The Question Is How Has Chinese GDP Been Affected By Covid Reality

The US Dollar Weakens as Chinese and Japanese Intervention Threats Rise, While US CPI and UK Jobs Data Await: A Preview

We're expecting China's 2Q GDP report next week to reflect the contraction of activity given Covid-19 lockdowns, while the calendar also features a couple of data points that could help central banks chart their next moves

The Question Is How Chinese GDP Has Been Affected By Covid Reality - 1

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Content

  • China growth and activity data
  • Data that could help shape central bank decisions in the near term
  • Regional trade data
  • Other important events: a Bank of Korea rate hike

China growth and activity data

The coming week features several data reports from China bannered by growth figures for the second quarter. China’s GDP report for 2Q22 should reflect the contraction of activity given the lockdowns experienced during the period.

Recent activity data for June should signal a recovery for retail sales as Covid-19 measures were relaxed and fewer lockdowns were implemented during the month. As such, we do not expect any change in the 1Y Medium Lending Facility policy rate, and loan growth should pick up as the government has urged banks to lend.

Data that could help shape central bank decisions in the near term

Next week also features a couple of data points that could help central banks chart their next set of moves.

The Reserve Bank of Australia's (RBA’s) latest statement repeats that “the size and timing of future interest rate increases will be guided by the incoming data and the board's assessment of the outlook for inflation and the labour market”, so the latest labour market report (June data), together with inflation data released later in the month, could help determine whether the RBA sticks to 50bp hikes next month, or scales up to 75bp or even larger. We anticipate a 50,00 increase in total employment, evenly split between part-time and full-time jobs, and a fall in the unemployment rate to 3.8%.

Meanwhile, the Reserve Bank of India (RBI) could be monitoring the latest price gauges to help chart its next move. India’s June inflation is out next week and will probably stay at 7.0%, down from the recent peak of 7.8% following cuts in fuel excise duties. A slight moderation in food price inflation should keep the monthly CPI gain to only 0.5%. This takes the immediate pressure off the RBI, which has stepped up the pace of its tightening recently, though we still expect another 50bp hike at the 4 August RBI meeting.

Regional trade data

Regional trade data will be in focus in the coming days with both Indonesia and the Philippines reporting their numbers. Indonesia’s trade surplus is set to widen further as authorities gave the go signal for the partial resumption of palm oil exports. Exports and imports are both likely to gain by double digits with the trade surplus possibly jumping to $5.2bn.

On the other hand, the Philippines will be seeing its trade balance move in the opposite direction as its deficit widens to -$5.3bn. Philippine imports are expected to sustain the robust doubledigit pace of growth as the oil import bill more than doubles due to pricey crude oil.

Other important events: a Bank of Korea rate hike

The Bank of Korea will meet on Wednesday. We expect it to raise 50bp at next week’s meeting in response to the higher-than-expected CPI inflation for June and rapidly rising inflation expectations.

Lastly, Singapore reports GDP figures and we expect a 4.9% YoY gain for 2Q. Economic reports have been surprising on the upside with NODX, industrial production and retail sales all beating consensus estimates for most of the quarter.

Asia Economic Calendar

The Question Is How Chinese GDP Has Been Affected By Covid Reality - 2

Source: Refinitiv, ING

Tags
Emerging Markets Asia week ahead Asia Markets Asia Economics

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The US Dollar Weakens as Chinese and Japanese Intervention Threats Rise, While US CPI and UK Jobs Data Await: A Preview

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