Asia week ahead: Fourth-quarter growth numbers dominate the calendar

Hong Kong SAR, Korea, Taiwan and the Philippines will release their GDP performance in the final quarter of 2020.

Like China, Taiwan continued to buck the region-wide negative GDP trend in the last quarter of 2020. Not only staying in the positive territory, but growth also gained further traction to our house forecast of 4.2% year-on-year in 4Q from 3.9% in 3Q. Accelerating exports are driving the growth - a trend hinging on how the global semiconductor cycle pans out this year. As of now, it seems to be in full swing, given the strong electronics exports in December.

Moderating GDP contraction remains the baseline for other Asian countries too with the Philippines continuing to be the region's underperformer

The electronics-led export argument holds good for Korea too, though it may not turn the corner into positive territory as the rapid spread of the virus depressed consumer and business confidence and brought a decade-high unemployment rate of 4.6%.

The low base year effect seems to be the only hope of a little less negative growth in Hong Kong. That said, our house view of steep GDP contraction in 4Q, by -5.0% YoY than -3.5% in 3Q, is probably a reflection of this economy losing its lustre as the world’s gateway to China.

Moderating GDP contraction remains the baseline for other Asian countries too with the Philippines continuing to be the region's underperformer with another quarter of double-digit GDP contraction (ING forecast -10.4% YoY in 4Q vs. -11.5% in 3Q). This is because the pandemic weighed down domestic demand and exports failed to catch up despite its high electronics content.

Lots of December industrial production releases will help refine GDP estimates for the last quarter, though Korean and Taiwanese data would be of little use as we also get their GDP figures. However, forward-looking indicators like consumer and business sentiment indices from Korea should be of some interest.

We don’t see CPI inflation figures form either Singapore or Australia causing any ripples in the markets either

That leaves us looking out for December industrial production from Japan and Thailand where sluggish export recovery sustained the negative spell on manufacturing growth. Singapore also reports industrial production data, which will indicate likely direction of revision to the -3.8% YoY advance 4Q GDP estimate released earlier this month. Also, look out for Singapore’s jobs report for the fourth-quarter, which should show an unchanged unemployment rate at 3.6%.

Lastly, we don’t see CPI inflation figures form either Singapore or Australia causing any ripples in the markets. Prices continue to be under pressure from weak consumer spending, which together with sluggish growth prospects argue for sustained policy accommodation ahead.