Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

<ul>
<li>The fiscal deficit for CY25 was 4.2% of GDP (below the 4.4% target for FY26), the primary deficit 0.8% (exactly the FY26 target), aided by monthly surpluses in Dec'25. </li>
<li>Non-Tax revenue (mainly PSU dividends) reached 93% of the FY26 target in the first 9 months. Corporate tax revenue rebounded 15.1%YoY, offsetting the deceleration in income tax after rate cuts. </li>
<li>Unless there is an increased 'Assignment to States', the fiscal deficit is likely to be lower than the FY26 budget target, providing modest room for accelerated spending in FY27. </li>
</ul>


The fiscal deficit for CY25 was 4.2% of GDP (below the 4.4% target for FY26), the primary deficit 0.8% (exactly the FY26 target), aided by monthly surpluses in Dec'25. 
Non-Tax revenue (mainly PSU dividends) reached 93% of the FY26 target in the first 9 months. Corporate tax revenue rebounded 15.1%YoY, offsetting the deceleration in income tax after rate cuts. 
Unless there is an increased 'Assignment to States', the fiscal deficit is likely to be lower than the FY26 budget target, providing modest room for accelerated spending in FY27. 


India: Fiscal Deficit Set to Be Lower Despite IT and GST Cuts, Amid Strong Direct Taxes

<ul>
<li>Merchandise exports grew 3.1%YoY in Oct-Dec'25 despite Trump's 50% tariffs, but imports grew 7.8%YoY. The Apr-Dec'25 goods deficit rose 10.8%YoY, but the services surplus for Apr-Nov'25 expanded 17%YoY.</li>
<li>Our estimated CAD for Apr-Dec'25 is US$6bn (0.2% of GDP). Even with a smaller Jan-Mar surplus than last year's US$13.4bn, we expect a FY26 current account surplus (0.1% of GDP).</li>
<li>CPI inflation averaged 0.9%YoY in Oct-Dec'25, and will likely average 2%YoY in Jan-Mar'26 (vs RBI forecast of 2.9%YoY). We expect another 50bp of cuts by Jun'26, to a 4.75% repo-rate. </li>
</ul>


Merchandise exports grew 3.1%YoY in Oct-Dec'25 despite Trump's 50% tariffs, but imports grew 7.8%YoY. The Apr-Dec'25 goods deficit rose 10.8%YoY, but the services surplus for Apr-Nov'25 expanded 17%YoY.
Our estimated CAD for Apr-Dec'25 is US$6bn (0.2% of GDP). Even with a smaller Jan-Mar surplus than last year's US$13.4bn, we expect a FY26 current account surplus (0.1% of GDP).
CPI inflation averaged 0.9%YoY in Oct-Dec'25, and will likely average 2%YoY in Jan-Mar'26 (vs RBI forecast of 2.9%YoY). We expect another 50bp of cuts by Jun'26, to a 4.75% repo-rate. 


India: CA Surplus Likely Despite US Tariffs; Tame Inflation Allows More Rate Cuts

<ul>
<li>CAD for H1FY26 (Apr-Sep'25) was 0.8% of GDP. Despite the continued expansion of the services surplus, we expect a CAD of 0.2% of GDP in FY26 as US tariffs bite. </li>
<li>The 12mma of the fiscal deficit was 4.6% of GDP in Oct'25. The 12mma of corporate tax revenue troughed in Feb'25, income tax revenue in Jul'25; both have since rebounded. </li>
<li>Despite the fiscal stimulus via GST rate reductions, the recovery in direct tax revenue will likely ensure the fiscal deficit target (4.4% of GDP) will be comfortably achieved. </li>
</ul>


CAD for H1FY26 (Apr-Sep'25) was 0.8% of GDP. Despite the continued expansion of the services surplus, we expect a CAD of 0.2% of GDP in FY26 as US tariffs bite. 
The 12mma of the fiscal deficit was 4.6% of GDP in Oct'25. The 12mma of corporate tax revenue troughed in Feb'25, income tax revenue in Jul'25; both have since rebounded. 
Despite the fiscal stimulus via GST rate reductions, the recovery in direct tax revenue will likely ensure the fiscal deficit target (4.4% of GDP) will be comfortably achieved. 


India Twin Deficit Watch: CAD Shrinking to 0.2% of GDP, Fiscal Deficit Back on Target

<ul>
<li>RBI's MPC cut 25bp as expected, but it remains behind the curve, with the real policy rate now excessively high at +5%. RBI inflation forecasts were and remain too high. </li>
<li>Food deflation is likely to be shortlived, with vegetable prices rising MoM since May'25. But all other food and non-food inflation components are moderating, and GST cuts impart further disinflation. </li>
<li>We expect inflation to be 1.8%YoY in Q4FY26 (vs RBI's 2.9%YoY forecast), 2.3% and 2.5% in Q1 and Q2FY27, so expect another 75bp reduction in repo rate by Aug'26. </li>
</ul>


RBI's MPC cut 25bp as expected, but it remains behind the curve, with the real policy rate now excessively high at +5%. RBI inflation forecasts were and remain too high. 
Food deflation is likely to be shortlived, with vegetable prices rising MoM since May'25. But all other food and non-food inflation components are moderating, and GST cuts impart further disinflation. 
We expect inflation to be 1.8%YoY in Q4FY26 (vs RBI's 2.9%YoY forecast), 2.3% and 2.5% in Q1 and Q2FY27, so expect another 75bp reduction in repo rate by Aug'26. 


