Market Research Reports, Inc. has announced the addition of “India, Japan and Malaysia Country Risk Report Q1 2017” research report to their website www.MarketResearchReports.com

Lewes, DE -- (SBWire) -- 10/28/2016 --The Indian government, led by the Bharatiya Janata Party (BJP), has initiated various reforms in its first two years in office, and it will continue to enact incremental rather than big-bang reforms over the coming years. That said, the lack of majority in the Rajya Sabha, India's 245-seat upper house, will remain a hurdle to the implementation of large-scale reforms. State elections, which will continue to take place over the coming years, will determine whether the BJP will attain an upper house majority by the time its term ends in May 2019.

We remain broadly constructive on the Indian economy, and it will remain the fastest growing major economy in Asia owing to the government's pro-business initiatives and accommodative monetary policy by the central bank. We expect the country's manufacturing and services sectors to continue to perform strongly, and we maintain our FY2016/17 (April-March) and FY2017/18 real GDP growth forecast of 7.2% and 6.9%, respectively. However, the economy is still facing ongoing challenges from weak private investment in the infrastructure sector and external headwinds.

The Reserve Bank of India (RBI) held its repurchase (repo) rate unchanged at 6.50% during its August 9 monetary policy meeting, and we forecast that the central bank will cut its benchmark policy rate by an additional 25bps to 6.25% by the end of FY2016/17 in a bid to provide continued support to the economy. The RBI remained dovish, and will continue to seek to improve the transmission mechanism. Subdued inflation in FY2016/17 will provide sufficient room for a reduction in the repo rate. The Indian government delivered its FY2016/17 union budget on February 29, sticking to its fiscal deficit targets of 3.5% of GDP in FY2016/17 and 3.0% in FY2017/18, which we believe is positive for macro-stability. That said, we forecast the central government's fiscal deficit as a share of GDP to come in at 3.7% in FY2016/17, as headwinds to revenue expansion and expenditure reduction are likely to persist.

The Indian rupee will depreciate gradually against the US dollar over the coming years, and we forecast the unit to average INR66.80/USD in 2016 and INR68.00/USD in 2017. The RBI will continue to allow the currency to weaken in order to keep the currency competitive against that of its regional peers. However, rupee weakness will be capped amid continued foreign direct investment owing to an improvement in business environment.

Major Forecast Changes

We upgraded our forecasts for Indian rupee to average INR66.80/ USD in 2016 and INR68.00/USD in 2017. India's external outlook has improved, with a narrowing current account deficit reflecting savings gains from low oil prices. On the financial ledger, foreign direct investment inflows are set to grow amid improving business conditions and a favourable growth outlook. We believe that the rupee will continue to perform in terms of total returns while remaining on a long-term depreciatory trend, since inflation will remain above that of the US.

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With a strong mandate to pursue structural economic reform, the The Liberal Democratic Party of Japan (LDP) has a good opportunity to raise productivity and boost labour force participation. However, reform proposals, particularly relating to the labour market, appear to be missing the mark.

With real GDP growth coming in below consensus at 0.2% q-o-q annualised in Q216, and recently-announced fiscal stimulus measures set to have a negligible impact on headline growth even in the short term, we maintain our 2016 and 2017 real GDP forecasts at 0.6% and 0.5%, respectively. The JPY/USD pair is currently testing support and option implied volatility markets suggest a significant move could be on its way.

The yen is at a crossroads and is likely gearing up for a large move as its trading range contracts. Our fundamental bias is for the currency to head weaker due to further monetary easing and rising oil prices. Should the currency strengthen further in the near term, this would likely set the stage for more aggressive weakness over the medium term as it would prompt the Bank of Japan (BoJ) to aggressively ramp up its efforts to weaken the currency.

We believe that inflation is bottoming out and should rise through to the end of the year and over 2017. The BoJ will likely be forced to increase its stimulus measures in order to keep bond yields from rising aggressively, which should begin to feed through to a weaker yen and higher inflation. While the country's large income account surplus is a major factor keeping inflation subdued, a declining national savings rate will ultimately undermine this surplus. While low oil prices have provided major support to the Japanese economy, they have been unable to allow the economy to escape its stagnation owing to several structural shortcomings. Furthermore, the low inflation readings that weak oil prices have caused have encouraged policymakers to expand monetary and fiscal policy under the mistaken belief that low inflation is the reason for the apparent economic weakness. We believe that this has further undermined Japan's economic potential, and left the economy increasingly at risk from a rise in oil prices.

The Japanese government's stimulus package announced in early August will be much smaller than originally expected, which we see as positive for fiscal sustainability and medium term real GDP growth. However, there remains no appetite for much-needed fiscal austerity, and the government's share of GDP is set to continue rising to the detriment of the country's economic health.

Major Forecast Changes

We have not undertaken any significant forecast changes during this latest report. Despite the sharp drop in headline inflation, we maintain that inflationary pressures will rise over the coming quarters. Meanwhile, we remain bearish towards the yen on account of the increasing likelihood of further monetary easing.

For more information Visit at: http://www.marketresearchreports.com/business-monitor-international/japan-country-risk-report-q1-2017

We have downgraded Malaysia's 2016 and 2017 real GDP forecasts to 4.1% and 4.7% respectively from 4.5% and 5.0% previously, as the economic headwinds in Q216 are unlikely to abate over the coming quarters. Ongoing weakness in the Chinese economy and domestic headwinds will continue to weigh on growth. However, we expect the stabilisation of oil prices to lend some support to the economy over the coming quarters.

While we maintain our forecast for Malaysia's 2016 fiscal deficit to come in at 3.1% of GDP, we note that continually elevated levels of government spending on wages and pensions presents downside risks to our forecast. However, the stabilisation and recovery of oil prices and the government's successful implementation of the goods and services tax (GST) will lend a degree of support to the government's revenue stream, enabling the fiscal deficit to narrow over the coming years.

In line with expectations, BNM kept its overnight policy rate steady at 3.00% during its September 7 monetary policy meeting. We maintain our forecast for rates to remain on hold throughout the year as the central bank seeks to support growth against a backdrop of external headwinds, but note that the risks to our forecast are firmly to the downside. We have also pared back our forecast for one rate hike in 2017 as the external environment will remain challenging, and now expect rates to remain on hold at 3.00% throughout 2017. We have downgraded our 2016 end-year forecast slightly to MYR4.100/USD from MYR4.050/USD previously to reflect recent weakness. Over the longer term, we expect the currency to appreciate gradually as the recovery in hydrocarbon prices and an undervalued real effective exchange rate provide structural support.

The establishment of the new bumiputera party Parti Pribumi Bersatu Malaysia (PPBM) does not present an immediate threat to the dominant position of the ruling Barisan Nasional (BN) coalition, due to the fragmented nature of the opposition. However, the opposition would be able to pose a credible threat to BN during the next general elections that must be held by 2018 if it is able to leverage PPBM's strengths and make inroads into BN's powerbase.

Major Forecast Changes

We have downgraded our 2016 end-year forecast slightly to MYR4.100/USD from MYR4.050/USD previously to reflect recent weakness.

We have downgraded Malaysia's 2016 and 2017 real GDP forecasts to 4.1% and 4.7% respectively from 4.5% and 5.0% previously, as the economic headwinds in Q216 are unlikely to abate over the coming quarters.

We have also pared back our forecast for one rate hike in 2017 as the external environment will remain challenging, and now expect rates to remain on hold at 3.00% throughout 2017.

For more information Visit at: http://www.marketresearchreports.com/business-monitor-international/malaysia-country-risk-report-q1-2017

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