of credit conditions tightening has been surprisingly slow despite higher interest rates, raising the risk of a soft landing.
Euro area
• We expect a moderate three quarter recession (-0.5pp of GDP ), from Q3 2023, driven by a sharp fall in investment.
• We see euro area inflation falling sharply in the coming months; core especially should remain above target for some time.
• We believe the ECB’s hiking cycle is over, with a terminal depo rate of 4%. We expect cuts only from Q3 2024.
• The ECB began full roll-off of its APP portfolio redemptions in July 2023. We think PEPP tapering could begin in Q3 2024.
United Kingdom
• GDP is likely to contract by 0.3pp over two quarters from Q4 2023 , as firms and households pull back on spending.
• Upside risks: excess savings and longer policy lags. Downside risks: the scale of monetary tightening and rise in unemployment.
• Lower energy prices and base effects should help cut inflation, though not back to target until beyond the end of 2024.
• We believe the BoE is done with raising rates, leaving Bank Rate at a terminal level of 5.25%. We don’t see cuts until Q3 2024.
Japan
• Japan’s economy will likely remain on an above-potential recovery path albeit with some volatility in and beyond Q4 2023.
• While core CPI inflation (less fresh food) will likely decline, it should gradually become stickier accompanied by continued wage increases.
• The BOJ shifted the 1% level of the 10-year JGB yield from a ‘rigid limit’ of the upper bound to a ‘reference’.
• The BOJ will likely abandon YCC in Q2 2024 and NIRP in Q3 2024 or later assuming a virtuous cycle between wages and prices.
Asia
• Our base case assumes that the export downturn is bottoming out, and will improve in Q4, reflecting an improved tech cycle.
• We expect investment and consumption demand to weaken on lagged monetary policy effects, high uncertainty and US recession spillovers.
• A turn in the tech cycle may improve the outlook for Northeast Asia, but we see India and ASEAN as the medium-term champions.
• Core disinflation is underway and should sustain, but El Nino and protectionism are upside risks for food prices in the coming months.
• We expect an extended pause across all central banks and rate cuts to broadly begin from Q2 2024 onwards .
• Korea: Despite a worsening domestic economy, an improving chip cycle should delay BOK rate cuts to July 2024 (100bp of cuts in 2024).
• India: Resilient growth and higher food inflation support extended policy pause, with 100bp of rate cuts in 2024 from April.
• Indonesia: With weakening terms of trade, small twin deficits should return but still look relatively manageable.
• Australia: We expect to narrowly avoid a recession. As inflation eases and unemployment rises, we expect rate cuts from August 2024.
China
• The economy has not yet truly stabilized and still faces a risk of another dip.
• We see major growth drags from in-person services, property and exports.
• Beijing is getting close to a real solution but is still not there yet.
• The highest hurdle of a real recovery is the large scale of pre-sold but unfinished homes in low-tier cities.
3
Policy interest rates – actuals and forecasts

Fig. 2: Central bank forecast summary
US CAN UK EUR SWE NOR SWI AUS NZ JPN CHI IND KOR IDN THA
Current 5.25% 5.00% 5.25% 4.00% 4.00% 4.25% 1.75% 4.35% 5.50% -0.10% 1.80% 6.50% 3.50% 6.00% 2.50%
Jan 23 25 0 0 0 25 25 25
Feb 23 25 50 50 50 25 50 25 0 0
Mar 23 25 0 25 50 25 50 25 0 0 25
Apr 23 0 50 0 50 0 0 0 0
May 23 25 25 25 25 25 25 0 0 25
Jun 23 0 25 50 25 25 50 25 25 0 -10 0 0
Jul 23 25 25 25 0 0 0 0 0
Aug 23 25 25 0 0 -10 0 0 0 25
Sep 23 0 0 0 25 25 25 0 0 0 0 25
Oct 23 0 0 0 0 0 0 0 25
Nov 23 0 0 25 0 25 0 0 0 0
Dec 23 0 0 0 25 0 0 0 -20 0 0
Jan 24 0 0 0 0 0 0 0 0 0
Feb 24 0 0 0 0 0 0 0
Mar 24 0 0 0 0 0 0 0 0 0 0 0
Apr 24 -25 0 0 0 -25 0 0
May 24 0 0 0 -25 0 0 -50 0 0 0
Jun 24 0 0 0 0 -25 0 0 0 0 -25 0
Jul 24 0 -25 0 0 -50 0 -25 0
Aug 24 -25 -25 0 -25 -50 -25 -25 0 0
Sep 24 -25 0 -25 -25 -25 -25 0 -25 10 -25 0
Oct 24 -25 -25 0 -50 0 -25 -25 -25
Nov 24 -25 -25 -25 -25 -25 0 -25 -25 0
Dec 24 -25 -25 -25 -25 -25 0 0 0 0 -25
Peak 5.25% 5.00% 5.25% 4.00% 4.25% 4.50% 1.75% 4.35% 5.50% 0.00% 2.00% 6.50% 3.50% 6.00% 2.50%
Trough 2.50% 4.00% 4.00% 2.75% 3.00% 3.00% 1.75% 3.60% 3.50% -0.10% 1.60% 5.50% 2.50% 5.00% 2.50%
Note: In some cases exact meeting dates have not been announced, so we are estimating the month that a meeting will occur. The dark dotted grey line separates meetings that
have occurred and our forecasts for future meetings.
The policy rate referenced for China is the PBoC 7-day OMO reverse repo rate, for the ECB it is the deposit facility rate and for the Federal Reserve it is the Federal Funds
Target Rate – lower bound.
Source: Bloomberg, Nomura
4
Research Analysts
Australia: A slower slowing Australia Economics
We anticipate a progressive easing in activity, reflecting powerful yet opposing forces. Andrew Ticehurst - NAL
andrew.ticehurst@nomura.com
+61 2 8062 8611
Forecast revisions: We have boosted our growth forecast for 2024 a fraction, but
lowered it for 2025, reflecting the global experience and local forces.
Activity: Partial data – including monthly retail sales and external trade data – suggest
the economy again recorded moderate growth in Q3. Employment growth also rose by a
firm 0.6% q-o-q in Q3, although hours worked dipped, reflecting a shift to part-time
employment. More broadly, we have modified our growth profile and now see a “slower
slowing”. Rate hikes are biting, and we expect this to continue to impact interest-sensitive
sectors, particularly consumer spending. However, this has been pushing against solid
momentum from earlier aggressive COVID-related stimulus, stronger-than-expected
population growth and Commonwealth and state government spending. Our growth
profile now also aligns more with the US experience and our colleagues’ revised US
growth profile. We forecast a moderate recovery through 2025, assuming inflation
pressures ease as forecast, allowing monetary policy settings to become less restrictive.
Inflation: Inflation pressures should ease further, as growth moderates and supply chain
pressures continue to ease. However, this process will likely be slow, given sticky service
sector inflation and lags in Australian wage setting practices, and reflecting the tight rental
market, with limited housing supply amid rapid population growth. We expect “the last
mile to be the hardest” and think inflation could settle at the top of the RBA’s target band
(rather than the mid-point), given the RBA’s joint focus on maximum sustainable
employment and longer-term structural forces (“greenflation”, “friend-shoring”).
Monetary policy: The RBA hiked by 25bp in November, following a four-month pause,
as we forecast. Its guidance, however, was more open and less hawkish, which came as
a surprise. We continue to think the tightening cycle is most likely over; we see little risk of
a December hike but some risk of a February hike, subject to Q4 CPI data and other
developments. Beyond February, we expect broadening signs of weakening momentum,
reducing the risk of hikes beyond that point. Given recent CPI data, we have pushed back
our forecast timing of the first rate cut from May to August, but still see the cash rate
returning to a roughly neutral level (around 3.60%) by late 2024. We no longer regard
active QT as likely, certainly not before the second half of 2024.
Risks: The post-pandemic outlook remains unusually uncertain, and we see two-way risk
around our key global (US, China) and local views.
Fig. 3: Australia: Details of the forecast

% q-o-q 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 2022 2023 2024 2025
Real GDP (% y-o-y) 2.4 2.1 1.8 1.5 1.4 1.2 1.1 1.0 1.2 1.7 3.7 1.9 1.2 1.9
Real GDP (% q-o-q) 0.4 0.4 0.4 0.4 0.3 0.2 0.2 0.3 0.5 0.6
Personal consumption 0.3 0.1 0.2 0.2 0.2 0.1 0.0 0.0 0.2 0.3 6.5 1.7 0.6 0.8
Private investment 2.6 0.3 0.3 0.2 0.4 0.1 0.0 0.3 0.4 0.5 1.5 3.8 0.9 1.5
- Business investment 4.0 0.6 0.6 0.5 0.5 0.5 0.4 0.4 0.4 0.5 3.9 6.7 2.1 1.9
- Dwelling investment -0.7 -0.2 -0.5 -0.5 0.0 -1.0 -1.0 0.0 0.5 0.5 -3.5 -2.5 -1.9 0.5
Government expenditures 0.8 1.8 -0.6 0.6 0.6 0.6 0.6 0.6 0.7 0.8 4.9 2.2 2.2 3.0
Exports 1.8 4.3 1.7 0.5 0.5 0.5 0.5 0.5 1.0 1.0 3.4 9.6 3.5 3.3
Imports 3.6 0.7 3.5 -1.0 1.0 0.5 0.5 0.5 0.8 1.0 12.9 5.2 2.9 3.3
Unemployment rate 3.5 3.5 3.6 3.8 4.0 4.2 4.6 4.9 5.0 5.0 3.6 3.6 4.4 5.0
Employment, 000 143 90 69 76 60 40 20 20 40 60 574 419 219 168
Consumer prices 7.0 6.0 5.4 4.5 4.1 4.1 3.7 3.5 3.3 3.2 6.6 5.7 3.8 3.2
Trimmed mean 6.6 5.9 5.2 4.4 4.1 4.0 3.6 3.3 3.2 3.1 5.4 5.5 3.7 3.1
Weighted median 5.8 5.4 5.2 4.6 4.3 4.0 3.4 3.2 3.0 3.0 4.6 5.2 3.7 3.0
Fiscal balance (% GDP) -1.4 0.9 -0.5 -1.3
Current account balance (% GDP) 1.1 1.4 0.5 0.0
RBA cash rate target 3.60 4.10 4.10 4.35 4.35 4.35 3.85 3.60 3.60 3.60 3.10 4.35 3.60 3.60
3-month bank bill 3.72 4.35 4.14 4.40 4.35 4.30 3.80 3.60 3.70 3.70 3.26 4.40 3.60 3.80
2-year government bond 2.95 4.22 4.08 4.20 4.10 4.00 3.75 3.60 3.65 3.70 3.40 4.20 3.60 3.80
AUD/USD 0.67 0.67 0.64 0.65 0.68 0.69 0.70 0.71 0.71 0.71 0.68 0.65 0.71 0.71
Note: Numbers in bold are actual values; others forecasts. Interest rate and currency forecasts are end of period; other measures are period average. Fiscal balance
forecasts are financial year forecasts, i.e., 2023 is the 2022-23 financial year ending 30 June 2023. All forecasts are modal forecasts (i.e., the single most likely outcome).
Table reflects data available as of 13 November 2023.
Source: Nomura.
5
Research Analysts
China: The rising risk of an economic triple dip Asia Economics
Markets should be cognisant of the material risk of an economic triple dip in coming Ting Lu - NIHK
ting.lu@nomura.com
months, despite signs of stabilisation over the summer.
+852 2252 1306
Forecast changes: We raise our 2023 annual GDP growth forecast to 5.1% y-o-y from Harrington Zhang - NIHK
harrington.zhang@nomura.com
4.8% and maintain our 2024 GDP growth forecast at 3.9%.
+852 2252 2057
Activity: Q3 GDP growth surprised to the upside, despite easing to 4.9% y-o-y, from Jing Wang - NIHK
6.3% in Q2. Economic activity data were mixed in October, with retail sales and IP growth jing.wang@nomura.com
both picking up on a low base, but FAI growth deteriorated significantly. Furthermore, the +852 2252 1011
contraction in exports worsened in October, even after considering base effects. Growth Hannah Liu - NIHK
of outstanding AF quickened to 9.3% in October from 9.0% y-o-y in September, mainly hannah.liu@nomura.com
boosted by the acceleration of government bond issuance. The official manufacturing PMI +852 2252 1082
dipped into contractionary territory in October, with the service PMI also dropping further.
While we raised our Q4 GDP growth forecasts to 4.7% y-o-y from 4.3%, with 2023 annual
growth revised to 5.1% from 4.8%, we think the latest weakening signs pose a clear risk
of a triple dip in either Q4 or early 2024. The newly approved RMB1trn of additional
central government bond (CGB) issuance shows Beijing is not being complacent about
China’s growth outlook, although it still appears somewhat reluctant in addressing the real
challenges in the property sector. We believe it is still too early to call the bottom.
Inflation: CPI inflation declined to -0.2% y-o-y in October from 0.0% in September. Food
price inflation decreased sharply to -0.8% m-o-m in October from 0.3% in September,
much lower than seasonal patterns suggest. Service price inflation remained negative at -
0.1% m-o-m in October, which suggests the release of pent-up demand in the sector
continued to soften. PPI inflation edged down to -2.6% y-o-y from -2.5%, reflecting the
moderation in global commodity prices. Due to the recent decline in crude oil prices, we
marginally trimmed our annual PPI inflation forecasts for 2023 and 2024 to - 3.0% and -
0.7%, respectively, from -2.9% and -0.4%.
Policy: Following several easing measures in an effort to support the property sector,
consumption and the currency since August and the PBoC’s 25bp RRR cut in mid-
September, Beijing approved RMB1.0trn of additional CGB issuance to fund infrastructure
projects, in a rare move to adjust the central government’s budget in the middle of the
fiscal year. This shows Beijing has become willing to take on more debt. However, we
believe the economic impact of this RMB1.0trn of additional CGBs should not be
overstated, especially in the near term. We maintain our forecast for the PBoC to deliver
one more round of policy rate cuts by year-end.
Risks: Risks to our growth forecasts appear largely balanced. The strength in external
demand and pace of policy easing pose both downside and upside risk to our forecast.
Fig. 4: China: Details of the forecast

