Asia Economic Diary:May 22-Jun 02
The Bank of Thailand meets next Wednesday and we expect it keep its policy rateunchanged and maintain its dovish bias, amid low inflation. Following week, it islikely to report a lower inflation of 0.1% for the month of May, vs. 0.4% in April,justifying its bias, despite a sharply stronger export growth of 16.2% in April, vs.9.2% in March.
We also see the Bank of Korea (BoK) keeping its policy rate unchanged nextweek and keep its “accommodative” stance, as not to disturb economic recovery,despite inflation at its target. We expect inflation to rebound to 2% in May, from1.9% in April. On the other hand, we are likely to see a marked slowdown in exportgrowth in May, to 18% from 24.2% in April, due to fewer working days. Withimport growth also likely to weaken, to 10.7% from 16.6% in the same period,however, we see South Korea may continuing to enjoy a large trade surplus ofUSD10.3bn in May, albeit down from USD13.3bn in April.
Per the final GDP report out of Singapore next Thursday, we think high frequencydata point to a GDP growth of 2.8%yoy in Q1, 30bps higher than the advanceestimate and the market forecast of 2.7%. Prior to it, Singapore likely reported ahigher inflation of 0.9%yoy in April, vs. 0.7% in March, with its core inflation alsorising to 1.4% from 1.2% during the same period. Meanwhile, we expect its IPgrowth to strengthen, to 10.7% in April from 10.2% in March, hinting at strongergrowth in Q2.
Next week’s data also likely to point to rebound in growth for Vietnam in Q2,while inflation heads higher. We expect CPI inflation to rise to 4.5%yoy in May,from 4.3% in April, as IP growth likely accelerated to 7.7% from 7.4% during thesame period, supported by stronger export growth of 18.5% in May vs. 15.3% inApril. With import growth slowing to 23.2% in May, from 24.9% in April, Vietnamis likely to print a trade deficit of USD1.5bn in first five months of the year. Wealso expect retail sales growth to strengthen, to 10.0%yoy ytd in May, vs. 9.6%in April, suggesting that overall economic activities accelerated in Q2.