Asia Week Ahead: RBI On Hold, Rising Regional Inflation And A Potential China PMI Data Rebound

By Robert Carnell, Lynn Song, Min Joo Kang, Nicholas Mapa of ING Economics

Thursday, March 28, 2024 9:41 AM EDT

Next week features a policy decision for the Reserve Bank of India, PMI readings from China, plus inflation from regional economies.

Pixabay

RBI likely on hold

We think it would be extremely unlikely that the Reserve Bank of India will make any change to their policy rates at this meeting, and like most other central banks in the region, will hold until the Federal Reserve starts easing. The policy rate will remain 6.5%, one of the highest in the region.

China PMI to edge closer to neutral

The upcoming week features a slew of PMI data across Greater China. China is up first on Sunday, where we expect a rebound in the manufacturing PMI on the month toward 49.5 to move closer to the neutral level. The encouraging start to industrial data at the start of the year also raises the possibility of an upside surprise.

We are also expecting China’s non-manufacturing PMI to remain broadly unchanged at 51.4, staying in expansion. Taiwan’s PMI is up next on Monday, where markets will watch to see if the manufacturing PMI can snap a 21-month streak of contraction. Hong Kong’s PMI is the last of the three to be published, expected next Friday.

Additionally, Hong Kong will publish its retail sales data for February, where a strong base effect from last year’s reopening could drag this year’s growth numbers.

Korea's exports to advance while inflation to moderate

Korea's exports are expected to stay firm in March on the back of strong shipment of semiconductor and vessels. We're concerned that car exports may decline for a second month, which could signal that final demand from developed markets – especially from the US – is cooling down. We continue to expect strong semiconductor exports to dominate weak car exports, and an improved manufacturing PMI should support our view here. Meanwhile, consumer price growth should moderate as the Lunar New Year effect fades. However, headline inflation is expected to stay at 3% level, and the Bank of Korea is therefore likely to be on alert.

Inflation in the Philippines and Indonesia to tick higher

Price pressures are mounting in the region, with inflation in both Indonesia and the Philippines likely moving higher. Indonesia will likely see inflation settle at 3.0% year-on-year, creeping towards the top-end of their new inflation target.

Likewise, inflation for the Philippines will likely edge higher to 3.8% YoY from 3.4% in the previous month. Food inflation will likely be the driver for inflation in both economies as the drought induced by the El Nino weather phenomenon impacts crop production and overall supply of basic food.

Key events in Asia next week

Refinitiv, ING

More By This Author:

Eurozone Money Growth And Bank Lending Show Cautious Recovery
Italian Business Confidence Improves In March As Consumers Take A Breather
FX Daily: Fed Foot-Dragging And Low Volatility Dominate

Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. ING forms part of ING Group (being for this purpose ING Group NV and its subsidiary and affiliated companies). The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.

The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.

Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved. ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam). In the United Kingdom this information is approved and/or communicated by ING Bank N.V., London Branch. ING Bank N.V., London Branch is deemed authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. The nature and extent of consumer protections may differ from those for firms based in the UK. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.. ING Bank N.V., London branch is registered in England (Registration number BR000341) at 8-10 Moorgate, London EC2 6DA. For US Investors: Any person wishing to discuss this report or effect transactions in any security discussed herein should contact ING Financial Markets LLC, which is a member of the NYSE, FINRA and SIPC and part of ING, and which has accepted responsibility for the distribution of this report in the United States under applicable requirements.

less

How did you like this article? Let us know so we can better customize your reading experience.