% y-o-y growth unless otherwise stated 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 2022 2023 2024 2025
Real GDP (% q-o-q, sa) 2.3 0.5 1.3 0.5 1.5 0.8 0.8 0.8 1.3 0.8 0.8 0.8
Real GDP 4.5 6.3 4.9 4.7 3.9 4.2 3.6 3.9 3.6 3.6 3.7 3.8 3.0 5.1 3.9 3.8
Contributions to GDP (pp):
Final consumption 3.0 5.3 4.7 1.0 4.6 3.1 3.0
Gross capital formation 1.6 2.1 1.1 1.5 1.2 0.9 0.8
Net exports (goods & services) -0.1 -1.1 -0.8 0.5 -0.7 -0.1 0.0
CPI 1.3 0.1 -0.1 -0.1 0.4 0.9 1.1 1.6 1.5 1.4 1.5 1.5 2.0 0.3 1.0 1.5
Core CPI 0.8 0.6 0.8 0.7 0.8 0.9 0.7 0.8 0.8 0.8 0.9 0.9 0.9 0.7 0.8 0.8
PPI -1.6 -4.5 -3.3 -2.6 -2.1 -0.7 0.0 -0.1 0.5 0.4 1.0 1.2 4.1 -3.0 -0.7 0.8
Retail sales (nominal) 5.8 10.7 4.2 10.2 3.2 5.7 6.9 5.0 5.0 5.0 5.1 5.1 -0.2 7.7 5.2 5.1
Fixed-asset investment (nominal, ytd) 5.1 3.8 3.1 3.4 0.3 1.3 3.3 4.0 2.5 5.6 5.2 4.6 5.1 3.4 4.0 4.6
Industrial production (real) 3.0 4.5 4.2 4.8 3.8 4.0 4.2 4.1 4.0 3.8 3.8 3.8 3.6 4.2 4.0 3.9
Exports (value) -1.9 -4.8 -9.8 -3.9 -8.0 -6.5 -3.5 -2.0 -3.5 -2.5 -2.5 -1.0 6.1 -5.3 -5.0 -2.3
Imports (value) -7.0 -6.7 -8.6 -0.6 -5.0 -4.5 -4.0 -3.5 -3.0 -2.0 -1.5 -1.0 0.8 -5.7 -4.2 -1.9
Trade balance (USD bn) 185 224 226 188 150 195 222 195 142 187 210 193 851 819 761 731
Current account balance (% of GDP) 2.0 1.5 1.4 1.1 1.5 1.0 1.4 0.8 1.2 0.9 0.9 0.9 2.3 1.5 1.2 1.0
Fiscal balance (narrow; % of GDP) -4.7 -4.5 -4.2 -4.0
Fiscal balance (broad; % of GDP) -8.1 -7.8 -7.2 -7.0
Outstanding RMB loans 11.8 11.3 10.9 11.0 10.6 10.8 10.8 10.6 10.6 10.5 10.5 10.5 11.1 11.0 10.6 10.4
Outstanding aggregate financing (AF) 10.0 9.0 9.0 9.6 9.5 9.5 9.6 9.5 9.4 9.4 9.4 9.4 9.6 9.6 9.5 9.4
Money supply M2 12.7 11.3 11.3 11.0 11.2 11.0 10.8 10.6 10.6 10.4 10.4 10.4 11.8 11.0 10.6 10.4
1-yr MLF rate (% pa) 2.75 2.65 2.50 2.35 2.35 2.35 2.35 2.35 2.35 2.35 2.35 2.35 2.75 2.35 2.35 2.35
7-day PBoC's reverse repo rate (% pa) 2.00 1.90 1.80 1.60 1.60 1.60 1.60 1.60 1.60 1.60 1.60 1.60 2.00 1.60 1.60 1.60
Reserve requirement ratio (large banks; %) 10.75 10.75 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 11.00 10.50 10.50 10.50
Note: Numbers in bold are actual values; others are forecasts. Interest rate forecasts are end of period; other measures are period average. All forecasts are modal forecasts
(i.e., the single most likely outcome). Table reflects data available as of 9 November 2023.
Source: Wind, Nomura Global Economics.
6
Research Analysts
Euro area: Less gloomy on growth European Economics
We now expect a shallower recession, but still forecast the ECB to leave rates on hold George Buckley - NIplc
until September 2024, when headline and core inflation should be around target.
+44 (0) 20 710 21800
Forecast revisions: In response to actual data, we now expect a shallower recession, Andrzej Szczepaniak - NIplc
andrzej.szczepaniak@nomura.com
with a total decline of only 0.5pp of GDP compared with 1pp previously.
+442071023167
Growth: Euro area growth of -0.1% q-o-q in Q3 was slightly stronger than we expected. George Moran - NIplc
The upside surprise to the big four countries was larger, however, and euro area growth george.moran@nomura.com
was negative largely because of Ireland. Consequently, we have pared back the scale of +442071023320
expected recession (we now see a contraction of only 0.5pp over three quarters, versus
1% previously). The euro area’s manufacturing and services PMIs fell again in October, to
levels usually only seen during downturns. The Sentix survey bounced back in November,
despite our expectations for it to fall further, although the level remains weak and
consistent with a recession. The ECB’s Bank Lending Survey confirmed that financial
conditions remain tight, which has been the case for most of the year, which should
eventually be transmitted to the real economy.
Inflation: Changes to our inflation forecast reflect actual data outturns, and we have not
changed our fundamental view on the path of inflation. The flash figures for October show
that headline was 0.1pp weaker than we expected (at 2.9%) but core HICP inflation was
exactly in line (4.2%). We forecast headline inflation dipping briefly below 2% at the start
of 2024, with core inflation remaining stickier and returning to 2% by August 2024. The
labour market remains very tight in the euro area, with the unemployment rate printing
around historical lows (at 6.5%). Country-level wage data so far suggest euro area
negotiated wage increases could accelerate to around 5%, from 4.4% previously, with
risks of further strength later on. The Indeed Wage Tracker (with a 9m lead), meanwhile,
suggests wage pressures are set to begin turning during the course of 2024. This
supports our view that inflation will ultimately reach the ECB’s 2% inflation target.
Policy: The ECB left its deposit rate on hold at 4% in October. We think its hiking cycle is
now over, and recent ECBspeak largely supports this. A few ECB Governing Council
members have highlighted that upside risks to inflation, stemming from wage-driven
pressures, may open the door to further hikes. Financial markets, meanwhile, are pricing
aggressive cuts for the ECB during 2024 and 2025. In our view, this will only begin in
September 2024, but acknowledge the risk of earlier should the recession be more
pronounced. With regard to accelerating the pace of quantitative tightening, we view
active sales of the APP portfolio as unlikely, and instead expect an announcement in Q2
2024 on the tapering of PEPP, for it to actually begin in Q3 2023.
Risks: There are several risks to our recession call, which include excess savings,
uncertainty over policy lags, as well as uncertainty over its potency, and finally the
divergence between surveys and official data. Uncertainty over our inflation outlook stems
from fuel prices and raw food commodity prices. Moreover, persistently low
unemployment may support stronger wage growth than we currently expect, which may
result in more persistent core HICP inflation.
Fig. 5: Euro area: Details of the forecast

1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 2022 2023 2024 2025
Real GDP (% q-o-q) 0.0 0.2 -0.1 -0.3 -0.1 0.0 0.1 0.2 3.4 0.4 -0.4 1.0
Real GDP level: 2019 Q4=100 102.9 103.1 103.0 102.6 102.5 102.5 102.6 102.8 102.5 102.9 102.6 102.6
Household consumption 0.2 0.0 0.8 -0.1 -0.1 0.0 0.1 0.1 4.2 0.7 0.3 0.8
Fixed investment 0.4 0.1 1.7 -1.5 -0.8 -0.5 0.0 0.3 2.8 1.5 -1.4 1.4
Government consumption -0.6 0.4 0.4 0.4 0.4 0.4 0.4 0.4 1.6 0.3 1.6 1.4
Exports 0.0 -0.9 -2.5 -0.8 -0.5 -0.2 0.0 0.2 7.4 -1.3 -2.7 1.1
Imports -1.1 -0.2 -0.5 -0.8 -0.5 -0.2 0.0 0.2 8.0 -0.9 -1.5 1.1
Contributions to GDP:
Domestic final sales 0.1 0.1 0.9 -0.3 -0.1 0.0 0.1 0.2 3.1 0.7 0.2 1.0
Inventories -0.5 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.3 -0.2 0.2 0.0
Net trade 0.5 -0.4 -1.1 0.0 0.0 0.0 0.0 0.0 0.0 -0.2 -0.7 0.0
Unemployment rate 6.6 6.5 6.5 6.4 6.5 6.7 6.9 7.0 6.7 6.5 6.8 7.0
Compensation per employee 5.5 5.6 5.4 4.8 4.2 4.4 3.9 3.4 4.5 5.3 4.0 2.7
Consumer prices 8.0 6.2 5.0 3.0 2.1 2.0 1.6 1.6 8.4 5.5 1.8 1.7
Core HICP 5.5 5.5 5.1 4.0 2.6 2.4 2.2 2.3 3.9 5.0 2.4 2.1
ECB main refi. rate 3.50 4.00 4.50 4.50 4.50 4.50 4.25 3.75 2.50 4.50 3.75 3.25
ECB deposit rate 3.00 3.50 4.00 4.00 4.00 4.00 3.75 3.25 2.00 4.00 3.25 2.75
10-yr bund yields 2.29 2.39 2.84 2.65 2.70 2.90 2.90 2.65 2.57 2.65 2.65 2.75
EUR/USD 1.08 1.09 1.06 1.02 1.04 1.06 1.08 1.10 1.07 1.02 1.10 1.10
Note: Quarterly figures are % q-o-q changes. Annual figures are % y-o-y changes. Inventories include statistical discrepancy. Inflation is % y-o-y. Interest rates and currencies are
end-of-period levels. Numbers in bold are actual values; others forecast. Table updated on 10 November 2023.
Source: Bloomberg, Nomura Global Economics.
7
Research Analysts
Euro area Big 4: A smaller recession & politics European Economics
We maintain our recession call for each country, but lower the expected decline in GDP. George Buckley - NIplc
Spanish politics, meanwhile, is set to be resolved, even if it is likely to be turbulent.
+44 (0) 20 710 21800
Germany: GDP contracted by 0.1% q-o-q in Q3 2023. We don’t have the expenditure Andrzej Szczepaniak - NIplc
breakdown, but at the sectoral level, we know that industrial production (incl. construction)
+442071023167
was a drag by approx. 0.6pp, meaning services output during the quarter remained
robust. Industrial weakness is likely to continue, because of base effects, but also the George Moran - NIplc
george.moran@nomura.com
truck toll mileage index declined by 1.9% in October and factory orders have fallen for six
+442071023320
of the last eight quarters. Consequently, we expect German GDP to decline by a total of
0.6pp during a three-quarter recession. On inflation, headline HICP fell 1.3pp to 3% y-o-y
in October, while core inflation (headline HICP excluding energy and food) declined to
4.2% from 4.8% previously. Momentum in core, meanwhile, is materially weak, having
fallen to 0.101% m-o-m from 0.159% previously, with the annualised monthly rate now
standing at only 1.2%, versus 1.9% previously and 5.1% in August. Fiscal largesse,
meanwhile, could be thwarted; the German Constitutional Court ruled that unused
pandemic-related funds cannot be repurposed, which amounts to approximately €60bn.
Moreover, there are now questions over whether Germany’s use of shadow budgets,
which circumvent the so-called “debt brake”, are unconstitutional; if so, this could mean a
substantially larger fiscal loss. That said, a lot of uncertainty over the implications of the
court’s ruling remain, and in our view, the eventual ramifications are likely to be contained.
France: Growth surprised to the upside in Q3 2023, printing at 0.1% q-o-q, albeit slowing
from 0.6% in Q2. Importantly, strong household consumption and fixed investment were
materially offset by declining inventories and net trade as a result of a marked fall in
exports. Looking forward, we still expect a recession, albeit only a two-quarter recession
worth 0.3% of GDP. Headline inflation fell to 4.5% y-o-y in October, from 5.7% previously,
and we expect it to reach 2% by mid-2024. Core inflation, meanwhile, is proving more
persistent, with core goods inflation printing at 2.3% and services inflation hovering
around 3% since the start of the year. Underlying momentum, however, has weakened
materially, and now stands at 2.1% (when defined as % 3m/3m annualised).
Italy: Alongside Germany we remain moderately bearish on Italy (in terms of growth)
relative to the euro area aggregate. There are a number of reasons for this, including: 1)
Italy has in the past tended to grow more slowly than the euro area as a whole (between
2015 and 2019 German GDP grew by a total of around 8.5%, France 7.5%, Spain nearly
13% and Italy just over 4.5%), 2) there are concerns about the speed of take-up of Next
Generation EU funds, and 3) Italian 10Y sovereign yield spreads to Germany have risen
by around 33bp since August to almost 200bp currently, adding upward pressure on
borrowing costs. Spreads have risen partly because of the government’s revised deficit
plans (raised from 4.5% to 5.3% of GDP in 2023, from 3.7% to 4.3% of GDP in 2024, and
not falling back below 3% until 2026) and questions about whether the ECB will bring
forward the date at which it plans to allow the PEPP roll-off (bearing in mind the flexibility
embedded within the PEPP as the first port of call to address rising spreads).
Spain: The political vacuum appears likely to be resolved, with incumbent PM Sánchez
deciding to grant amnesty to Catalonian separatists in exchange for the Junts party
backing, allowing Sánchez to form a government, four months after an election that
resulted in no single party winning an overall majority. This has caused tensions with the
centre-right party calling for nationwide protests in response and the European
Commission, too, interjected, saying the amnesty raises “serious concerns”. Spain has
been absent in its role as rotating president of the Council of the European Union,
focusing instead on domestic politics. This may now mean it plays more of an active role
in brokering desperately needed new EU fiscal rules.
Fig. 6: Big four: Details of the forecast

