MNI ASIA PAC Weekly Macro Wrap:

Download Full Report Here

Executive Summary:

• AUSTRALIA
  • RBA Deputy Governor Hauser said that the timing of February’s rate cut was driven by a shift in the risks. The meeting minutes stated though that the reduction in restrictiveness was not a pre-commitment to further easing.
  • Q4 GDP suggested that the economy has begun to tentatively recover. It printed exactly in line with consensus at +0.6% q/q & 1.3% y/y up from 0.3% & 0.8% in Q3, but above the RBA’s February forecast of 1.1% y/y. Growth was supported by private, public and overseas demand.
• SHORT TERM RATES
  • STIR markets have a 10% probability of a 25bp rate cut at the RBA’s April meeting, with a cumulative 57 bps of easing priced by year-end (based on an effective cash rate of 4.09%). In NZ, currently, 25 bps of easing is priced for April, with a cumulative 69 bps by November 2025.
• CHINA
  • China’s February CAIXIN PMI beat expectations in February. The result of 50.8 was the highest print in three months and the fifth month in a row of expansion (above 50 equals expansion). Output rose to 51.6 from 51.2 with new orders up on the previous month.
• SOUTH KOREA
  • A moderation of inflation in February to 2% provides policy flexibility going forward to support growth.
  • February’s Manufacturing PMI highlights the uncertainty that is impacting Korean prospects. January’s industrial production contracted -4.1% (expected -2.0%) and December’s result was revised down significantly to 4.4%. It is likely that the numbers are showing a perfect storm for Korean corporates given political uncertainty, tariff threats and China’s Lunar New Year holiday.
• ASIA
  • February S&P Global manufacturing PMIs across the Asian region improved despite heightened global uncertainty around US trade policy. The ASEAN PMI rose to 51.5 from 50.4, signalling the fastest pace of growth in the sector since July 2024 driven by output and new orders, which supported job creation and improved business sentiment.
  • Indonesia’s headline CPI inflation in February printed significantly below expectations at -0.1% y/y after +0.8% y/y. This number doesn’t signal that Bank Indonesia needs to be worried about deflation though as the start of 2025 was impacted by a 50% discount on electricity rates for some consumers. Core inflation is a better indicator of price pressures and it rose 0.1pp to 2.5%.
  • February’s CPI release in the Philippines was lower than expected, providing further room for the BSP to cut rates.
• ASIA EQUITY FLOWS
  • Taiwan is now at almost $4b in outflows in just the past 5 sessions. India saw another $400m in outflows, while Thailand was the only region to register inflows.
• GLOBAL
  • The JP Morgan global manufacturing PMI for February held up despite significant uncertainty over US trade policy. It signalled slightly stronger industrial growth with the index rising to 50.6 from 50.1, the highest since June.