Besides trade war noise, economic releases on GDP, manufacturing, and inflation will be the highlights of the Asian economic calendar in a shortened trading week
First some good news. Latest media reports of trade negotiations resuming between the US and China by the end of August lift hopes of trade tension being averted. However, this comes as the US gets ready to implement the second round of tariffs on $16bn of Chinese goods. The kick-off date is set for next Thursday (23 August).
Markets should have taken the next batch of tariff implementation into their stride by now, but with the consultation for the next phase of tariffs already underway and set to be completed by early September, trade war concerns are unlikely to fade from being an overhang so soon - a small tweet-trigger by President Trump is enough to unsettle markets.
President Jokowi's 2019 budget targets of 5.3% GDP growth and a fiscal deficit of -1.84% of GDP are indeed achievable in our view. But the assumption of a stronger Indonesian rupiah (IDR) is a reason for caution
President Jokowi’s budget for 2019 with GDP growth of 5.3% and a fiscal deficit at -1.84% of GDP looks attainable to us. The 2019 GDP target is in line with the current consensus forecast and lower than the initial proposal of 5.4% to 5.8%.
There is reason to think that the performance of the government in 2019 will not deviate much from the proposed 2019 fiscal deficit of -1.84% of GDP.
The unpredictability of the Trump administration's policies is a reason in itself not to take positions