Asia week ahead: Japan GDP and key data from China and Taiwan
China: Domestic weakness persists as IP outperforms
China releases its key domestic activity data for October on Monday. After a surprisingly solid September, we expect retail sales growth to moderate to 0.7% YoY as consumption stays soft amid weak discretionary consumption. After stabilising last month, fixed asset investment growth could see a smaller drag in October as public investment picks up. We expect headline FAI to rise to -6.7% YoY YTD.
Industrial production is expected to remain the outperformer, and we think growth will remain unchanged at 5.5% YoY. We will also watch the 70-city property price data, which has recently been showing a stabilisation of prices in tier 1 and a few tier 2 cities. Later next week, China’s loan prime rates will be released, with the 1- and 5-year LPRs expected to remain unchanged at 3.0% and 3.5%, respectively.
Taiwan: Export orders continue to grow
Taiwan releases its export orders data next Friday. We expect the strong growth of the past few months to continue and are looking for 67.0% YoY growth in October. This indicator is worth watching closely for signs that the AI capex cycle could be slowing, but so far we haven't seen any such signal. Various Taiwanese corporates have signalled that order books remain full on an 18-month rolling basis, suggesting that momentum should stay solid for now.
Japan: Third quarter GDP and activity data in focus
Japan will release its Q3 GDP and trade data next week. The market expects growth to slow sharply to 0.1% QoQ from the previous 0.4%, with private consumption contracting 0.2% as the expiry of energy subsidies pushed utility bills sharply higher. Markets expect imports to accelerate to 25.9% YoY on energy and capital equipment, while exports pick up to 20.1%, extending to 13 consecutive months of YoY gains. Altogether, it leads to a trade balance deficit of JPY1067bn.
Japan will also release its inflation data next Friday. The market expects headline inflation to accelerate to 2.5% YoY from 2.1% in September with core CPI rising to 2.3%. A firm inflation reading would support expectations for further Bank of Japan policy normalisation.
Key events in Asia next week
Author
ING Global Economics Team
ING Economic and Financial Analysis
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