Sunday, 19 September 2021 07:46 GMT

Asia week ahead: GDP data dominates

(MENAFN - ING) The Asian economic calendar will be filled with the usual end-of-the-month economic releases next week. Second quarter GDP reports from northeast Asia will steal the spotlight

In this article
  • 2Q GDP and inflation reports
  • Other June activity data
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Korea and Taiwan are next in line to unveil their 2Q GDP performance next week. Based on our house forecasts, the quarter-on-quarter growth rates of both economies moderated in the last quarter, though close to 6% YoY growth is still a decent performance considering their ongoing plight with Covid-19.

We expect a slowdown in Korean 2Q GDP growth to 0.6% quarter-on-quarter in 2Q from 1.7% QoQ in 1Q, though the year-on-year growth rate accelerates to 5.8% from 1.9% over the same period. The strong surge in exports (up 7% QoQ and 42% YoY), thanks to the global semiconductor upswing, may have softened the impact of weaker domestic demand due to rising Covid cases and tighter movement restrictions.

In Taiwan, 2Q GDP growth likely eased to 6.1% YoY in 2Q from 8.9% in the previous period. The main factors at work here, besides Covid-19, are water and electricity shortages in June, which were particularly detrimental to the semiconductor sector. The water shortages may have eased now thanks to recent rainfall, but power cuts remain a drag on production, while the semiconductor industry has also been operating close to full capacity and new orders continue to pile up amid the global chip shortage.

Down under, a spike in Australian 2Q CPI to 3.5% from 1.1% in 1Q will likely be brushed off by the Reserve Bank of Australia as transitory and base-driven. There could be some market response from a surprise on either side, as higher inflation is now being interpreted by markets as a force for slower future growth via tighter monetary policy, causing bond yields to fall and FX to sell-off.

Other June activity data

The rest of the calendar is filled with the usual end-of-the-month data releases from around the region. Most of these will be for June, capping the economic picture for 2Q.

Strong export growth augurs well for June's industrial production figures from Japan, Korea and Singapore. However, the already-released 2Q GDP figures make June IP prints from Korea and Singapore almost redundant. Their importance is reduced to what they say about any likely GDP revisions  and are unlikely to be big market movers.

Instead, the forward-looking sentiment indicators will be worth a look. This puts the focus on Korean consumer and business confidence indicators. Likewise, China's industrial profits data will shed light on the prospect of capex spending by companies.

Asia Economic Calendar
Refinitiv, ING, *GMT

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Author: Robert Carnell, Iris Pang , Nicholas Mapa, Prakash Sakpal
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