In the upcoming week, significant economic data will be released across several Asian countries, including inflation figures for China and Taiwan, critical data from Japan and South Korea, and an interest rate decision from the Philippines. In China, March’s inflation data will be unveiled on Thursday.
Preliminary price data indicates that the consumer price index (CPI) remains low, likely showing a slight year-on-year increase of around 0.1%. In contrast, the producer price index (PPI) is expected to continue its trend in negative territory for the 30th consecutive month due to falling input costs.
This persistent deflationary pressure, coupled with elevated real interest rates, should provide the People’s Bank of China (PBoC) the flexibility to consider rate cuts, though they have held off acting until a more opportune moment arises. Taiwan will also release its CPI data on Tuesday, where we anticipate a rebound to 1.9% year on year, which aligns with the 2% inflation target.
Inflation pressures seem to be easing as the effects of last year’s electricity price hikes diminish. Growth momentum appears to be slowing, and while the central bank paused its decisions in March, adjustments may happen if necessary.
On Thursday, Taiwan will publish March trade data, likely reflecting a cooling off after a Lunar New Year boost, but still maintaining solid export and import growth rates of 11.3% and 19.1% year on year, respectively, resulting in a trade surplus of about $7.1 billion. In Japan, a gradual improvement in wages is expected due to strong bonus payouts, although real cash earnings may continue to decline amid inflationary pressures.
Meanwhile, in South Korea, the unemployment rate is predicted to remain steady at 2.7% for March; employment growth in government sectors may not offset declines in private sector jobs, particularly in construction. Lastly, the Bangko Sentral ng Pilipinas (BSP) is anticipated to announce a rate cut following an unexpected drop in CPI inflation in February.
The BSP previously paused its rate-cutting cycle, influenced by global uncertainties. Nonetheless, three additional cuts of 25 basis points each are expected as they proceed cautiously in response to both domestic and international economic conditions.