Asia week ahead: Rate decisions in the Philippines and Australia and key data on China and Taiwan

Recent GDP numbers raise concerns that soft government spending could become a longer-term drag, weighing not only on fiscal outlays but also on business and private-sector sentiment. While agriculture and private consumption are likely to rebound in the fourth quarter, investment and public spending may remain muted, keeping overall growth subdued. As a result, we now expect full-year GDP growth of 4.7%, down from our earlier estimate of 5.2%. This strengthens our call for a 25bp rate cut by Bangko Sentral ng Pilipinas on Thursday.

We expect the Reserve Bank of Australia to leave the cash rate unchanged at 3.6% on Tuesday. Given recent upside surprises in inflation and growth, which shows robust momentum, we assess that the probability of another rate cut has diminished meaningfully. This implies the RBA could be done with its easing cycle.

China's November trade data is out on Monday. While the trade truce and the US's tariff reductions should be a positive for Chinese exports, we are now entering a period of unfavourable base effects. This should keep trade growth modest. We are looking for 3.3% year-on-year growth in exports and 3.4% growth in imports, resulting in a trade surplus of $100.3bn. We expect CPI inflation for November, out on Wednesday, to continue its recovery, rising to 0.5% YoY. This would represent progress after last month's return to positive territory. The main reason is that the drag from food prices is fading. This, combined with the recent upward momentum in non-food prices, should boost inflation. Overall, inflation remains quite low, but preventing a deflationary mindset from settling in is important to maintaining a healthy long-term consumption and investment trajectory. Low positive inflation will likely play a limited role in People’s Bank of China decision-making.

We expect exports, out on Tuesday, to continue their torrid growth at 47.5% YoY, while imports are expected to grow a respectable 12.3%. This will equate to a trade surplus of $23.4bn. Exports have been supported by the AI race. They look set to close out the year on strong footing, with export orders also continuing to grow.