The week ahead - GDP figures release

Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus (pic) is expected to release third quarter gross domestic product (GDP) data on Friday.

GDP figures to dominate

Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus is expected to release third quarter gross domestic product (GDP) data on Friday.

IHS Markit projects the Malaysian economy to contract at an annual rate of 8.6% in the third quarter, slower than the minus 17% in the second quarter.

ING Asia senior economist Prakash Sakpal said both Malaysia and the Philippine economies were Asia’s underperformers in the second quarter and believe that remains the case in the third quarter with another double-digit year-on-year GDP decline.

He added that Malaysia will also be in the limelight as Prime Minister Tan Sri Muhyiddin Yassin’s make-or-break budget for 2021 decides the path of economic recovery ahead.

According to a Bloomberg survey, GDP in the third quarter is expected to contract 6.5% year-on-year and grow 11% quarter-on-quarter. In addition, the Department of Statistics Malaysia is also expected to announce the industrial production index (IPI) today for the month of September.

Bloomberg estimates a growth of 2.5%.

In August, the country’s IPI increased by 0.3% from a year ago. The increase in IPI in August was driven by the positive growth of 2.4% in the manufacturing index.

Data from China

China is expected to release its credit and foreign direct investment figures. Data on inflation and producer price index (PPI) will also be updated this week.

IHS said China data watchers will eagerly await official October statistics for confirmation of a sustained economic recovery after Caixin China PMI data indicated a solid start for output in the fourth quarter, backed up by the fastest upturn in overall sales for nearly a decade. As such, new yuan loans and total social financing will provide updates on credit growth and therefore the extent to which any stimulus measures will remain in progress to support the Chinese economy.

Q3 GDP results from HK, UK

GDP data for Philippines, Hong Kong and United Kingdom are expected to be released this week.

IHS Markit said the Philippines’ economy is expected to shrink at a weaker rate of 11.5% when compared to a decline of 16.5% in the second quarter.

Hong Kong will release its final print of Q3 GDP on Friday.

According to IHS, the UK economy should show a strong bounce from the record contraction seen in the previous quarter.

However, given the backward-looking nature of the data, and the month-long national lockdown recently announced for England, attention will remain firmly focused on the high frequency data

RBNZ policy decision

The Reserve Bank of New Zealand (RBNZ) will be holding its monetary policy meeting this week.

ING believes the RBNZ will match the move by Reserve Bank of Australia (RBA) next week and cut the cash rate from 0.25% to 0.10%.

UOB Global Economics and Markets Research opined it is indeed looking more likely that the RBNZ will cut the official cash rate (OCR), but it will not be this year.

At this juncture, the RBNZ looks likely to cut the OCR by 50 basis points next year at the April 14,2021 meeting, alongside a FLP, pausing thereafter.

According to the Bloomberg poll, of the 14 economists polled, only one expected RBNZ to cut rates to 0.1% while the majority expect no change at 0.25%.

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