Bond Market Growth Slows in Emerging East Asia Amid Global Headwinds – ADB

MANILA, June 27 – Growth in emerging East Asia’s local currency bond market slowed to 3.1 percent in the first three months of the year amid weakened financial conditions and global economic headwinds, according to a report by the Asian Development Bank (ADB).

Issuance fell 6.5% from the previous quarter, while rising inflationary pressure and tightening financial conditions pushed up bond yields in economies in the region, according to the latest issue of ADB’s Aisa Bond Monitor, released today.

Financial conditions in emerging East Asia softened between 28 February and 9 June, evidenced by falling stock prices, portfolio outflows, and the weakening of currencies against the US dollar, ADB said in a statement today, highlighting the findings in the report.

The trend was largely driven by monetary tightening by central banks in major advanced economies and several regional economies, and by heightened risks to economic outlooks. These risks include continued inflation, rising commodity prices, slower-than-expected growth in the People’s Republic of China (PRC), and larger-than-expected impacts of the Russian invasion of Ukraine.

“Monetary stances in emerging East Asia remain largely accommodative, but persistent inflationary pressure and accelerated monetary tightening by the US Federal Reserve could lead to further monetary tightening in the region,” said ADB Chief Economist Albert Park. “The region’s economies will continue to recover, but growth could moderate this year.