BOK: "Policy Rate Differentiation Among Emerging Countries Largely Influenced by COVID-19 Situation"

[Asia Economy Reporter Kim Eunbyeol] It is forecasted that policy interest rates in emerging countries will be significantly influenced and differentiated by the spread of COVID-19 in each country.

According to the 'Overseas Economic Focus' released by the Bank of Korea on the 16th, while countries such as Brazil and Russia have been continuously raising policy interest rates recently, major Asian emerging countries including India and the five ASEAN countries are maintaining policy interest rates at low levels.

Brazil raised its policy interest rate from 2.0% on January 20 to 5.25% on the 4th of this month. Russia increased its policy interest rate from 4.25% in February to 6.5% last month. Both countries have raised rates four times in total.

Resource-exporting countries like Brazil and Russia have seen improved economic conditions due to recent rises in commodity prices, alongside significantly increased inflationary pressures. The consumer price inflation rates in June for Brazil and Russia were 8.4% and 6.5%, respectively, exceeding their targets (Brazil 3.75%, Russia 4%) for eight consecutive months since November last year.

On the other hand, major Asian emerging countries such as India, Indonesia, Thailand, Malaysia, the Philippines, and Vietnam?the five ASEAN countries?are maintaining low policy interest rates. The Bank of Korea explained, "Due to the recent resurgence of COVID-19, face-to-face consumption has contracted, so inflationary pressures are expected to remain low for the time being," adding, "In particular, some countries like Vietnam face growing concerns over delayed domestic economic recovery due to stringent quarantine measures caused by low vaccination rates."

According to Our World in Data, as of the end of July, vaccination rates (at least one dose) are 43.1% in Malaysia, 26.1% in India, 19.8% in Thailand, 17.3% in Indonesia, 10.5% in the Philippines, and 5.7% in Vietnam.

The Bank of Korea stated, "Whether the differentiation of policy interest rates among emerging countries continues will largely depend on the COVID-19 spread situation in each country."

This content was produced with the assistance of AI translation services.