GDP & HICP by country 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 2022 2023 2024 2025
GDP: Germany 0.0 0.1 -0.1 -0.3 -0.2 0.0 0.1 0.2 1.9 -0.2 -0.3 1.0
France 0.1 0.6 0.1 -0.2 -0.1 0.1 0.2 0.2 2.5 0.8 0.2 1.1
Italy 0.6 -0.4 0.0 -0.3 -0.2 0.0 0.1 0.1 3.9 0.6 -0.4 0.7
Spain 0.6 0.4 0.3 -0.1 -0.1 0.1 0.2 0.3 5.8 2.3 0.3 1.4
HICP: Germany 8.7 6.9 5.8 3.1 2.2 2.0 2.0 1.9 8.6 6.1 2.0 2.2
France 7.0 6.1 5.5 4.2 2.7 2.1 1.8 1.8 5.9 5.7 2.1 1.7
Italy 9.5 7.8 5.8 1.4 0.6 1.3 0.9 1.1 8.7 6.1 1.0 1.6
Spain 5.0 2.8 2.6 4.2 3.2 3.7 2.5 2.3 8.3 3.6 2.9 2.0
Note: Quarterly figures are % q-o-q changes. Annual figures are % y-o-y changes. Numbers in bold are actual values; others forecast. Table updated 10 November 2023
Source: Bloomberg, Haver Analytics, Nomura Global Economics.
8
Research Analysts
Hong Kong: Slower growth ahead Asia Economics
Subdued rebound in Q3 GDP points to moderate growth in coming quarters. Ting Lu - NIHK
ting.lu@nomura.com
+852 2252 1306
Forecast changes: We trim our 2023 and 2024 annual GDP growth forecasts to 3.2%
and 2.4%, respectively, from 4.0% and 2.6%. Harrington Zhang - NIHK
harrington.zhang@nomura.com
Activity: Preliminary data show that GDP growth rebounded to 4.1% y-o-y in Q3 from +852 2252 2057
1.5% in Q2, but was notably below expectations. On a sequential, seasonally adjusted Jing Wang - NIHK
basis, GDP growth returned to a marginally positive 0.1% q-o-q in Q3, from -1.3% in jing.wang@nomura.com
Q2. The year-on-year rebound was partly driven by a low base, with domestic demand +852 2252 1011
recovering steadily. Personal consumption expenditure was still healthy, but government Hannah Liu - NIHK
spending plunged, and private investment surged on a low base, while inventory build-up hannah.liu@nomura.com
reversed its previous slump and made sizeable positive contributions to headline growth. +852 2252 1082
Retail sales growth slowed to a still-healthy 13.0% y-o-y in September from 13.7% in
August. Labour market conditions remain healthy, with the unemployment rate at 2.8% in
September, unchanged from August. Overall, we expect private consumption to remain
resilient over coming months, but external demand is likely to remain weak. With elevated
interest rates, private investment also faces headwinds. Property prices have now
dropped below the previous trough reached late last year, and we expect the sector to
remain highly depressed, owing to structural factors and elevated interest rates.
Inflation : CPI inflation rebounded to 2.0% y-o-y in September from 1.8% in August,
partly due to the release of strong pent-up demand from visiting Mainland tourists, which
notably boosted food prices and prices in parts of the services sector. However, we
expect a payback following the Golden Week holiday. Shelter inflation has remained fairly
muted, staying at 0.0% m-o-m in September for the sixth consecutive month, but holding
up better than property prices, and we maintain our view that housing costs will remain
subdued.
Policy: Following the inaction at November’s FOMC meeting, our US economics team
continues to believe the Fed has reached the end of its current rate hiking cycle. This
should provide continued relief for the HKMA. That said, there is still a non-trivial
possibility that local banks may raise their prime rates slightly further. At the policy
address in late October, Chief Executive John Lee announced some property sector
easing measures, such as slashing the stamp duty imposed on non-permanent-residents,
but we believe these are unlikely to fundamentally change the underlying trend in Hong
Kong’s property market, as structural headwinds remain fully intact.
Risks: Risks to our forecasts appear largely balanced. Downside risks include further
rate hikes by the Fed and the prospect of “higher for longer” rates, prolonged housing
market distress and non-linear effects from weak external demand. Upside risks include a
larger-than-expected release of pent-up demand from local consumers, faster/earlier-
than-expected rate cuts from the Fed, and a stronger-than-expected recovery in China’s
economy and Mainland tourists.
Fig. 7: Hong Kong: Details of the forecast

% y-o-y growth unless otherwise stated 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 2022 2023 2024 2025
Real GDP (sa, % q-o-q) 0.1 0.0 1.2 1.0 1.0 0.7 0.6 0.6
Real GDP 4.1 4.2 0.0 2.4 3.4 4.0 3.4 3.0 -3.5 3.2 2.4 2.9
Contributions to GDP (pp)
Domestic final sales 6.4 4.5 3.9 5.8 4.1 5.2 7.6 5.2 -1.1 6.0 4.7 4.7
Inventories 3.1 -2.8 -4.4 -4.3 0.0 -4.1 -2.5 -0.7 -1.1 -1.8 0.9 -1.5
Net trade (goods & services) -5.4 2.4 0.5 1.0 -0.7 2.9 -1.6 -1.5 -1.3 -1.1 -3.2 -0.3
Unemployment rate (sa, %) 2.8 2.7 2.7 2.6 2.6 2.6 2.5 2.5 4.3 3.0 2.6 2.4
Consumer prices 1.9 1.6 1.2 1.6 1.9 2.0 1.7 1.8 1.9 1.9 1.7 1.8
Exports -6.0 3.7 18.5 15.1 10.5 4.5 3.6 2.7 -8.6 -8.5 11.4 8.1
Imports -2.8 4.9 14.1 13.2 10.1 3.2 2.9 2.3 -7.2 -6.2 6.9 7.2
Current account balance (% of GDP) 5.7 4.0 1.0 -0.3 2.8 2.1 0.9 -0.4 11.0 3.4 1.4 1.1
Fiscal balance (% of GDP) -8.8 -1.8 3.2 2.8
Discount rate (%) 5.75 5.75 5.50 5.00 4.50 4.00 3.50 3.00 4.75 5.75 4.00 3.00
3-month Hibor (%) 5.27 5.50 5.00 4.75 4.50 4.25 4.00 3.75 4.99 5.50 4.25 3.50
Exchange rate (USD/HKD) 7.83 7.84 7.81 7.80 7.79 7.78 7.77 7.77 7.79 7.84 7.78 7.75
Note: Numbers in bold are actual values; others are Nomura forecasts. Interest rate and currency forecasts are end of period; other measures are period average. All forecasts
are modal forecasts (i.e., the single most likely outcome). Financial year (FY) from April to next March is applied for fiscal balance (government consolidated account). Table
reflects data available as of 9 November 2023.
Source: CEIC, Wind, Nomura Global Economics
9
Research Analysts
India: Politics coming to the fore Asia Economics
Growth and underlying inflation have stayed stable, albeit with upside risks to food prices. Sonal Varma - NSL
sonal.varma@nomura.com
Monetary policy remains on a long pause for now, while fiscal risks are rising.
+65 6433 6527
Forecast revision: We lower our CA deficit forecast to -1.1% of GDP in 2023 (from - Aurodeep Nandi - NFASL
aurodeep.nandi@nomura.com
1.4%).
+91 22 4037 4087
Activity: GDP growth rose to 7.8% y-o-y in Q2 from 6.1% in Q1, supported by stronger
private consumption and fixed investment, and this momentum has persisted into Q3.
Although there has been some paring back in September, overall consumption growth in
Q3 has improved from Q2. That said, rural growth remains subdued. Investment growth
has been robust, reflecting strong public capex. Both merchandise export and import
growth contracted in September from upwardly revised growth rates in August, leading to
a narrower trade deficit. While GDP growth is likely to remain strong in Q3, we are
cautious of headwinds from weaker rural demand, a likely slowdown in government capex
and spillovers from sluggish global growth . We forecast GDP growth of 6.3% y-o-y in
2023 and 5.5% in 2024 (FY24: 5.9%; FY25: 5.6%).
Inflation: CPI inflation eased to 4.9% y-o-y in October from 5.0% in September, amid
higher food inflation, while core CPI inflation eased to 4.3% from 4.5%. Our broader
measures of underlying inflation suggest core inflation remains well contained. Early data
for November suggest headline inflation is tracking higher in November at ~5.8%, due to
higher onion prices, but core inflation should remain anchored at ~4.3%. We expect
vegetable prices to sharply correct in December and through Q1 2024, with headline
inflation likely to average 5.3% in FY24 and 4.4% in FY25, close to the RBI’s projections.
Policy: The RBI left policy rates unchanged at its October policy meeting , but the
combination of hawkish forward guidance and the threat of OMO sales to manage liquidity
sent a hawkish signal. Moderating core pressures amid robust growth should ensure a
policy pause, but upside headline inflation risks will keep the RBI hawkish. As growth
moderates, we believe the RBI’s priorities will shift away from inflation control to growth
management. We expect 100bp in cumulative easing in 2024 from April. On the political
side, five state elections are underway, which will have implications for the general
elections in 2024, and populism is once again in vogue, with the government looking to
extend its free food scheme for five years. While the near-term macro implications are
muted, higher revenue expenditure, including on rural employment guarantees, could
affect the government’s FY24 fiscal deficit target of 5.9% of GDP.
Risks : Downside risks to growth are sluggish private capex, higher oil prices, poor
monsoons and weak global growth, while upside risks are resilient consumer demand and
public capex. Food and oil prices pose both upside and downside risk to inflation.
Fig. 8: India: Details of the forecast
% y-o-y growth unless otherwise stated 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 2023 2024 2025
Real GDP 6.3 5.2 4.7 4.6 5.5 7.2 5.1 6.0 6.3 5.5 6.6
Private consumption 6.9 4.8 5.5 6.7 4.9 5.6 4.6 6.0 5.1 5.7 6.0
Government consumption 9.2 11.5 9.1 7.6 9.9 10.8 6.1 10.0 5.0 9.3 7.2
Fixed investment 5.0 4.1 2.3 1.1 3.4 8.0 7.8 8.5 6.6 3.6 7.9
Exports (goods & services) -9.0 -4.4 -0.4 -2.7 2.4 3.8 9.3 15.0 -2.4 0.7 12.2
Imports (goods & services) -3.5 -2.8 0.4 5.4 1.5 4.2 9.2 11.0 2.0 2.9 10.6
Contributions to GDP (pp)
Domestic final sales 6.6 5.3 4.9 5.0 5.0 7.0 5.9 7.4 5.7 5.4 6.9
Net trade (goods & services) -1.2 -0.3 -0.2 -2.0 0.1 -0.2 0.0 -0.1 -1.1 -0.6 -0.1
Consumer price index 6.4 5.2 4.7 4.8 3.6 4.5 4.7 4.7 5.6 4.4 4.6
Current account balance (% GDP) -0.8 -2.2 -1.3 -1.2 -1.5 -1.7 -1.0 -1.0 -1.1 -1.4 -1.2
Fiscal balance (% GDP) -6.2 -5.7 -5.3
Repo rate (%) 6.50 6.50 6.50 6.00 5.75 5.50 5.50 5.50 6.50 5.50 5.50
Standing Deposit Facility (SDF) rate (%) 6.25 6.25 6.25 5.75 5.50 5.25 5.25 5.25 6.25 5.25 5.25
Cash reserve ratio (%) 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
10-year bond yield (%) 7.22 7.00 6.75 6.50 6.50 6.50 6.25 6.25 7.00 6.50 6.25
Exchange rate (USD/INR) 83.0 85.0 83.2 82.7 82.3 81.8 81.4 80.9 85.0 81.8 80.0
Note: Numbers in bold are actual values; others forecast. Interest rate and currency forecasts are end of period; other measures are period average. For fiscal balance, calendar
year refers to the forthcoming fiscal year. The SDF rate has replaced the reverse repo rate as the operational floor of the policy corridor from April 2022. Table reflects data
available as of 16 November 2023.
Source: CEIC and Nomura Global Economics
10
Research Analysts
Indonesia: Rising political uncertainty Asia Economics
We are becoming more cautious about rising political risks ahead of the elections, which Euben Paracuelles - NSL
euben.paracuelles@nomura.com
may further weigh on market sentiment and add to external vulnerability .
+65 6433 6956
Forecast changes: We revise our policy rate forecast to be unchanged at 6.0% until Nabila Amani - NSL
nabila.amani@nomura.com
end-2023 and push out the start of BI’s cutting cycle to September 2024 .
+65 6433 6409
Activity: We continue to forecast GDP growth of 5.1% y-o-y for 2023 (2022: 5.3%),
before improving to 5.3% in 2024, driven mainly by election-related spending. GDP
growth eased materially to a lower-than-expected 4.9% y-o-y in Q3 from 5.2% in Q2, led
by weaker private consumption growth . We expect a pick up to 5.2% y-o-y in Q4, with the
government likely accelerating budget disbursements. We still forecast a current account
deficit (CAD) of 0.5% of GDP in 2023 and 1.3% in 2024, due to deteriorating terms-of-
trade effects and weak external demand. The overall balance of payments is already
weakening owing to the return of a CAD when global financial conditions are tightening.
We think domestic political uncertainty will exacerbate these external financing pressures,
partly because the fall in FDI inflows tends to intensify ahead of presidential elections.
Based on recent surveys, we believe Defence Minister Prabowo is the front-runner. This
could increase caution among market participants, partly because his programme is seen
as nationalist and populist, which could raise fiscal risks .
Monetary policy and inflation: Despite a still-benign inflation outlook, BI surprisingly
raised its policy rate to 6.00% in October, citing the need to stabilize the currency . We no
longer forecast another 25bp policy rate hike by BI at its next meeting on 23 November, in
view of latest external developments, including falling UST yields and the softening of
USD. While FX stability is BI’s main objective, weaker-than-expected Q3 GDP growth
could also make it more reluctant to hike further. We maintain our CPI inflation forecast of
3.6% y-o-y in 2023, falling from 4.2% in 2022, with a drop to 2.6% in 2024. Our forecast
pencils in headline inflation edging up to 2.5% in Q4, due to higher food prices .
Fiscal policy: We still forecast a 2023 fiscal deficit of 2.1% of GDP, lower than the latest
official guidance of 2.3%. The fiscal deficit expanded sharply to IDR79.3trn in September
from IDR6.3trn in August, keeping the year-to-date total in a surplus of IDR67.7trn.
Central government spending is likely to pick up further in Q4. The 2024 budget was
approved in parliament, projecting a deficit of 2.3% of GDP, in line with our forecast and
suggesting a still-conservative fiscal stance despite the elections.
Risks: Downside risks to growth may come from more political uncertainty weighing on
domestic demand. Rising commodity prices and terms of trade is an upside risk.
Fig. 9: Indonesia: Details of the forecast

