Chinese trade likely rebounded in March. Exports are benefiting from stronger global demand, especially in the U.S. Imports are picking up on the back of steady domestic demand and increased manufacturing. China’s booming housing market continues to boost money supply.
House price growth in Tier 1 cities is slowing as government measures to rein in credit growth start to take hold. But outside this, the housing market remains strong and continued to drive credit growth in March. The housing market is also supporting consumer price gains, which likely strengthened in March. Producer prices are also expected to accelerate as rising global commodity prices push up raw material costs.
Indian inflation is edging higher, with March headline CPI expected to strengthen. Higher global commodity prices are pushing up the cost of energy, while lower food prices provide some offset. Wholesale prices are also expected to accelerate, driven mostly by higher fuel prices due to a low base. Indian manufacturers likely slowed in February because of a slowdown in investment. Adding a further dampener to production is the disruption from the government’s demonetisation policy.
Elsewhere, industrial production continues to expand steadily in the Philippines as domestic demand and improved global conditions support manufacturing. Malaysian production is also expected to have rebounded in February after the Lunar New Year disruptions.In Japan, machinery orders are expected to have rebounded in February after the Lunar New Year dragged on growth in January. Export-facing firms are benefiting from a weaker yen, but the recent appreciation poses a downside risk to the outlook. Singapore’s economy likely started 2017 on steady footing. Upbeat manufacturing and services were likely offset by weakness in construction due to the fall in residential property prices.
Australia’s housing market is growing strongly, and this will support mortgage growth. The regulatory body is working with major lenders to tighten lending standards, and this will likely dampen mortgage growth in the coming months. Australia’s unemployment rate likely held steady in March because of subdued employment growth. This suggests wages will remain weak through the first half of 2017. Meanwhile, Korea’s unemployment rate likely dipped in March as job growth picked up on the back of stronger export conditions. However, restructuring by indebted businesses, especially in the shipping industry, will limit the gains.
The Bank of Korea will likely maintain its current monetary policy stance. The economy is on the mend, but domestic conditions remain difficult and high private debt will keep the bank from easing further.
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