Asia week ahead: PMI reports kick off a busy week for Asia
Manufacturing, inflation, trade and inflation reports pepper next week’s calendar
PMI reports could show impact of global supply chain gridlock
China kicks off a busy week with PMI reports over the weekend, followed by most of Asia. PMI readings could give an indication as to whether the global supply chain bottlenecks are beginning to feed into overall manufacturing activity. Our Greater China economist, Iris Pang, writes “China's official manufacturing PMI is expected to remain in contraction due to a lack of diesel for trucks which has disturbed delivery and construction activity”. Meanwhile, “the CAIXIN manufacturing PMI may see an improvement from small exporters’ manufacturing activity for the western holidays”. Other economies in Asia could see improved activity after relaxing mobility restrictions. China, Japan, Indonesia, Taiwan, Korea, Singapore and the Philippines all release PMI readings next week.
Trade activity affected by bottlenecks?
One area that is expected to take a hit from the global supply chain bottlenecks is trade. Tightness in supply and logistical gridlock may hamper overall trade, however higher commodity prices and the general reopening of economies has also translated into an increase in overall activity compared to 2020. In the coming days, Korea, India, Australia and the Philippines will release data on trade.
Inflation, the hot button issue
Concerns about the acceleration in price gains is definitely one of the main factors affecting sentiment in Asia. On top of the acceleration in prices, market participants are increasingly aware that the current spike in inflation could become more pervasive and persistent. Inflation pressures have prodded central banks around the world to take action recently (Singapore, New Zealand and Korea in the region). The Philippine inflation report will likely be closely watched as inflation remains stubbornly above target, although the central bank has continuously pushed back on the idea of raising rates “prematurely”. Korea, Singapore and Taiwan will also release CPI inflation figures in the coming days.
Growth and central bank activity
Next week’s economic calendar also features data releases on growth and a central bank policy meeting. The Reserve Bank of Australia (RBA) meets next week to discuss policy although our Asia Pacific Regional Head of Research, Rob Carnell, believes the RBA will remain in supportive mode as the economy recovers. Taiwan and Indonesia report 3Q GDP results, with Indonesia forecast to post a 3.5% year-on-year expansion, a slowdown from the previous quarter, after surging Covid-19 cases prompted authorities to heighten mobility curbs during the quarter.
Asia Economic Calendar
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Download article29 October 2021
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