Real GDP (sa, % q-o-q) 0.3 1.6 2.1 1.2 0.2 1.4 1.6 1.4
Real GDP 4.9 5.2 5.7 5.3 5.2 5.0 4.6 4.7 5.1 5.3 5.1
Government consumption -3.8 2.0 0.7 -3.8 4.8 3.0 1.7 1.1 3.1 1.3 2.5
Gross fixed capital formation 5.8 5.0 4.3 3.9 5.2 6.0 5.2 5.3 3.8 4.9 5.6
Exports (goods & services) -4.3 -0.1 0.9 4.4 4.6 5.1 6.7 6.9 1.6 3.8 5.8
Imports (goods & services) -6.2 4.1 2.7 6.0 10.2 8.9 11.1 10.9 -0.9 7.0 8.2
Contributions to GDP (% points)
Inventories 0.5 1.3 1.6 1.5 1.1 0.5 0.7 0.9 0.2 1.2 0.6
Net trade (goods & services) 0.2 -0.9 -0.3 -0.1 -0.8 -0.6 -0.6 -0.5 0.6 -0.5 -0.3
Unemployment rate (% nsa) 5.4 5.4 5.3 5.3 5.2 5.2 5.2 5.2 5.4 5.3 5.2
Consumer prices 2.9 2.5 2.6 2.6 2.7 2.6 2.8 2.3 3.6 2.6 2.5
Exports (BOP basis) -16.8 -9.8 -1.9 7.9 6.2 6.7 2.0 4.4 -11.2 4.6 3.9
Imports (BOP basis) -6.6 8.6 17.8 22.1 15.1 7.9 11.1 10.9 -3.8 15.4 8.3
Trade balance (US$bn, BOP basis) 8.5 5.0 4.0 3.8 4.1 4.6 -1.5 -0.2 38.6 16.5 6.0
Current account balance (US$bn) -2.3 -6.1 -4.9 -5.9 -4.9 -4.2 -6.3 -8.6 -7.3 -19.9 -26.2
Current account balance (% of GDP) 0.2 -0.5 -1.0 -1.3 -1.4 -1.3 -1.3 -1.4 -0.5 -1.3 -1.5
Fiscal Balance (% of GDP) -2.1 -2.3 -2.2
Policy rate, 7 day reverse repo rate (%) 5.75 6.00 6.00 6.00 5.75 5.00 5.00 5.00 6.00 5.00 5.00
10-year government bond yield (%) 6.91 6.50 6.25 5.75 5.75 5.75 5.75 5.75 6.50 5.75 5.75
Exchange rate (USD/IDR) 15526 15650 15100 14900 14800 14650 14538 14425 15650 14650 14200
Note: Numbers in bold are actual values; others forecast and inventories under the GDP components also includes statistical discrepancies. Interest rate and currency forecasts
are end of period; other measures are period average. Quarterly current account balance (% of GDP) numbers are four-quarters rolling sum. All forecasts are modal forecasts
Source: CEIC, Nomura Global Economics.
11
Research Analysts
Japan: Scrapping YCC and NIRP frontloaded Japan Economics
We now believe YCC and NIRP will be scrapped sooner than we had expected, with YCC Kyohei Morita - NSC
kyohei.morita@nomura.com
scrapped in Q2 2024 (most likely in April) and NIRP in Q3 2024 or later (most likely in Q3 2024).
+81 3 6703 1395
Activity: We revised our GDP outlook and now expect Japan to recover with an above- Takashi Miwa - NSC
takashi.miwa@nomura.com
potential pace (or above an annual rate of approximately 0.5%), starting in Q4 2023
+81 3 6703 1280
through 2025, leading to a rise in the positive margin of the output gap.
Kohei Okazaki - NSC
The factors leading to this view include 1) an increase in real labor income backed by kohei.okazaki@nomura.com
wage hikes, 2) support for private consumption through the Kishida cabinet’s economic +81 3 6703 1255
package containing grants for low income earners and personal income tax cuts, together Uichiro Nozaki - NSC
exceeding JPY5trn or roughly 1.5% of annual household disposable income, 3) progress uichiro.nozaki@nomura.com
in labor-saving and digitalization types of capex under a harsh labor shortage and 4) a +81 3 6703 1284
decline in the likelihood of the US economy falling into a recession soon (i.e., Q4 2023). Yuki Ito - NSC
yuki.ito@nomura.com
Inflation: Given our new economic outlook, we remain of the view that core CPI inflation
+81 3 6703 3867
(less fresh food) will decline toward H2 2024, driven by food prices but that inflation will
grow stickier further out, supported by continued wage hikes on the back of a labor Yuki Kodera - NSC
yuki.kodera@nomura.com
shortage and an improving output gap.
+81 3 6703 1281
Policy: Since we now believe Japan will recover at an above-potential pace, we changed
our BOJ call. Our new main scenario is for the scrapping of YCC in Q2 2024 (potentially in
April) and the scrapping of NIRP in or after Q3 2024 (potentially in Q3 2024). We expect
the BOJ to remove the phrase "will not hesitate to take additional easing measures if
necessary" from its forward guidance at the same time that it ends its YCC policy.
That said, we find it difficult to assume that the BOJ will adopt a positive interest rate
policy and quantitative tightening (QT) going forward, as we do not envision entrenched
economic conditions (growth in demand and wages) that would result in inflation
remaining above 2% in a sustainable and stable fashion. We thus think the BOJ will also
retain its inflation-overshooting commitment (the commitment to continue expanding the
monetary base until core CPI inflation consistently exceeds 2%).
Risks: Uncertainties regarding Japan’s economy include effects on exports arising from
the US and China economies, slower-than-expected consumption with declining real
wages, corporate price- and wage-setting behavior affecting inflation and wage growth
and global resources and food prices affecting the terms of trade.
Fig. 10: Japan: Details of the forecast

% 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 2023 2024 2025
Real GDP (% q-o-q, annualized) 3.7 4.5 -2.1 0.9 0.7 1.3 0.2 -0.7 1.3 1.6 1.0 1.0
Real GDP (% q-o-q) 0.9 1.1 -0.5 0.2 0.2 0.3 0.1 -0.2 0.3 0.4 0.2 0.3 1.7 0.6 0.8
Private consumption 0.7 -0.9 0.0 0.5 0.6 0.5 0.3 -0.2 0.2 0.3 0.2 0.2 0.7 1.2 0.7
Private non res fixed invest 1.7 -1.0 -0.6 0.6 0.9 1.0 0.5 0.4 0.8 0.8 0.8 0.8 1.6 1.8 2.8
Residential fixed invest 0.5 1.8 -0.1 -2.2 -0.5 0.1 -0.2 -0.3 -0.4 -0.7 -0.7 -0.7 1.4 -1.9 -1.8
Government consumption 0.1 0.0 0.3 0.2 -0.6 -0.2 0.0 0.4 0.2 -0.1 0.2 0.5 0.5 -0.3 0.6
Public investment 1.4 0.3 -0.5 -2.1 -1.9 -0.7 -0.9 -2.3 1.5 1.9 -1.4 -2.4 1.5 -5.1 -0.9
Exports -3.5 3.9 0.5 0.9 0.7 0.6 -0.2 0.0 0.7 0.9 0.8 0.8 2.6 3.0 2.1
Imports -2.1 -3.8 1.0 0.7 1.1 0.9 0.5 0.3 0.7 0.5 0.6 0.5 -1.4 2.1 2.2
Contributions to GDP: (ppt, q-o-q)
Domestic final sales 0.7 -0.6 -0.1 0.2 0.2 0.4 0.2 -0.1 0.3 0.3 0.2 0.2 1.0 0.5 0.8
Inventories 0.4 -0.1 -0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.2 -0.2 0.0
Net trade -0.2 1.8 -0.1 0.0 -0.1 -0.1 -0.1 -0.1 0.0 0.1 0.1 0.1 0.8 0.2 0.0
Unemployment rate 2.6 2.6 2.6 2.6 2.6 2.5 2.5 2.5 2.4 2.4 2.4 2.4 2.6 2.5 2.4
Consumer prices (% y-o-y) 3.6 3.3 3.2 2.6 2.2 1.9 1.7 1.6 1.6 1.7 1.7 1.5 3.2 1.8 1.6
Core CPI 3.5 3.3 3.0 2.6 2.2 1.9 1.7 1.6 1.6 1.7 1.7 1.5 3.1 1.8 1.6
CPI less foods (ex. alcoholicbeverages)
2.1 2.6 2.7 2.9 1.9 1.7 1.6 1.7 1.7 1.6 1.6 1.6 2.6 1.7 1.6
and energy
Fiscal balance (fiscal yr, % GDP) -7.5 -4.9 -4.4
Current account balance (% GDP) 1.7 3.6 5.2 4.0 4.1 3.5 4.7 3.2 3.8 3.4 4.9 3.5 3.6 3.9 3.9
Policy rate -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 0.00 0.00 0.00 0.00 0.00 0.00 -0.10 0.00 0.00
JGB 5-year yield 0.09 0.06 0.32 0.35 0.35 0.40 0.50 0.50 0.50 0.50 0.50 0.50 0.35 0.50 0.50
JGB 10-year yield 0.32 0.40 0.77 0.80 0.80 0.90 1.05 1.10 1.10 1.10 1.10 1.10 0.80 1.10 1.10
JPY/USD 132.9 144.3 149.4 148.0 140.0 135.0 130.0 130.0 130.0 130.0 130.0 130.0 148.0 130.0 130.0
Note: Unemployment rate is as a percentage of the labour force. Inflation measures and CY GDP are year-on-year percent changes. Interest rate forecasts are end of
period. Fiscal balances are for fiscal year and based on general account. Economic forecasts as of 15 November 2023.
Source: Cabinet Office, Ministry of Finance, Statistics Bureau, BOJ and Nomura Global Economics.
12
Research Analysts
Malaysia: Macro policies stay the course Asia Economics
Despite weak FX, monetary policy should remain stable. Fiscal consolidation is still intact Euben Paracuelles - NSL
but, with limited details in Budget 2024, we are more sanguine on inflation.
+65 6433 6956
Forecast changes: We reduce our fiscal deficit forecasts to 5.0% of GDP from 5.4% for Nabila Amani - NSL
nabila.amani@nomura.com
2023 and to 4.6% from 4.9% for 2024.
+65 6433 6409
Activity: We maintain our forecast for GDP growth to slow significantly to 3.6% y-o-y in
2022 from 8.7% in 2022 (below the official range of 4-5%), before modestly improving to
3.8% in 2024 and 4.3% in 2025. Weak external demand, particularly from China, will likely
remain a drag on Malaysia’s exports of goods and services and the tourism recovery. We
also continue to expect elevated global uncertainty to weigh on business sentiment and,
as is already evident in the data, on domestic demand. Based on advanced estimates of
the government, Q3 GDP growth improved only modestly to 3.3% y-o-y after falling
sharply to 2.9% in Q2. We continue to forecast a narrowing of the current account surplus
to 2.6% of GDP in 2023 from 3.1% in 2022 and further to 2% in 2024, reflecting still-weak
external demand and electronics exports lagging the bottoming of the global tech cycle.
Monetary policy and inflation: We maintain our forecast that Bank Negara Malaysia
(BNM) is done with its hiking cycle and will be on hold throughout 2024. At its last meeting
of 2023, BNM left its policy rate unchanged at 3% for the third consecutive meeting. In
line with our view, the tone of the policy statement was similar to the previous meeting,
which we argued tilted slightly dovish and signalled a more neutral stance. BNM still
emphasized that the growth outlook remains subject to downside risks and inflation will
remain relatively modest. We maintain our forecast for CPI inflation to average 2.6% and
2.1% in 2023 and 2024, respectively, assuming no major changes in the subsidy policy.
Fiscal policy: We lower our fiscal deficit forecasts to 5.0% and 4.6% in 2023 and 2024,
respectively. For 2024, our forecast is still above the budget’s 4.3% target, reflecting our
more cautious view on the economic outlook due to a weak external environment. Still,
our 2024 forecast represents a modest decline from our 2023 forecast of 5.0% given
government efforts to stay on track with its medium-term fiscal agenda, by keeping overall
spending broadly stable and implementing small revenue-raising measures as unveiled in
Budget 2024. However, no details were provided on subsidy rationalization plans, which
to us suggests only gradual adjustments are likely, so that higher inflation does not
exacerbate cost of living concerns.
Risks: A sharper global slowdown and the return of domestic political risks are downside
risks to growth. Stabilization in China and a stronger tech uptrend are upside risks.
Fig. 11: Malaysia: Details of the forecast

