The Week Ahead - Export data, GDP, PMI, FOMC

Economists expect exports to grow 17% while imports are expected to expand 20% and trade surplus at RM10.6bil.

Export data

THE Statistics Department will release the June 2021 external trade statistics on Wednesday. It will also release the producer price index on Thursday.

Economists expect exports to grow 17% while imports are expected to expand 20% and trade surplus at RM10.6bil.

Malaysia’s total trade in May 2021 surged 48.7%, reaching RM170.9bil as compared with RM114.9bil in May 2020.

Exports rose 47.3% to RM92.3bil in May against a year ago while import was valued at RM78.6bil, up 50.3% year-on-year (y-o-y).

Trade balance continued to record a surplus with a value of RM13.7bil with an increase of 32.3%.

Bursa Malaysia Bhd is scheduled to release its financial results for the second quarter ended June 30 on Wednesday.

GDP reports

SOUTH Korea and Taiwan will be releasing their second-quarter (Q2) gross domestic (GDP) performance today and Friday respectively. Hong Kong will also be releasing its Q2 GDP on Friday.

UOB Global Economics & Markets Research estimates South Korea, Hong Kong and Taiwan Q2 GDP to grow 5.6%, 7.7%, and 7.6% y-o-y respectively.

Based on ING’s house forecasts, the quarter-on-quarter growth rates of both economies moderated in the last quarter, though close to 6% y-o-y growth is still a decent performance considering their ongoing plight with Covid-19.

ING expects a slowdown in South Korea’s Q2 GDP growth to 0.6% quarter-on-quarter from 1.7% quarter-on-quarter in Q1, though the y-o-y growth rate has accelerated to 5.8% from 1.9% over the same period.

In Taiwan, ING said Q2 GDP growth likely eased to 6.1% y-o-y from 8.9% in the previous period.

China PMI

CHINA’S official July purchasing managers’ index (PMI) surveys will be released at the end of the week.

According to a Bloomberg survey, it expects the manufacturing PMI to ease slightly to 50.8 in July from 50.9 in June while the non-manufacturing July PMI may rise slightly faster to 53.7 (from 53.5 in June).

US GDP, FOMC meeting

THE Q2 GDP will be released by the United States this week while the US Federal Open Markets Committee (FOMC) convenes on July 27 and 28.

ING is forecasting Q2 GDP to grow 9.5% annualised while Bloomberg estimates a growth of 8.2%.

Meanwhile, minutes from the June 15-16 FOMC meeting showed that the central bank is beginning to believe it may soon be appropriate to tighten monetary policy.

ING is not expecting any change in the Fed funds target rate range of 0% to 0.25%, nor is it expecting the Fed to lower its monthly QE asset purchases, which are currently running at US$120bil (RM507.18bil) per month.

UOB said the “talk about the talk” about QE tapering and updated Dot plot during the June FOMC could set in motion for taper discussion in the July FOMC. It expects the Fed to keep its current policy stance unchanged in this meeting.

UOB’s view remains that the Jackson Hole Symposium in August is the more likely venue to see the first hint of taper and expects the first taper to be done in December 2021.

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