Asia week ahead: Regional inflation numbers and a Bank Indonesia decision
Coming up in the next week, we can expect significant news from across Asia. In particular, we will be keeping a close eye on developments in both China and Indonesia.
As of 16 November 2023, this post has been refreshed within the past two hours.
Next week, Asia's data calendar will be less busy. Two countries, Japan and Singapore, will unveil their inflation figures while Bank Indonesia will hold a meeting to determine their policy rates. Additionally, the People's Bank of China will disclose its benchmark lending rates.
The Chinese People's Bank is scheduled to announce its loan rates, including the one-year and five-year loan prime rates. Our forecast is that the rates will remain unchanged, following the MLF rate.
Data on economic activity that has been published over the previous few months demonstrate a slight improvement in China's recuperation. This, combined with worry over the frailty of the Chinese yuan currency, indicates that cuts in interest rates will probably not occur at this time.
Next week, Taiwan is scheduled to publish its data on export orders and industrial production. The demand for semiconductors worldwide is gradually increasing, and we anticipate that the decrease in orders will reduce even further to -4.8% in comparison to the previous year.
It is expected that industrial production will also experience a decrease of -6.4% compared to the previous year. Although exports have shown growth for three months in a row starting from June, it is still in negative numbers primarily because of the base effects.
The central bank of Indonesia, Bank Indonesia (BI), is anticipated to keep the interest rates at the current 6% level in the following week. A favorable trade report, along with the IDR's recovery, indicates that the central bank has no reason to increase the rates, and thus they should remain the same in the upcoming meeting.
Coming up next week is the release of Japan's October CPI inflation data. Our prediction is that the overall inflation rate will speed up to 3.3% YoY in October compared to the 3.0% recorded in September. The primary reasons for this increase are projected to be the rising costs of fresh food and energy, with other services prices expected to follow suit due to the ripple effect of previously escalating input costs.
It is expected that the core inflation, which excludes fresh food and energy, will remain higher than 4.0%. This could cause the Bank of Japan to change their policy approach from being extremely focused on easing to being more balanced.
The inflation rate in Singapore is expected to increase slightly to 4.2% compared to the previous year, which was recorded at 4.1%. However, there might be a decrease in prices by 0.2% on a monthly basis. On the other hand, the core inflation, which is the preferred measurement of the Monetary Authority of Singapore, is projected to remain constant at 3%.
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