Real GDP (sa, % q-o-q) 1.1 0.4 0.5 1.2 1.5 1.6 0.2 0.9
Real GDP 1.8 4.0 3.5 3.1 3.6 4.9 4.6 4.3 3.6 3.8 4.3
Gross fixed capital formation 6.1 11.1 8.7 1.8 2.1 -3.5 -0.3 6.1 6.9 2.2 2.8
Exports (goods & services) -9.6 -2.2 1.5 1.9 4.1 5.8 8.9 5.4 -6.2 3.4 6.7
Imports (goods & services) -7.3 0.2 3.6 3.4 4.6 3.7 6.8 6.5 -5.8 3.8 6.5
Inventories 0.2 0.8 0.5 0.3 -0.1 0.3 -0.4 -0.2 -0.2 0.3 -0.3
Net trade (goods & services) -2.3 -1.7 -1.1 -0.8 -0.2 1.6 1.7 -0.5 -0.6 -0.1 0.5
Unemployment rate (% sa) 3.4 3.5 3.6 3.5 3.6 3.6 3.6 3.6 3.5 3.6 3.6
Consumer prices 2.0 1.9 2.0 2.1 2.2 2.2 2.4 2.5 2.6 2.1 2.6
Exports (BOP basis) -19.7 -10.8 -6.2 8.2 14.0 15.9 13.8 13.3 -15.9 8.0 13.1
Imports (BOP basis) -19.3 -7.7 -1.2 12.9 17.0 16.4 8.9 8.7 -15.0 11.3 9.7
Trade balance (US$bn, BOP basis) 8.2 9.5 6.0 4.7 7.8 10.7 9.2 7.9 33.3 29.2 40.7
Current account balance (US$bn) 3.0 4.4 2.1 1.6 2.3 2.3 1.8 1.3 10.4 8.2 8.3
Current account balance (% of GDP) 3.0 2.6 2.9 2.8 2.5 2.0 1.8 1.8 2.6 2.0 1.8
Fiscal Balance (% of GDP) -5.0 -4.6 -4.2
Overnight policy rate (%) 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Exchange rate (USD/MYR) 4.69 4.61 4.56 4.53 4.48 4.40 4.38 4.37 4.61 4.40 4.33
Note: Numbers in bold are actual values; others are forecasts, and inventories under the GDP components also includes statistical discrepancies. Interest rate and currency
forecasts are end of period; other measures are period average. All forecasts are modal forecasts (i.e., the single most likely outcome). Table reflects data available as of 9
November 2023.
13
Research Analysts
Philippines: Additional tightening off the table Asia Economics
After BSP’s latest 25bp hike, which was delivered off-cycle, headline CPI inflation Euben Paracuelles - NSL
surprised significantly lower. We thus see additional hikes as unwarranted .
+65 6433 6956
Forecast changes: We push out the start of Bangko Sentral ng Pilipinas' (BSP) cutting
cycle from May to September 2024, taking our end-2024 policy rate forecast to 5.75%
(was 5.0%). We lower our current account deficit (CAD) forecast to 3.3% of GDP for 2023
and 2024 (from 3.9% and 3.7%), and to 3.0% from 3.4% for 2025.
Activity: We maintain our forecast for GDP growth to slow to 5.2% y-o-y in 2023 from
7.6% in 2022 (below the government’s 6-7% range), before a modest improvement to
5.8% in 2024 and 6.1% in 2025, helped by public infrastructure spending, which is likely
to gather momentum after the shock Q2 GDP contraction. Indeed, GDP growth in Q3
improved to 5.9% y-o-y from 4.3%, led by stronger construction activity. Taking into
account the narrowing of the goods trade deficit in Q3 , we lower our 2023-25 CAD
forecasts, but they are still historically wide (i.e., relative to the CAD since 2016). We still
expect capital goods imports to pick up, as the implementation of infrastructure projects
gains more traction over the next few quarters into the mid-term elections in 2025.
Inflation and monetary policy: Headline CPI inflation fell significantly to a much lower-
than-expected 4.9% y-o-y in October from 6.1% in September, led by lower food price
inflation, particularly for rice and vegetables. Core inflation also eased to 5.3% from 5.9%,
in line with weaker demand conditions. We maintain our CPI inflation forecasts of 6.2% for
2023 and 3.8% for 2024. Base effects will start to become more favourable in the next few
months but, similar to BSP’s assessment, we believe headline inflation is unlikely to return
to BSP’s 2-4% target until August 2024. Against this backdrop, we think BSP’s hiking
cycle is likely over after delivering an off-cycle 25bp hike to 6.5% in October . As we
expected, BSP left its policy rate unchanged on 16 November, citing moderating inflation
and inflation expectations for 2024, but kept a hawkish tone. We forecast the start of
BSP's cutting cycle in September 2024 after we expect actual data to show headline
inflation is becoming more entrenched within BSP’s 2-4% target.
Fiscal policy: We forecast still-high fiscal deficits of 6.6% of GDP in 2023 and 5.9% in
2024, above the government’s medium-term fiscal framework (MTFF) targets of 6.1% and
5.1%, respectively. We believe these MTFF targets will be challenging to meet, as
revenues will likely underperform, while the disbursement of capital expenditures will likely
improve, given the prioritization of the government’s “build better more” program. The
fiscal deficit rose to 6.6% of GDP in September from 6.3% in August, led by higher capital
expenditures as the government pushes catch-up spending plans.
Risks: A resurgence in food and energy prices and a deeper global growth slowdown are
downside risks to growth. Higher FDI inflows, more structural reforms and a faster roll-out
of infrastructure are upside risks.
Fig. 12: Philippines: Details of the forecast

Real GDP (% q-o-q, sa) 3.3 1.3 1.3 1.4 1.5 0.7 1.7 1.8
Real GDP 5.9 4.4 5.3 7.5 5.6 5.0 5.4 5.8 5.2 5.8 6.1
Gross fixed capital formation 7.9 10.0 5.8 15.7 14.1 11.6 9.6 9.3 8.0 12.0 13.8
Exports (goods & services) 2.6 -0.6 1.3 4.1 4.6 4.9 6.5 7.2 1.8 3.8 8.2
Imports (goods & services) -1.3 6.9 4.6 11.1 12.6 9.9 6.7 8.1 2.5 9.6 11.5
Contribution to GDP growth (% points)
Inventories -2.1 0.4 -0.3 0.8 0.5 0.0 -0.2 -0.4 -0.5 0.3 -0.1
Net trade (goods & services) 1.4 -2.5 -1.5 -3.2 -3.6 -2.3 -1.0 -1.4 -0.5 -2.7 -2.4
Unemployment rate (sa, %) 4.7 4.9 5.4 5.4 5.3 5.1 5.3 5.3 4.7 5.3 5.0
Consumer prices (2018=100) 5.4 5.1 4.6 4.5 3.6 2.7 2.4 3.5 6.2 3.8 3.3
Exports (BOP basis) 0.9 -1.3 5.7 4.4 6.1 7.9 4.2 10.2 -2.7 6.1 8.2
Imports (BOP basis) -10.8 4.7 -0.3 1.8 7.4 8.5 9.2 7.2 -4.4 4.4 8.4
Trade balance (US$bn, BOP basis) -15.7 -16.7 -16.4 -16.0 -17.0 -18.2 -18.5 -16.7 -65.6 -67.6 -73.4
Current account balance (US$bn) -3.1 -3.0 -4.9 -2.8 -3.9 -3.8 -5.2 -3.3 -14.4 -15.4 -16.3
Current account balance (% of GDP) -2.7 -3.3 -3.3 -3.1 -3.2 -3.3 -3.2 -3.2 -3.3 -3.3 -3.0
Fiscal balance (% of GDP) -6.6 -5.9 -5.2
Reverse repo rate (%) 6.25 6.50 6.50 6.50 6.25 5.75 5.25 5.00 6.50 5.75 5.00
Exchange rate (USD/PHP) 57.0 58.5 57.5 57.0 56.5 56.0 55.6 55.3 58.5 56.0 54.5
Note: Numbers in bold are actual values; others forecast. “Inventories” component contribution to GDP also includes statistical discrepancies. Interest rate and currency forecasts
are end of period; other measures are period average. Quarterly current account balance (% of GDP) numbers are four-quarters rolling sum. All forecasts are modal forecasts
14
Research Analysts
Singapore: Higher for longer core inflation Asia Economics
The Monetary Authority of Singapore (MAS) left its FX policy unchanged in October amid Euben Paracuelles - NSL
still-elevated core inflation. We expect no change in FX policy for an extended period.
+65 6433 6956
Activity: We maintain our GDP growth forecasts of 0.5% y-o-y in 2023 (Consensus: 0.9%) – at Charnon Boonnuch - NSL
charnon.boonnuch@nomura.com
the bottom of the official forecast range of 0.5-1.5% – and 2.0% in 2024 (Consensus: 2.2%). We
+65 6433 6189
expect a more subdued recovery due to weaker global growth, led by China and the mild
recessions we expect in Europe and the US. Industrial output growth improved to -2.1% y-o-y in
September from -11.6% in August, led by the rebound in electronics output. Visitor arrivals also
picked up to 77.3% of 2019 levels in September after easing to 75.4% in August, but still below
the 78.8% reading in July. We expect the services sector to trail the manufacturing recession and
make the downturn more synchronized eventually. Despite a weakening economy, the
unemployment rate rose only slightly to 2.0% in Q4 from 1.9% in Q3, as high vacancy rates likely
absorbed higher retrenchments. Employment growth remained robust in Q3, but the hiring
outlook became more mixed, with official survey pointing to a slowdown in Q4, while others show
labor demand holding up over the next year. This is consistent with our view that labor market
tightness will soften only gradually, despite a slowing economy.
Inflation and monetary policy: We maintain our 2023 core inflation forecast of 4.1%,
pencilling in 2.9% y-o-y for Q4, easing from 3.4% in Q3 but at the higher end of the MAS’
forecast range of 2.5-3.0%. We see upside risks to our 2024 forecast of 2.6%, owing to
renewed geopolitical tensions that may push up oil prices and protectionist measures that
could lead to higher food prices. The MAS left its FX policy unchanged in October with a
broadly balanced policy statement. The MAS forecasts core inflation of 2.5-3.5% in 2024,
above our expectations of 2-3% and the historical average of 1.5%, but it still cited upside
risks from energy and food prices. Craig Chan, our global head of FX strategy, believes
the MAS will leave its FX policy stance unchanged at the next policy announcement in
January (the meeting frequency is revised up to quarterly from semi-annually), due to its
assessment that sufficiently tight policy is appropriate amid still-elevated core inflation.
Fiscal policy: We maintain our FY23 fiscal deficit forecast of 0.1% of GDP, narrowing from
0.3% in FY22 and in line with the official projection. The FY23 budget projects a decline in
the basic balance deficit – our preferred measure of the fiscal stance – to 1.5% of GDP in
FY23 from 3.0% in FY22, which suggests more fiscal consolidation after the strong recovery
from the pandemic. Expenditure growth fell to 7.1% y-o-y in Q2 from 30.0% in Q1, while
revenue growth remained robust at 13.9% in Q3, up from 19.6% in Q2.
Risks: Downside risks to our growth forecast stem from a sharper decline in global
growth, more persistent price pressures and heightened geopolitical tensions. A more
resilient services sector and a faster turnaround in manufacturing are upside risks.
Fig. 13: Singapore: Details of the forecast

