29 June 2018
Asia week ahead: Weak trade and FX, high inflation

Inflation data crowds the calendar with Korea, Taiwan, Indonesia, Thailand and Philippines reporting CPI for June. As an all-out trade war looms, it'll be a challenging period ahead for Asian central banks to strike the growth-inflation balance

Trade war is upon us

The threat of an all-out trade war will continue to dominate the headlines before the US implements $34 billion of tariffs on Chinese goods on 6 July. China has vowed to retaliate on an equal scale and intensity. The stakes are high but so are the hopes that the two countries will come to terms in averting the war in a last-minute deal.

Meanwhile, the tensions will weigh on trade from the rest of Asia. Korea’s trade data for June will be a testimony of this. The 4.8% year-on-year fall in Korean exports in the first 20 days of June was alarming, a sign of already weakening export momentum. The weak trade sentiment is further reflected in the Korean won as Asia’s worst currency with 4.1% month-to-date depreciation.

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Good MornING Asia - 29 June 2018

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