Asia's Economic Outlook: Bank of Korea Pauses, India and China Inflation Reports Awaited
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Asia week ahead: Bank of Korea to extend pause
The Bank of Korea (BoK) meets to discuss policy next week while India and China report inflation. Meanwhile, Singapore will release its latest GDP figures.
Inflation in India
We get June CPI inflation for India next week, which will likely show that inflation remained in the low 4% area, close to the mid-point of the Reserve Bank of India’s target range of 2-6%. This leaves real policy rates at one of the highest levels in the region (nominal policy rate is 6.5%) and may help to explain the Indian rupee's recent resilience.
We also get India’s industrial production data for June. June’s Manufacturing PMI dropped to 57.8 from 58.7, so we may well see the rate of growth moderate from the 4.2% year-on-year rate recorded in May.
China loan and inflation reports
China’s aggregate financing data for June will be released. Within the total, new Chinese yuan (CNY) loans will likely come in lower than the CNY2806bn level recorded in June last year, reflecting the weakness of investment. CPI inflation data is also published, which will show inflation remaining close to zero.
Weak domestic demand is the main culprit, though there are also some helpful base effects and we should see inflation return to around a 2% rate over the coming months. PPI inflation will remain strongly negative, reflecting weak factory gate as well as subdued commodity prices.