India: RBI Cuts 25bp but the Real Policy Rate Is Still Too High at +5%

Chief Economist, Aletheia Capital

Dr. Jim Walker

Chief Economist

Independent and original Asian investment research

Aletheia Capital

Aletheia Capital (HK) Ltd. (previously known as Asianomics) combines the extensive knowledge of its experienced team with technology and regulatory changes to disrupt Global Markets business in Asia. The firm is completely independent with no conflicts of interest either on Investment Banking advisory or Capital Markets execution.

<ul>
<li>China: Monetary &amp; Trade Indicators Strengthen: September data show broad-based monetary growth</li>
<li>Korea: Early Signs of Trade Softness: The first 10 days of October show exports down 15% YoY, imports down 22.8%.</li>
<li>India: Inflation Trends Favor Rate Cuts: Wholesale prices up just 0.1% YoY in September — a stark contrast to &gt;10% in 2022 and flat in 2023.</li>
</ul>


China: Monetary &amp; Trade Indicators Strengthen: September data show broad-based monetary growth
Korea: Early Signs of Trade Softness: The first 10 days of October show exports down 15% YoY, imports down 22.8%.
India: Inflation Trends Favor Rate Cuts: Wholesale prices up just 0.1% YoY in September — a stark contrast to &gt;10% in 2022 and flat in 2023.


Walker’s Weekly: Dr. Jim's Summary of Key Global Macro Developments - 17 October 2025

India

iShares MSCI India Index ETF is an exchange-traded fund registered in Singapore. The Fund seeks to provide investment results that, before expenses, closely correspond to the performance of the MSCI India Index. The Fund invests all or substantially all of its assets in shares comprising the MSCI India Index in substantially the same weightings as constituted in the underlying index.

iShares MSCI India Index ETF (INDIA SP)

India: Fiscal Deficit Set to Be Lower Despite IT and GST Cuts, Amid Strong Direct Taxes

Fiscal deficit for CY25 below target, aided by monthly surplus in Dec'25. Non-tax revenue strong, corporate tax revenue rebounded. Below target...

Prasenjit K. Basu

India: CA Surplus Likely Despite US Tariffs; Tame Inflation Allows More Rate Cuts

The goods deficit expanded 10.8%YoY in Apr-Dec'25, but services surplus expanded 17%YoY, so a CA surplus is likely in FY26. With CPI inflation of...

Prasenjit K. Basu

India Twin Deficit Watch: CAD Shrinking to 0.2% of GDP, Fiscal Deficit Back on Target

CAD likely to shrink to 0.2% of GDP in FY26 as US tariffs bite, offsetting larger services surplus. With corporate tax revenue rebounding from...

Prasenjit K. Basu

India: RBI Cuts 25bp but the Real Policy Rate Is Still Too High at +5%

RBI cut rates 25bp but remains behind the curve, as its inflation forecasts were and remain too high. We expect another 75bp of rate cuts by...

Prasenjit K. Basu

Walker’s Weekly: Dr. Jim's Summary of Key Global Macro Developments - 17 October 2025

China: Monetary & Trade Indicators Strengthen: September data show broad-based monetary growth Korea: Early Signs of Trade Softness: The first...

Dr. Jim Walker

India: Fiscal Deficit Set to Be Lower Despite IT and GST Cuts, Amid Strong Direct Taxes

​Fiscal deficit for CY25 below target, aided by monthly surplus in Dec'25. Non-tax revenue strong, corporate tax revenue rebounded. Below target...

Prasenjit K. Basu

India: CA Surplus Likely Despite US Tariffs; Tame Inflation Allows More Rate Cuts

​The goods deficit expanded 10.8%YoY in Apr-Dec'25, but services surplus expanded 17%YoY, so a CA surplus is likely in FY26. With CPI inflation of...

Prasenjit K. Basu

India Twin Deficit Watch: CAD Shrinking to 0.2% of GDP, Fiscal Deficit Back on Target

​CAD likely to shrink to 0.2% of GDP in FY26 as US tariffs bite, offsetting larger services surplus. With corporate tax revenue rebounding from...

Prasenjit K. Basu

India: RBI Cuts 25bp but the Real Policy Rate Is Still Too High at +5%

​RBI cut rates 25bp but remains behind the curve, as its inflation forecasts were and remain too high. We expect another 75bp of rate cuts by...

Prasenjit K. Basu

Walker’s Weekly: Dr. Jim's Summary of Key Global Macro Developments - 17 October 2025

China: Monetary & Trade Indicators Strengthen: September data show broad-based monetary growth Korea: Early Signs of Trade Softness: The first...

Dr. Jim Walker

Fiscal deficit for CY25 below target, aided by monthly surplus in Dec'25. Non-tax revenue strong, corporate tax revenue rebounded. Below target...

The goods deficit expanded 10.8%YoY in Apr-Dec'25, but services surplus expanded 17%YoY, so a CA surplus is likely in FY26. With CPI inflation of...

CAD likely to shrink to 0.2% of GDP in FY26 as US tariffs bite, offsetting larger services surplus. With corporate tax revenue rebounding from...

RBI cut rates 25bp but remains behind the curve, as its inflation forecasts were and remain too high. We expect another 75bp of rate cuts by...