Real GDP (sa, % q-o-q) 1.0 -0.1 0.4 0.7 0.9 0.7 0.6 0.7
Real GDP 0.7 0.5 1.4 2.0 1.9 2.7 2.3 1.4 0.5 2.0 2.5
Government consumption -3.2 -4.5 -6.5 1.0 1.1 1.3 0.7 0.4 -1.6 -1.2 0.3
Gross fixed capital formation -3.8 1.9 1.0 0.1 0.6 0.7 2.3 2.3 -1.4 0.6 1.2
Exports (goods & services) -8.7 -1.0 4.1 6.1 4.4 4.3 4.5 4.7 -2.2 4.7 5.0
Imports (goods & services) -10.4 -1.6 3.8 5.6 3.7 3.2 3.5 3.8 -3.5 4.1 4.1
Domestic final sales -0.1 1.7 0.8 0.8 1.3 1.6 2.0 2.0 1.1 1.3 1.7
Inventories 1.5 -1.5 -1.0 -1.8 -1.9 -1.8 -2.7 -3.7 -1.7 -1.7 -2.3
Net trade (goods & services) -0.7 0.4 1.6 3.0 2.5 2.9 3.0 3.2 1.1 2.4 3.1
Headline CPI inflation 4.1 3.2 3.4 2.6 1.8 1.0 0.5 0.4 4.6 2.2 0.4
MAS core inflation 3.4 2.9 3.1 2.7 2.4 2.2 0.6 0.6 4.1 2.6 0.7
Exports (BOP basis) -15.5 -0.2 1.6 10.6 10.5 8.4 7.4 6.8 -8.4 7.7 6.7
Imports (BOP basis) -21.6 -5.8 0.7 10.1 9.7 7.3 6.4 5.9 -13.3 6.8 5.7
Trade balance (US$bn, BOP basis) 37.1 35.7 35.0 44.7 41.6 39.8 38.6 48.7 146.4 161.2 175.8
Fiscal Balance (% of GDP) -0.1 1.0 -0.5
SORA 3m compounded average (%) 3.70 3.25 3.00 2.75 2.75 2.75 2.75 2.75 3.25 2.75 2.75
Exchange rate (USD/SGD) 1.36 1.38 1.33 1.32 1.30 1.29 1.28 1.28 1.38 1.29 1.26
Note: Numbers in bold are actual values; others forecast. The contribution to GDP from the “inventories” component also includes statistical discrepancies. Interest rate and
currency forecasts are end of period; other measures are period average. All forecasts are modal forecasts (i.e., the single most likely outcome). MAS core inflation excludes
accommodation and private road transport costs. Our current account balance forecast as a % of GDP is based on a four-quarter rolling sum basis.Table reflects data available
as of 9 November 2023
15
Research Analysts
South Korea: An export recovery is Asia Economics
materializing Jeong Woo Park - NSL
jeongwoo.park@nomura.com
A recovery in the manufacturing sector and higher supply-side price pressures are likely +65 6433 6197
to extend the BOK’s hawkish pause.
Forecast changes : We raised our GDP growth forecasts to 1.3% y-o-y from 0.9% for
2023 and to 1.9% from 1.5% for 2024 , reflecting an export growth recovery. We also
raised our 2023 inflation forecast to 3.7% (from 3.6%), and we now expect the first 25bp
cut in July 2024 (was April).
Activity: GDP growth remained steady at 0.6% q-o-q, sa in Q3, led by an export growth
recovery that offset soft consumption. With the chip cycle picking up, e xport growth
turned positive in October for the first time in 13 months driven by a broad-based recovery
across products and destinations, which also underpinned higher chip production.
However, retail sales (goods consumption) remained weak in September, outside of
seasonally strong food consumption. Weekly credit card spending data show service
consumption likely remained weak in October, excluding healthcare and education
spending, which suggests a continued decoupling of domestic consumption from the
export-led recovery. Reflecting the export recovery, we raised our GDP growth forecasts
to 1.3% y-o-y from 0.9% for 2023 and to 1.9% from 1.5% for 2024, with GDP growth likely
to rise above 2.0% y-o-y in H1 2024.
Inflation: CPI inflation continued its rise to 3.8% y-o-y in October from 3.7% in
September, driven by higher oil and agricultural prices. Agricultural product prices
remained elevated, as bad weather conditions disrupted the supply chain, even after the
harvesting season. However, core inflation moderated to 3.2% y-o-y in October from 3.3%
in September, owing to an easing of demand-side price pressures. Reflecting higher oil
and food prices, we have raised our 2023 inflation forecast to 3.7% y-o-y (from 3.6%).
Policy: We expect the BOK to extend its hawkish pause at the 30 November meeting.
Although the export recovery and rising near-term price pressures support the hawks in
the MPC, we expect the BOK to remain patient about further hikes, due to a higher
financial burden that should weigh on private consumption and self-employed businesses.
The dovish outcome of the November FOMC will also likely help the BOK maintain its rate
pause. We now expect the BOK to start rate cuts in July 2024 (was April) and lower the
policy rate to 2.5% by end-2024, from the current 3.5%.
Risks : A faster export recovery is an upside risk. Rising food and oil prices are upside
inflation risks.
Fig. 14: Korea: Details of the forecast

Real GDP (sa, % q-o-q, annualized) 2.4 1.8 3.5 1.4 -0.7 0.5 1.6 4.5
Real GDP (sa, % q-o-q) 0.6 0.5 0.9 0.3 -0.2 0.1 0.4 1.1
Real GDP 1.4 2.0 2.6 2.3 1.5 1.2 0.7 1.5 1.3 1.9 2.1
Construction investment 4.0 3.2 -0.2 -0.6 -5.2 -5.9 -5.1 -3.4 2.7 -3.0 -1.3
Facilities investment -4.7 -9.1 -5.3 -3.2 6.8 10.6 4.2 4.9 -0.8 2.2 5.3
R & D investment -1.1 1.3 2.5 2.5 4.1 4.1 2.0 2.0 1.5 3.3 2.6
Exports (goods & services) 3.2 7.5 3.7 6.8 4.1 4.9 2.4 4.1 2.2 4.9 4.4
Imports (goods & services) 0.0 3.1 1.1 4.9 3.8 5.1 3.9 4.1 3.0 3.7 5.0
Contributions to GDP growth (% points)
Inventories -0.4 -0.2 -0.1 0.3 0.2 0.1 0.3 -0.3 0.1 0.1 0.2
Net trade (goods & services) 1.4 2.1 1.2 1.2 0.4 0.3 -0.5 0.3 -0.2 0.8 0.1
Consumer prices 3.1 3.6 2.9 2.7 2.0 1.5 1.8 1.9 3.7 2.3 1.9
Current account balance (USDbn) 14.1 18.4 2.1 9.8 14.1 16.9 4.0 11.8 35.0 42.9 68.9
Fiscal balance ex-social security (% of GDP) -3.9 -3.9 -3.0
BOK official base rate (%) 3.50 3.50 3.50 3.50 3.00 2.50 2.25 2.00 3.50 2.50 2.00
10-year government bond 4.0 4.0 3.8 3.7 3.6 3.5 3.3 3.1 4.0 3.5 3.0
Exchange rate (USD/KRW) 1349 1360 1300 1280 1260 1240 1210 1210 1360 1240 1190
Note: Numbers in bold are actual values; others forecast. Interest rate, currency are end of period; other measures are period average. All forecasts are modal forecasts (i.e. the
single most likely outcome). Table reflects data as of 9 November 2023.
Source: CEIC, Nomura Global Economics
16
Research Analysts
Taiwan: Strong growth ahead Asia Economics
With export growth picking up and consumption solid, we expect economic growth to Jeong Woo Park - NSL
jeongwoo.park@nomura.com
gather momentum.
+65 6433 6197
Activity: GDP growth picked up sharply to 2.3% y-o-y in Q3 from 1.4% in Q2, led by
exports amid solid consumption. Monthly economic activity has also continued to
improve, with the pace of the decline in IP growth slowing. Seasonal demand helped
increase the output of assembly sectors (e.g., smartphones), and the continued increase
in AI investment helped improve chip production. Export growth returned to negative
territory in October, but the weakness was largely due to a fall in exports to the EU.
Export growth to the US remained solid in October at 12.1% y-o-y (September: 17.7%),
and improved to China (-6.6% from -12.7%). We expect export growth to continue its
recovery, led by stabilizing chip prices and demand for tech products. Domestic
consumption appears to have remained solid, as evidenced by the services PMI
remaining in expansionary territory in October. Indeed, the PMI survey for hotels &
restaurants moved back to expansionary levels in October after two months in
contractionary territory. Consistent with the continued rise in leading economic indicators,
we expect GDP growth to extend its strength into Q4 and forecast GDP growth of 1.6% y-
o-y in 2023 (CBC: 1.5%).
Inflation: CPI inflation rose to a higher-than-expected 3.0% y-o-y in October from 2.9%
in September, as recent typhoons kept vegetable and fruit prices elevated. Moreover,
clothing price inflation rose sharply, reflecting seasonal demand. However, core CPI
inflation was unchanged in October at 2.5% y-o-y, helped by steady service price inflation.
We expect near-term price pressures to sustain on elevated oil and food prices, which
should keep headline inflation around 2% in coming months. We maintain our inflation
forecasts of 2.5% y-o-y for 2023, 2.0% for 2024 above the CBC’s inflation forecasts
(2023: 2.2%; 2024: 1.8%).
Policy: We expect the Central Bank of China (CBC) to extend its rate pause but become
more hawkish at the margin. With higher uncertainty around the inflation outlook, a
recovery in economic growth would likely shift the CBC’s focus towards inflation and away
from risk management. Therefore, at the December meeting, we expect the CBC to revise
up its inflation outlook, which could increase the risk of further hikes in Q1 2024. However,
with the Fed’s hiking cycle nearing its end, and as the CBC will likely maintain its
optimistic view on price stability, our baseline view is for a hawkish pause, with the CBC
likely to leave the policy rate unchanged at 1.875% through end-2024.
Risks : A recovery in the chip cycle poses an upside risk to growth. Rising energy prices
and solid consumption pose an upside risk to inflation.
Fig. 15: Taiwan: Details of the forecast

