Asia week ahead: Trade and inflation reports

Asia’s data calendar is heavy on trade reports for the coming week, with Australia, China and the Philippines all scheduled to release data on exports and imports. Both exports and imports for China likely posted double-digit growth last December. China’s exports are forecast to have jumped 20.1%, benefiting from some last-minute Western demand tied to the holiday shopping season. Meanwhile, China’s imports are also expected to jump sharply, by 37.8%, this time fuelled by domestic demand ahead of the Lunar New Year. Meanwhile, recent trends in Philippine trade data will likely continue. Philippine imports are expected to grow 36.9%, outpacing the modest 10.4% expansion in exports. Double-digit import growth is tied to the economic reopening while export growth was likely driven by global demand for Philippine electronics components. The overall Philippine trade balance is projected to remain in deficit for November.

Next week also features inflation reports from China and India. For China, PPI inflation is forecast to rise over 10% year-on-year and it should be slower than November’s 12.9% rise due to lower LNG and coal prices. On the other hand, CPI inflation on a yearly basis should also be slower due to the base effect of pork prices.

Meanwhile, India releases December CPI inflation data on 12 January. The month-on-month CPI index will probably show a reversal of last month’s gains, mainly due to some moderation in earlier vegetable price increases. But an even larger food price decline last December means that the year-on-year rate of inflation will probably rise quite sharply. We’ve pencilled in a 5.5% increase, but there is upside risk to this figure in our view.

The Bank of Korea meets on Friday 14 Jan and although Governor Lee Ju-yeol has indicated that rates have not yet peaked and would probably rise again in 1Q22, the last meeting didn’t provide any indication that there would be a further imminent cut, so we think if we get one more in the first quarter, it will probably be at the end of the quarter, which will also coincide with Governor Lee’s last meeting before he steps down. He may of course opt to leave it up to his successor.