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Economic Research

Asia Week Ahead: Growth and Policy Challenges Yield Revaluation, Capital Controls and Fiscal Austerity

EXECUTIVE SUMMARY

This week we consider the potential ramifications of recent policy announcements in China, Japan, Indonesia, South Korea and Australia. China will allow modest renminbi appreciation against the G3 currencies and two-way movement against the U.S. dollar, reducing risks of asset bubbles and a hard landing. Japan's leaders have swung back into fiscal consolidation mode, setting goals to increase the tax base, but targets to halve the deficit by 2015 and cap 2011 bond issues appear incompatible without further spending cuts. In Australia, Kevin Rudd’s waning approval[...]

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