Moody’s Analytics on Asia Pacific weekly highlights and preview released on January 18 states that December was a tough month for Chinese exporters.
Annual exports fell by 4.4% y/y, marking the first fall since February 2017 and following downward revisions to November’s export growth to 3.9% (previously reported as 5.4%). The monthly trade surplus widened further in December, but this was the result of a pullback in imports.
Annual imports dropped by 7.6% y/y in December, well below market expectations for a 4.5% rise. In particular, mechanical and electrical exports dropped by 6.8% y/y in December, while high-tech product exports fell by 10.3% y/y.
The export weakness likely will persist in the near term. New export orders from the official manufacturing PMI have been steadily trending lower and reached a level in December not seen since 2015.
Japan’s core CPI growth cooled to 0.7% y/y in December following the 0.9% rise in November. Lower energy prices are driving the softer headline after being the primary upward contributor earlier in 2018. Core-core CPI growth (excludes food and energy) was 0.1% y/y in December.
South Korea’s economy likely rose by 0.5% q/q in the final quarter of2018, following the third quarter’s 0.6%.
Annual growth is forecast to slow to 2%, after hitting 2.7% in the third quarter. On an annual basis, we expect a broad-based slowdown with household consumption and exports in particular travelling in a slower lane. With external trade slowing and employment growth staying weak, we expect economic conditions to stay relatively soft into 2019.
India’s CPI growth cooled to an 18-month low at 2.2% y/y in December. The slowdown was largely on food prices, which fell by 1.5% y/y. Inflation has been below the Reserve Bank of India’s target for five months. We expect 50 basis points worth of rate cuts in 2019.
Singapore’s non oil domestic exports surprised on the downside by falling 8.5% y/y in December, after a 2.8% decline in November. The slump was broad-based with electronic exports down by 11.2% y/y, while non electronic shipments dropped by 7.4%.
Bank Indonesia kept the policy rate on hold at 6% in January following 175 basis points worth of hikes in 2018. BI has followed the Federal Reserve with a less aggressive tightening path, a consequence of less capital outflow pressure.
Elsewhere, GDP growth in the Philippines likely hit 6.8% y/y in the fourth quarter, after slowing to 6.1% in the third.
Improvement is expected in private consumption after a slump in the third quarter on higher food prices squashing discretionary spending. Imports of goods also accelerated to doubledigits, a consequence of the government’s large infrastructure spending program. Full-year GDP growth remains on track to expand 6.5% in 2018.
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