Real GDP (sa, % q-o-q) 2.5 2.5 -1.3 0.4 0.8 0.2 2.0 1.1
Real GDP 2.3 5.8 5.2 4.1 2.4 0.1 3.4 4.2 1.6 2.9 4.4
Government 0.7 2.1 3.9 2.4 3.8 0.2 2.0 2.0 2.1 2.6 2.0
Gross capital formation -14.0 -9.1 -5.2 3.2 6.6 5.5 2.8 9.2 -10.3 2.5 7.4
Exports -1.0 5.5 8.2 6.9 4.6 3.4 4.5 4.5 -3.4 5.8 5.7
Imports -4.9 -3.3 0.5 3.3 6.1 9.1 3.9 4.8 -5.1 4.7 4.6
Contributions to GDP growth (pp)
Domestic demand 0.4 0.5 0.1 1.5 2.6 1.22.3 2.4 3.6 1.6 2.9
Net trade (goods & services) 1.9 5.5 5.1 2.8 0.0 -2.2
0.4 1.0 0.6 1.3 1.5
Unemployment rate (sa, %) 3.4 3.4 3.6 3.6 3.7 3.53.7 3.6 3.5 3.7 3.5
Consumer prices 2.5 3.0 2.4 2.1 1.9 2.51.6 1.6 1.7 2.0 1.8
Current account balance (USDbn) 15.7 21.9 21.3 18.7 18.8 73.425.4 26.4 27.4 84.2 111.6
Current account balance (% of GDP) 7.8 10.3 10.6 9.1 8.6 11.3
9.4 12.8 13.0 9.9 12.9
CBC discount rate (%) 1.875 1.875 1.875 1.875 1.875 1.875 1.875 1.875 1.875 1.875 1.875
10-year government bond 1.20 1.35 1.33 1.32 1.3 1.30 1.25 1.20 1.35 1.30 1.15
Exchange rate (USD/TWD) 31.7 32.5 32.5 31.8 31.5 31.0 30.8 30.5 32.5 31.0 30.0
Note: Numbers in bold are actual values; others forecasts. The “Inventories” component in growth contributions also includes statistical discrepancy. Interest rate, currency are
end of period; other measures are period average. All forecasts are modal forecasts (i.e. the single most likely outcome). Table reflects data as of 9 November 2023.
Source: CEIC, Nomura Global Economics
17
Research Analysts
Thailand: Low growth, low inflation Asia Economics
The risk of a policy rate cut as early as Q2 2024 has increased, with growth significantly Charnon Boonnuch - NSL
charnon.boonnuch@nomura.com
deteriorating and headline inflation turning negative, which could persist well into 2024.
+65 6433 6189
Forecast changes: We cut our GDP growth forecasts to 2.4% in 2023 (from 2.7%) and Euben Paracuelles - NSL
to 3.8% in 2024 (from 4.2%), raised our FY24 fiscal deficit forecast to 3.9% of GDP (from
+65 6433 6956
3.5%) and raised our 2023 current account surplus forecast to 1.4% of GDP (from 1.0%).
Activity: The downward revisions to our GDP growth forecasts reflect the weak
economic activity data in Q3 2023 and a smaller fiscal stimulus for 2024. Our Nomura
Coincident Monthly Activity Indicator fell to -0.2% y-o-y in Q3 from 0.5% in Q2, hinting at
a further slowdown due to a deeper contraction in manufacturing output. The delayed
passage of the FY24 budget should weigh on growth, and we expect the bill to be
enacted only in May. Foreign tourist arrivals fell to 2.1mn in September (73.4% of 2019
levels) from 2.5mn in August (71.2%) owing to the slow return of tourists from China .
However, owing to a surge in gold exports, the current account surplus (CAS) widened
sharply in September, prompting the upward revision to our full-year 2023 forecast. We
however maintain our Q4 CAS forecast of USD4.3bn, still rising from USD3.3bn in Q3.
Inflation and monetary policy: Headline CPI inflation turned negative in October, falling
to -0.3% y-o-y from 0.3% in September, owing to the government’s subsidy policy and
price controls. We maintain our headline inflation forecasts of 1.3% in 2023 and -0.2% in
2024, which is well below Bank of Thailand’s (BOT) forecasts of 1.6% and 2.6%,
respectively, and reflects our view of persistently weak demand conditions and expanding
subsidies. This also supports our view that BOT will likely leave its policy rate unchanged
in November and through 2024. However, we have flagged the risk of policy race cuts as
early as Q2, particularly if growth undershoots BOT’s forecasts significantly.
Fiscal policy: The upward revision to our FY24 fiscal deficit forecast takes into account
the fact that the digital wallet policy is likely to be financed fully by the annual budget,
although we expect the size of the handout to be reduced to THB430bn (2.4% of GDP)
from THB560bn (3.1% of GDP), owing to rising fiscal concerns. However, due to rising
public debt, we expect at least one credit rating agency to lower Thailand’s sovereign
credit rating outlook to “negative” from “stable” in Q1 2024.
Risks: Key downside risks to growth emanate from a sharper slowdown in the global
economy, slower tourist arrivals, severe drought and budget delay. A faster-than-
expected FY24 budget bill enactment and fiscal stimulus implementation are upside risks.
Fig. 16: Thailand: Details of the forecast

% y-o-y growth unless otherwise stated 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 2022 2023 2024 2025
Real GDP (sa, % q-o-q) 0.7 0.7 0.5 1.0 1.6 0.8 0.4 0.7 0.5 0.5
Real GDP 1.6 3.4 2.1 3.0 3.9 4.0 3.9 3.5 2.4 2.1 2.6 2.4 3.2 3.0
Private consumption 6.9 6.8 5.1 5.0 5.9 5.8 4.5 2.0 0.3 1.3 6.3 6.8 5.4 2.0
Government consumption -3.2 -7.5 -1.3 3.2 4.5 8.0 8.0 4.0 -6.2 3.9 0.2 -5.3 3.6 2.1
Gross fixed capital formation -1.6 -1.6 -3.2 0.9 1.9 2.8 5.4 4.7 1.2 -5.8 2.3 0.1 0.5 1.3
Exports (goods & services) 6.2 11.0 8.2 8.9 4.6 4.0 4.3 2.0 3.4 3.0 6.8 4.9 6.4 3.2
Imports (goods & services) -8.1 7.5 6.2 4.1 4.7 -0.1 0.5 -0.5 0.2 0.5 4.1 -1.2 3.7 0.2
Domestic final sales 2.8 2.0 1.8 3.8 4.9 5.0 4.9 2.9 -0.7 0.1 3.9 2.8 3.8 1.8
Inventories -11.6 -0.9 -1.0 -4.0 -1.1 -3.8 -3.6 -1.2 0.8 0.4 -3.1 -4.2 -2.5 -0.8
Net trade (goods & services) 10.4 2.3 1.3 3.2 0.1 2.7 2.6 1.8 2.3 1.7 1.8 3.7 2.0 2.0
Unemployment rate (% nsa) 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.3 1.0 1.0 1.0
Headline CPI inflation 0.5 -0.4 -0.6 -0.4 -1.0 -0.8 -0.4 0.4 1.2 2.0 6.1 1.3 -0.7 0.8
Core CPI inflation 0.8 0.5 0.5 0.5 0.4 0.4 0.4 0.3 0.3 0.3 2.5 1.2 0.4 0.3
Exports (BOP basis) -2.0 5.0 3.2 3.9 1.8 1.7 -0.4 -2.2 0.0 0.0 5.4 -2.0 2.6 -0.7
Imports (BOP basis) -10.7 9.5 3.4 1.7 4.8 -1.3 0.0 -1.2 0.0 0.3 14.0 -1.5 2.1 -0.2
Trade balance (US$bn, BOP basis) 5.4 1.6 2.9 3.7 3.5 3.6 2.6 2.9 3.6 3.4 13.5 12.1 13.8 12.5
Current account balance (US$bn) 3.3 4.3 3.3 2.0 3.8 7.3 6.9 4.5 7.7 8.9 -15.7 7.1 16.4 28.0
Current account balance (% of GDP) 0.7 1.4 1.6 2.4 2.4 2.8 3.3 3.7 4.3 4.5 -3.2 1.4 2.8 4.5
Fiscal balance (% of GDP, fiscal year) -6.1 -4.3 -5.1 -4.0
Overnight repo rate (%) 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 1.25 2.50 2.50 2.50
10-year government bond yield 3.18 3.00 2.75 2.75 2.50 2.50 2.50 2.50 2.50 2.50 2.64 3.00 2.50 2.50
Exchange rate (USD/THB) 35.4 37.1 35.5 35.0 34.9 34.5 34.2 33.9 30.5 30.0 34.5 37.1 34.5 33.3
Note: Numbers in bold are actual values; others forecast. The contribution to GDP from the “inventories” component also includes statistical discrepancies. Fiscal balance refers
to overall cash balance plus the disbursement of off-budget borrowing decrees. Interest rate and currency forecasts are end of period; other measures period average. All
forecasts are modal forecasts (i.e., the single most likely outcome). Our current account balance forecast as a % of GDP is based on a four-quarter rolling sum basis. Table
reflects data available as of 5 December 2023.
18
Research Analysts
UK: A milder recession European Economics
Following more resilient GDP and survey data we’ve reduced the scale of our forecast George Buckley - NIplc
recession. We see inflation at 2.5% by mid-2024 and the first BoE rate cut next August.
+44 (0) 20 710 21800
Forecast revisions: Following better-than-expected GDP and surveys, we have revised Andrzej Szczepaniak - NIplc
our view and see a smaller recession with a fall in output of just 0.3% from peak-to-trough
+442071023167
over two quarters. A more resilient US, revisions up to our euro area, Japan and Australia
growth forecasts and more policy stimulus in China support this view too. George Moran - NIplc
george.moran@nomura.com
Growth: GDP data for Q3 beat our expectations, coming in at 0.0% q-o-q (Nomura: - +442071023320
0.2%, consensus: -0.1%). Based on better realised data and a stronger global backdrop
we have revised our UK growth outlook and now only see a very marginal two-quarter
recession from Q4 2023 and comprising a total fall in GDP of 0.3%. But the detail of the
latest GDP report looks grim. Both consumption (-0.4% q-o-q) and gross fixed capital
investment (-2%) were weak in Q3, and instead it was stronger exports and weaker
imports that kept UK GDP from contracting during the quarter. In general, survey data
held up well in October except for consumer confidence, which saw a sharp downturn,
despite improving in the prior three months. The Lloyds Business Barometer continues to
be one of the most bullish surveys, with the headline activity index above its long-term
average. The composite PMI also improved, albeit from weaker level, but at 48.7 it can
hardly be described as excessively weak. In the background, the looming risk however is
tighter credit conditions and according to the data it remains at stagnant levels.
Inflation: The trend in price momentum has been slowing, with the latest October print
published this week coming in below consensus (and well below Bank of England)
expectations – notably the all-important services CPI print. Surveys point to upstream
goods prices having moderated sharply while service prices are stickier, though official
data did suggest that producer service prices moderated in Q3 2023 versus the first half
of the year. After falling sharply in October, we think inflation will remain broadly
unchanged at around 4.5% on average in the months between November 2023 and
January 2024, before falling sharply to around 2.5% by the middle of next year – largely
due to base effects from household energy bills. We expect core inflation to prove stickier,
however, and don’t expect to see those levels reached until a year later.
Policy: We think the Bank of England has finished hiking and that moderating inflation
and wage outcomes have supported that. We think in the near-term the Bank of England
will look through a recession, while inflation remains firm. Therefore, we only see cuts
beginning in Q3 2023, when the progress on inflation should be more clear. However,
more resilient activity data raise the risk that this could be pushed later.
Risks: On the upside, we have already had to revise up GDP (i.e. a smaller recession)
and inflation could prove stickier than we expect especially if wage growth holds firm. That
could lead to the BoE keeping rates on hold for longer. On the downside, the pass-
through of higher interest rates, rising unemployment and weak confidence could all drag
on GDP, while surveys point to inflation continuing to fall.
Fig. 17: UK: Details of the forecast

Quarterly forecasts 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 2022 2023 2024 2025
Real GDP (% q-o-q) 0.3 0.2 0.0 -0.2 -0.1 0.1 0.2 0.2 4.3 0.5 -0.1 1.0
Real GDP level: 2019 Q4=100 101.2 101.4 101.4 101.2 101.1 101.1 101.3 101.5 100.8 101.3 101.3 102.3
Household consumption 0.7 0.4 -0.4 -0.2 -0.1 0.0 0.1 0.1 5.2 0.3 -0.3 0.7
Fixed investment 2.5 0.8 -2.0 -0.9 -0.6 0.0 0.2 0.5 7.9 2.5 -1.9 1.7
Government consumption -1.2 2.5 -0.5 0.3 0.3 0.3 0.3 0.3 2.5 -0.2 1.4 1.2
Exports -6.4 -0.9 0.5 -0.8 -0.5 -0.2 0.0 0.2 8.6 -0.7 -1.2 1.1
Imports -1.8 2.2 -0.8 -0.8 -0.5 -0.2 0.0 0.2 14.1 -1.6 -1.1 1.1
Inventories (contribution) -0.6 -0.2 -0.1 0.0 0.0 0.0 0.0 0.0 0.9 -1.1 -0.1 0.0
Net trade (contribution) -1.6 -1.0 0.4 0.0 0.0 0.0 0.0 0.0 -1.7 0.3 0.0 0.0
Unemployment rate 3.9 4.2 4.2 4.3 4.5 4.8 4.9 4.9 3.7 4.2 4.8 4.9
Average weekly earnings 6.2 8.4 7.9 7.1 6.3 4.0 3.4 3.1 6.0 7.4 4.2 2.7
Consumer prices 10.2 8.4 6.7 4.5 4.0 2.3 2.4 2.6 9.0 7.4 2.8 2.2
Core consumer prices 6.1 6.9 6.4 5.6 5.2 3.6 3.2 3.1 5.9 6.3 3.8 2.4
BoE Bank Rate, % EOP 4.25 5.00 5.25 5.25 5.25 5.25 4.75 4.25 3.50 5.25 4.25 4.00
10-yr Gilt yields 3.49 4.39 4.44 4.30 4.25 4.40 4.25 4.00 3.67 4.30 4.00 4.30
EUR/GBP 0.88 0.86 0.87 0.88 0.87 0.86 0.85 0.84 0.89 0.88 0.84 0.84
GBP/USD 1.23 1.27 1.22 1.16 1.20 1.23 1.27 1.31 1.21 1.16 1.31 1.31
TWI 78.9 82.2 82.2 80.1 81.5 82.8 84.3 85.8 77.4 80.1 85.8 85.8
Note: Quarterly figures are % q-o-q changes. Annual figures are % y-o-y changes. Inventories include statistical discrepancy. Inflation is % y-o-y. Interest rates and currencies are
end-of-period levels. Numbers in bold are actual values; others forecast. Table updated 16 November 2023.
Source: ONS, Bank of England, Bloomberg, Haver Analytics, Nomura.
19
Research Analysts
US: A delayed recession should keep the North America Economics
Fed on hold until Q3 2024 Aichi Amemiya - NSI
aichi.amemiya@nomura.com
Tighter financial conditions are likely to push the US into recession by H2 2024; however, +1 212 667 9347
the risk of a soft landing is high given recent economic resilience. Jeremy Schwartz - NSI
jeremy.schwartz@nomura.com
Economic activity: Financial conditions will remain restrictive, and we see vulnerabilities +1 212 667 9637
for business investment. Without an obvious near-term catalyst, we have penciled in the
onset of recession for Q3 2024. Household balance sheets have remained resilient, but
unsustainable consumption, slowing labor income and restrictive stance of monetary
policy should slow consumer spending. We think a recession will be led by weak business
investment, followed by higher unemployment and weak consumption.
Inflation: Excluding energy and food prices, we expect core inflation to continue to
moderate, largely due to lower rent inflation and declines in vehicle prices. Inflation of
core service prices excluding rent-related components, so-called supercore inflation, will
likely remain sticky until recessionary forces become salient in H2 2024. We think that
additional disinflationary pressures from an expected recession will push down core
inflation further starting in late 2024, reaching 2.2% y-o-y by the end of 2025.
Policy: We believe the July rate hike was the last of the current tightening cycle. The
impact of credit tightening and the lagged effects of past hikes suggest this tightening may
end up being excessive. The Fed is likely to hold at the terminal rate until the risk of
inflation rebounding has diminished and the unemployment rate starts to increase
materially. Thus, we expect no rate cuts for some time. We expect the Fed to cut rates by
25bp/meeting starting in September 2024 as the economy falls into a recession. However,
there is an unusually high degree of uncertainty. Even if the inflation situation continues to
improve, the Fed might delay the start of rate cuts or slow the pace of rate cuts as long as
the economy remains resilient, posing the risk of inflation reacceleration. Conversely, if
disinflation is accompanied by a severe recession and sharp moderation in wage growth,
the Fed might reduce the policy rate more aggressively than we currently expect.
Risks: The ongoing drag from tight credit conditions makes a recession more likely than
not, but a soft landing is possible. Cyclical spending may find some support even if financial
conditions remain restrictive. Residential investment has already fallen substantially since
the start of the Fed’s hiking cycle and housing is undersupplied, with construction running at or
below household formation and vacancy rates near multi-decade lows. Equipment spending
is near historic lows as a share of GDP. New auto sales, a traditionally rates-sensitive part
of the economy, might remain resilient, supported by increasing sale incentives by
automakers. If weakness in cyclical sectors remains limited, then a prolonged slump or
‘rolling recessions’ would be more likely than an outright recession. In addition, a decisive
disinflation would allow the Fed to pivot to ‘insurance cuts,’ reducing the risk of a recession.
Fig. 18: Details of the forecast

