Why Asia’s inflation scare may be overstated: a Morgan Stanley economist explains
Rising bond yields and renewed inflationary pressures are raising concerns about Asia’s growth outlook. But could the region’s investment boom offer a...
Source: The Business Times Singapore · August 28, 2026 at 10:01 AM · AI-assisted report
Single-sourceSINGAPORE, 28 AUGUST 2026 —
Asia’s Inflation Risks May Be Overstated, Says Morgan Stanley Economist
Market Impact
Rising bond yields and renewed inflationary pressures have sparked concerns over Asia’s growth outlook, but a surge in regional capital expenditure could counterbalance these risks. Economists are closely monitoring inflation trends in Australia and Singapore, as well as rate hikes by the Philippines and South Korea, amid persistent US inflation and elevated bond yields. However, Derrick Kam, Asia Economist at Morgan Stanley, suggests the situation may be less dire than recent data suggests.
Malaysia Market Impact: Limited Direct Exposure Expected
While regional inflation dynamics may influence investor sentiment, Malaysia’s market reaction is expected to remain measured. Analysts note that Malaysia’s inflation remains within manageable levels, supported by stable domestic demand and controlled food prices.
Morgan Stanley Economist Highlights Nuanced Inflation Picture
In an interview with The Business Times, Kam emphasized that Asia’s inflation scare may be overstated. He pointed to strong capital expenditure (capex) growth as a key driver of regional resilience, suggesting that investment-led expansion could offset inflationary pressures. Kam’s analysis contrasts with recent inflation spikes in Australia and Singapore, where price pressures have prompted monetary tightening.
Outlook: Cautious Optimism Amid Global Uncertainty
The outlook for Asia remains cautiously optimistic, with capex growth expected to sustain economic momentum. However, risks persist from stubborn US inflation and volatile bond markets. Investors are advised to monitor Fed signals and regional policy responses.
Related: Morgan Stanley · Derrick Kam