Asia week ahead: China’s annual rite of spring
China returns to the limelight as it’s top legislative body sets out economic targets and policies for the year. Elsewhere in the region, monetary policy meetings and start-of-the-month activity data pack the calendar
China Two Sessions
Top government officials from all over China will gather in Beijing for the annual rite of spring - the Chinese People’s Political Consultative Conference and the National People’s Congress sessions to be held on 4th and 5th March respectively.
The typical focus in these meetings is Premier Li Keqiang’s work report due on 5th March, as well as speeches by the heads of the central bank and other regulatory bodies, which set out economic targets for the year – GDP growth, inflation, money supply, bank lending, etc. – and also policy changes required to achieve these targets.
Here is what our greater China Economist Iris Pang expects from Two Sessions this year, which marks the first year of China’s 14th five year plan. Iris expects them to omit the GDP growth target once again this year.
Monetary policies
Australia and Malaysia’s central banks are scheduled to hold their policy meetings.
Having eased via expanded quantitative easing in early February, we don’t think the Reserve Bank of Australia will have another policy move in the pipeline just yet. Australia’s 4Q20 GDP report due a day after the central bank meeting would be rather interesting. We are looking for a moderate year-on-year GDP contraction in the last quarter, by -2.0% than -3.8% in 3Q.
Malaysia's central bank has been defying the easing pressure even as tighter Covid-19 movement restrictions are poised to hit the economy hard in the current quarter. It should have more reasons to do so following the release of January CPI data showing a significant improvement in inflation, to -0.2% YoY from -1.4% in December. We have dropped our call of a 25bp rate cut in March and shifted to a stable policy view for the rest of the year.
Lots of February inflation figures from Korea, Indonesia, the Philippines and Thailand should help to condition expectations of monetary policies by the respective central banks. We are watching if the Korean data attests to the latest upward revision by the Bank of Korea to its 2021 inflation view to 1.3% from 1.0%.
Read our Asia Chief Economist Rob Carnell’s thinking on the BoK policy. Indonesia has been experiencing the lowest inflation in more than two decades while the Philippines' inflation numbers have surged past the central bank's 2-4% policy target in January, the trends likely persisted in February.
The latest notes by our Indonesia and the Philippines watcher Nicholas Mapa shed light on the monetary policy path in these countries.
Activity releases
Markets will also be busy watching the usual start-of-the-month activity releases on trade and manufacturing for guidance on the path of post-Covid-19 economic recovery this year. Indeed, the electronics-led exports upturn is leading the way out of the record slump of last year but we'll find out if the momentum is sustained from Korea’s exports figures for February, the first of the month from the region. It probably did, given our house forecast of a 17% YoY export growth.
Also widely watched around this time of the month are the purchasing managers indices (PMIs), both for manufacturing and non-manufacturing sectors.
China’s official PMIs to be released over this weekend will set the tone here.
Asia Economic Calendar
Tags
Asia week aheadDownload
Download article26 February 2021
Our view on next week’s key events This bundle contains {bundle_entries}{/bundle_entries} articles"THINK Outside" is a collection of specially commissioned content from third-party sources, such as economic think-tanks and academic institutions, that ING deems reliable and from non-research departments within ING. ING Bank N.V. ("ING") uses these sources to expand the range of opinions you can find on the THINK website. Some of these sources are not the property of or managed by ING, and therefore ING cannot always guarantee the correctness, completeness, actuality and quality of such sources, nor the availability at any given time of the data and information provided, and ING cannot accept any liability in this respect, insofar as this is permissible pursuant to the applicable laws and regulations.
This publication does not necessarily reflect the ING house view. This publication has been prepared solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.
The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.
Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved.
ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam).