PIMCO: In a challenging environment, policy easing sweeps through Asia

A new Asia-Pacific Cyclical Outlook by PIMCO has just been released

In the interview, Adam Bowe, executive vice president and fixed income portfolio manager in the Sydney office, Tomoya Masanao, managing director and head of portfolio management Japan, and Isaac Meng, senior vice president and emerging markets portfolio manager in Hong Kong, discuss the conclusions from PIMCO’s quarterly Cyclical Forum in March 2015 and how they influence our Asian outlook and investment strategy –

• The key change to our cyclical outlook for Asia: We have further downgraded our growth forecast for China to the low-6% range as real borrowing rates remain elevated.
• In Japan, we expect growth to recover from last year’s technical recession, following the delay in the next value-added tax (VAT) hike and the increase in the Bank of Japan’s easing program.
• In Australia, subdued domestic demand, weaker national income growth and a still-elevated trade-weighted exchange rate will likely require the Reserve Bank of Australia to lower interest rates again in the coming months and keep policy accommodative for an extended period.