MNI Asia Pac Weekly Macro Wrap
MNI (SYDNEY) - Executive Summary:
JAPAN: A steady hand looks likely at next week’s BoJ meeting. Inflation pressures in the services sector appear to be holding up though, paving the way for a BOJ shift down the track. FX rhetoric picked up this week as USD/JPY tested above 153.00. Weekend focus will be on the elections and whether the ruling LDP loses its majority, which could impact the fiscal/monetary policy outlook.
AUSTRALIA: The IMF revised its forecasts for Australia to reflect subdued growth but also the impact of government subsidies on inflation. Even when they expire, Australian inflation is projected to remain around 0.5pp above the OECD average.
SHORT TERM RATES: $-Bloc markets firmer over past week apart from NZ.
CHINA: While IMF growth forecasts for China are higher than in April, 2024 was revised lower compared with July. The outlook is pessimistic with growth expected to trend lower over the forecast horizon and shift below ASEAN-5 from 2025. As expected, the 1yr MLF rate was held steady.
SOUTH KOREA: Slowing export growth takes away a key source of support for the South Korean economy. Growth expectations may be nudged down.
ASIA: The past week has been focused on weaker FX trends in the region, as the resilient US economy, coupled with election risks, drive USD gains in the near term. Healthy FX reserves though in South East Asia should leave the central banks able to maintain financial stability.
ASIA EQUITY FLOWS: Asia markets saw equity outflows in the past week.
GLOBAL: The updated October IMF forecasts showed little change in global aggregates compared to its expectations in both April and July. Global growth is forecast at 3.2% in 2024 and 2025 with the latter revised down 0.1pp, to be in line with the series average. The IMF warns that the 5-year outlook is “mediocre” and that reforms remain “necessary” to lift it, while policy should “ensure a smooth landing” near-term.
The IMF sees downside risks to global growth coming from China’s property sector, protectionism, lags from monetary tightening and a spike in commodity prices. These could all impact Asian growth, especially the first two.
PLEASE FIND THE FULL REPORT HERE: weekly macro round up (October 25 2024) .pdf