The export-led recovery appears to have run its course and inflation isn’t an issue in much of the region and a case for prolonged stable CB policies is strong, according to Prakash Sakpal, Economist at ING.
Key Quotes
“We think the last batch of 3Q GDP releases from the region this week may largely go unnoticed for two reasons; first, two out of three of these are merely revised numbers, and second, the focus has already shifted to growth in the final quarter of the year. Nonetheless, our interest was is Thailand’s 3Q GDP data, of which the first report came in today, for what means for the Bank of Thailand’s monetary policy. Steady acceleration in headline GDP growth this year has masked underlying weakness in domestic spending, which is what matters for BoT policy. Without a solid recovery in domestic demand, the BoT will be among the last Asian central banks in moving to tightening, in our view.”
“October industrial production releases from Singapore and Taiwan, the other two 3Q GDP reporting countries this week, will provide a glimpse into the fourth quarter performance. Singapore reported strong NODX data for October on Friday, though it was a clawback of weakness in September. Judging from October export data from the region, this year’s export surge seems to have run its course. And for electronics exporters Singapore and Taiwan, the seasonal product replacement cycle for flagship mobile devices is nearing its end. Fading export strength will likely weigh on GDP growth in the final quarter of the year.”
“What about inflation around the region? Higher energy prices are adding to inflation pressures, but apart from a few countries, inflation isn’t a worry. Malaysia’s CPI data stands out for this reason (Hong Kong and Singapore are other two economies reporting CPI data this week). Inflation is running close to the top end of BNM’s 3-4% target for this year and is likely to remain high in the rest of the year due to rising oil prices and supply shocks to food prices from floods in some states. We saw hints of an early rate hike in the latest BNM MPC statement, which, with a strong GDP report for 3Q, suggests they could hike as early as 1Q18.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD drops below 1.0800 after German Retail Sales data
EUR/USD has come under fresh selling pressure and trades below 1.0800 after the data from Germany showed that Retail Sales declined by 1.9% MoM in February. Resurgent US Dollar demand is adding to the downside in the pair. US data are next in focus.
GBP/USD stays weak near 1.2600 amid market caution
GBP/USD remains defensive near 1.2600 in European trading on Thursday. The hawkish tone from Fed Governor Christopher Waller keeps the US Dollar afloat amid a cautious trading environment ahead of key US data releases and the Good Friday trading lull.
Gold price bulls keenly await US PCE Price Index on Friday before placing fresh bets
Gold price (XAU/USD) continues with its struggle to make it through the $2,200 mark on Thursday and oscillates in a narrow trading band through the early part of the European session.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
The other terminal rate: How far will policy rates be cut?
Recent communication by the Federal Reserve and the ECB has made it clear that the first cut in official interest rates is coming. Both central banks are saying the same but the ECB communication is more opaque than that of the Fed.