Asia, Phl get respite amid tailwinds

Moody’s Analytics expects better data from China for its August performance

Keeping market steady Bangko Sentral ng Pilipinas Governor Felipe M. Medalla convened the Financial Stability Coordination Council as the new chairman of the Council. In the meeting, Medalla (third from left) is flanked by Insurance Commission Commissioner Dennis Funa (second from right), Securities and Exchange Commission chairperson Emilio Aquino (third from right), and Philippine Deposit Insurance Corporation President Roberto Tan (second from left), who are members of the FSCC Executive Committee. Also present are Finance Undersecretary Zeno Ronald Abenoja (left) and BSP Senior Assistant Governor Johnny Noe Ravalo (right). | Photograph courtesy of BSP

After experiencing unprecedented volatility from the Ukraine war, runaway inflation, rising petroleum prices, and the Federal Reserve’s hawkish stance, Asia-Pacific economies appear to be getting some respite as tailwinds emerge.

In its weekly Asia-Pacific Economic Review, Moody’s Analytics expects better data from China for its August performance, which will be “softer than in July for all except retail sales.”

“China will release a suite of activity data for August, including industrial production, retail sales, and fixed-asset investment,” Moody’s Analytics said. In addition, it said that the private sector infrastructure investment remains weak because of China’s zero-Covid policy.

“Infrastructure spending is ramping up, and this will provide some relief later this year and into 2023,” Moody’s added about China’s prospects.

The research and consulting group expects Australia’s unemployment rate to remain stable at 3.4 percent for August “as job vacancies have soared and the number of overseas workers has remained soft.”

Australia’s labor force contracted in August, and a further decline in August could suggest a turning tide for the labor market, Moody’s Analytics went on to say.

On the other hand, New Zealand’s economy is expected to expand by 1.4 percent quarter-on-quarter in June after declining in the larch quarter. Net exports are likely to again weigh on GDP because services exports have yet to improve meaningfully.

Positive outlook remains

Moody’s Analytics said, “Meanwhile, an increase in petrol imports in the quarter due to the closure of New Zealand’s last refinery will dampen growth. New Zealand’s strong consumer sector and the start of new infrastructure projects will support GDP.”

Moody’s also painted a positive outlook for the Philippines after industrial production rose 2.5 percent year-on-year in July, supported by growth in non-electrical machinery and equipment, fabricated metal, and bamboo and wood.

Headline inflation also eased slightly to 6.3 percent year-on-year in August as petroleum prices eased.

However, the foreign trade deficit for goods widened to a record $55.9 billion in July due to a substantial increase in imports, while exports slumped.

Last month, Bangko Sentral ng Pilipinas Governor Felipe Medalla said the domestic economy is strong enough to accommodate the recent policy rate increase, as he hinted at another key rate hike as the country’s monetary agency adopts an unprecedented measure to ease financial pressures and support economic recovery under the Marcos administration.

“The BSP’s monetary policy settings will remain supportive of economic growth and financial stability,” Medalla said at an online forum organized by the University of the Philippines School of Economics Alumni Association.

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