% 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 2022 2023 2024 2025
q-o-q
Real GDP (%, a.r.) 2.2 2.1 4.9 0.9 1.3 1.4 -1.1 -1.9 0.4 1.1 2.6 3.4 1.9 2.4 1.2 0.4
(%) 0.6 0.5 1.2 0.2 0.3 0.3 -0.3 -0.5 0.1 0.3 0.6 0.8
Personal consumption (%, a.r.) 3.8 0.8 4.0 1.4 1.5 1.3 -0.4 -1.0 0.7 1.0 1.6 1.8 2.5 2.2 1.3 0.5
Nonresidential fixed invest (%, a.r.) 5.7 7.4 -0.1 -1.6 2.7 1.7 -9.4 -9.5 -1.7 2.0 2.8 5.2 5.2 3.9 -0.7 -2.4
Residential fixed invest (%, a.r.) -5.3 -2.2 3.9 -5.8 -12.5 -2.2 -1.0 -1.6 1.5 3.5 4.5 7.2 -9.0 -11.4 -4.7 1.5
Government expenditure (%, a.r.) 4.8 3.3 4.6 3.8 1.7 1.4 1.6 1.4 0.8 0.5 0.5 0.5 -0.9 3.9 2.5 0.9
Exports (%, a.r.) 6.8 -9.3 6.2 1.8 0.5 0.5 0.2 -0.5 0.5 2.5 2.8 3.5 7.0 2.5 0.7 1.1
Imports (%, a.r.) 1.3 -7.6 5.7 -0.3 2.7 1.5 -3.0 -2.4 -2.0 0.3 1.5 3.8 8.6 -1.7 0.6 -0.8
Contributions to GDP:
Final sales (pp., a.r.) 4.5 2.1 3.6 1.4 0.9 1.1 -0.9 -1.5 0.8 1.3 1.8 2.2 1.3 2.8 1.1 0.5
Net trade (pp., a.r.) 0.6 0.0 -0.1 0.2 -0.3 -0.1 0.4 0.3 0.3 0.2 0.1 -0.1 -0.5 0.5 0.0 0.2
Inventories (pp., a.r.) -2.2 0.0 1.3 -0.5 0.4 0.3 -0.2 -0.4 -0.4 -0.2 0.8 1.2 0.6 -0.4 0.2 0.0
As noted
Unemployment rate (%) 3.5 3.6 3.7 3.9 4.0 4.1 4.5 4.9 5.2 5.3 5.2 5.0 3.6 3.7 4.4 5.2
Nonfarm payrolls (000s) 312 201 266 180 160 70 -120 -220 50 150 200 250 399 240 -28 162.5
Housing starts (000s, a.r.) 1385 1450 1359 1253 1220 1224 1232 1239 1255 1279 1307 1344 1551 1362 1229 1296
Consumer prices (%, y-o-y) 5.8 4.1 3.6 3.2 2.9 2.8 2.6 2.5 2.6 2.6 2.5 2.4 8.0 4.2 2.7 2.5
Core CPI (%, y-o-y) 5.6 5.2 4.4 4.0 3.5 3.1 3.1 3.0 2.9 2.8 2.7 2.6 6.1 4.8 3.2 2.8
PCE Deflator (%, y-o-y) 5.0 3.9 3.4 3.0 2.5 2.3 2.3 2.2 2.3 2.3 2.2 2.1 6.3 3.8 2.3 2.2
Core PCE (%, y-o-y) 4.8 4.6 3.9 3.4 2.8 2.5 2.6 2.5 2.4 2.4 2.2 2.2 5.0 4.2 2.6 2.3
Federal budget (% GDP) -5.3 -5.8 -6.0 -6.4
Current account balance (% GDP) -3.8 -3.0 -2.7 -2.1
Fed securities portfolio ($trn) 7.82 7.58 7.33 7.10 6.87 6.63 6.39 6.39 6.39 6.39 6.39 6.39 8.04 7.10 6.39 6.39
Fed funds target midpoint (%) 4.875 5.125 5.375 5.375 5.375 5.375 5.125 4.625 4.125 3.625 3.125 2.625 4.375 5.375 4.625 2.625
TSY 2-year note (%) 4.06 4.87 5.03 4.90 4.75 4.60 3.70 3.20 2.95 2.75 2.50 2.25 4.41 4.90 3.20 2.25
TSY 5-year note (%) 3.60 4.13 4.60 4.60 4.45 4.40 3.65 3.25 3.20 3.10 3.00 2.80 3.99 4.60 3.25 2.80
TSY 10-year note (%) 3.48 3.81 4.59 4.60 4.50 4.50 3.85 3.65 3.60 3.60 3.50 3.35 3.88 4.60 3.65 3.35
Note: The unemployment rate is a quarterly average as a percentage of the labor force. Nonfarm payrolls are average monthly changes during the period. Inflation measures and
calendar year GDP are year-over-year percent changes. The Fed securities portfolio is end-of-period. The annual interest rate forecasts are end-of-period. Housing starts are
period averages. Numbers in bold are actual values. Table reflects data available as of 16 November 2023.
Source: BEA, BLS, Census Bureau, FRB, Haver, Nomura
20
Appendix A-1
Analyst Certification
Each research analyst identified herein certifies that all of the views expressed in this report by such analyst accurately reflect
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hereby certifies that no part of his or her compensation was, is, or will be, directly or indirectly related to the specific
recommendations or views that he or she has expressed in this research report, nor is it tied to any specific investment banking
transactions performed by Nomura Securities International, Inc., Nomura International plc or any other Nomura Group company.
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not registered/qualified as research analysts under FINRA rules, may not be associated persons of NSI, and may not be subject to FINRA Rule
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Economists
North America
Aichi Amemiya United States aichi.amemiya@nomura.com 1-212-667-9347
Jeremy Schwartz United States jeremy.schwartz@nomura.com 1-212-667-9637
Europe
George Buckley Chief Economist Euro Area and UK george.buckley@nomura.com 44-20-7102-1800
Andrzej Szczepaniak Europe andrzej.szczepaniak@nomura.com 44-20-7102-3167
George Moran Europe george.moran@nomura.com 44-20-7102-3320
Japan
Kyohei Morita Chief Economist Japan kyohei.morita@nomura.com 81-3-6703-1395
Takashi Miwa Japan takashi.miwa@nomura.com 81-3-6703-1280
Kohei Okazaki Japan kohei.okazaki@nomura.com 81-3-6703-1255
Yuki Takashima Japan yuki.takashima@nomura.com 81-3-6703-3880
Uichiro Nozaki Japan uichiro.nozaki@nomura.com 81-3-6703-1284
Yuki Ito Japan yuki.ito@nomura.com 81-3-6703-3867
Asia
Rob Subbaraman Head of Global Macro Research rob.subbaraman@nomura.com 65-6433-6548
Ting Lu Chief Economist China ting.lu@nomura.com 852-2252-1306
Jing Wang China jing.wang@nomura.com 852-2252-1011
Harrington Zhang China harrington.zhang@nomura.com 852-2252-2057
Hannah Liu China hannah.liu@nomura.com 852-2252-1082
Sonal Varma Chief Economist India and Asia ex-Japan sonal.varma@nomura.com 65-6433-6527
Aurodeep Nandi India aurodeep.nandi@nomura.com 91-22-4037-4087
Jeong Woo Park Korea and Taiwan jeongwoo.park@nomura.com 65-6433-6197
Toh Si Ying Asia ex-Japan siying.toh@nomura.com 65-6433-6666
Euben Paracuelles Chief Economist Southeast Asia euben.paracuelles@nomura.com 65-6433-6956
Charnon Boonnuch Singapore and Thailand charnon.boonnuch@nomura.com 65-6433-6189
25

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Global Markets Research

Global Economic Outlook Monthly 17 November 2023

Production Complete: 2023-11-20 07:37 UTC

Fig. 1: Forecast summary table

Our view in a nutshell

Policy interest rates – actuals and forecasts

Apr 24 -25 0 0 0 -25 0 0

May 24 0 0 0 -25 0 0 -50 0 0 0

Jun 24 0 0 0 0 -25 0 0 0 0 -25 0

Jul 24 0 -25 0 0 -50 0 -25 0

Aug 24 -25 -25 0 -25 -50 -25 -25 0 0

Sep 24 -25 0 -25 -25 -25 -25 0 -25 10 -25 0

Oct 24 -25 -25 0 -50 0 -25 -25 -25

Nov 24 -25 -25 -25 -25 -25 0 -25 -25 0

Dec 24 -25 -25 -25 -25 -25 0 0 0 0 -25

Fig. 3: Australia: Details of the forecast

Fig. 4: China: Details of the forecast

Fig. 5: Euro area: Details of the forecast

Fig. 6: Big four: Details of the forecast

Fig. 7: Hong Kong: Details of the forecast

Fig. 8: India: Details of the forecast

Fig. 9: Indonesia: Details of the forecast

Fig. 10: Japan: Details of the forecast

Fig. 11: Malaysia: Details of the forecast

Fig. 12: Philippines: Details of the forecast

Fig. 13: Singapore: Details of the forecast

Fig. 14: Korea: Details of the forecast

Fig. 15: Taiwan: Details of the forecast

Fig. 16: Thailand: Details of the forecast

Fig. 17: UK: Details of the forecast

Fig. 18: Details of the forecast

Online availability of research and conflict-of-interest disclosures

decisions and Offshore Issuers take no responsibility in this regard.

Nomura Securities Co., Ltd.

Jeremy Schwartz United States jeremy.schwartz@nomura.com 1-212-667-9637

Andrzej Szczepaniak Europe andrzej.szczepaniak@nomura.com 44-20-7102-3167

George Moran Europe george.moran@nomura.com 44-20-7102-3320

Takashi Miwa Japan takashi.miwa@nomura.com 81-3-6703-1280

Kohei Okazaki Japan kohei.okazaki@nomura.com 81-3-6703-1255

Yuki Takashima Japan yuki.takashima@nomura.com 81-3-6703-3880

Uichiro Nozaki Japan uichiro.nozaki@nomura.com 81-3-6703-1284

Yuki Ito Japan yuki.ito@nomura.com 81-3-6703-3867

Ting Lu Chief Economist China ting.lu@nomura.com 852-2252-1306

Jing Wang China jing.wang@nomura.com 852-2252-1011

Harrington Zhang China harrington.zhang@nomura.com 852-2252-2057

Hannah Liu China hannah.liu@nomura.com 852-2252-1082

Aurodeep Nandi India aurodeep.nandi@nomura.com 91-22-4037-4087

Jeong Woo Park Korea and Taiwan jeongwoo.park@nomura.com 65-6433-6197

Toh Si Ying Asia ex-Japan siying.toh@nomura.com 65-6433-6666

Euben Paracuelles Chief Economist Southeast Asia euben.paracuelles@nomura.com 65-6433-6956

Charnon Boonnuch Singapore and Thailand charnon.boonnuch@nomura.com 65-6433-6189

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