Asia Forecast Week: China data and regional trade reports released

Growth and activity data for China
The coming week brings multiple data reports out of China, lined with second quarter growth figures. China’s 2Q22 GDP report should reflect the slowdown in activity amid lockdowns experienced during the period.

The latest activity data for June should signal a rebound in retail sales as Covid-19 measures have been eased and lockdowns eased throughout the month. Therefore, we do not expect any change in the 1-year central credit facility rate and credit growth should pick up as the government has pushed banks to lend.

Data that could influence central bank decisions in the short term
Next week also includes some data points that could help central banks plan their next moves.

The Reserve Bank of Australia’s (RBA) latest statement reiterates that “the magnitude and timing of future rate hikes will be guided by incoming data and the board’s view on the inflation and jobs outlook,” according to the latest jobs report (June data) could, along with inflation data released later in the month, help determine whether the RBA will stick to 50 basis points next month or scale to 75 basis points or even higher. We expect total employment to rise by 50.00, evenly split between part-time and full-time jobs, and the unemployment rate to fall to 3.8%.

Meanwhile, the Reserve Bank of India (RBI) could be monitoring the latest price indicators to plan its next move. India’s June inflation will be released next week and is likely to remain at 7.0%, down from a recent peak of 7.8% on fuel excise duty cuts. A slight moderation in food price inflation should keep the monthly CPI gain at just 0.5%. This takes immediate pressure off the RBI, which recently increased the pace of its tightening, although we still expect another 50 basis point hike at the August 4 RBI meeting.

Regional Trade Data

Regional trade data will be the focus in the coming days, with both Indonesia and the Philippines set to report their numbers. Indonesia’s trade surplus is likely to widen further as authorities gave the go-ahead for a partial resumption of palm oil exports. Exports and imports are both expected to grow at double-digit rates, with the trade surplus potentially widening to $5.2 billion.

On the other hand, the trade balance of the Philippines will move in the opposite direction as its deficit widens to -$5.3bn. Philippine imports are expected to maintain robust double-digit growth pace as oil import bill more than doubles on expensive crude.

Other notable events: a rate hike by the Bank of Korea

The Bank of Korea will meet on Wednesday. We expect it to rise 50 basis points at next week’s meeting in reaction to higher-than-expected June CPI inflation and rapidly rising inflation expectations.

Finally, Singapore reports GDP numbers and we expect Q2 growth of 4.9% yoy. Economic reports were surprisingly upbeat as NODX, Industrial Production and Retail Sales beat consensus estimates for most of the quarter.
Asia economic calendar
Source: ING

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