20160108-渣打银行-Whole_lotta_shakin__going_on_16页_1mb

Economics Weekly Summary

Core Content

This week's Economics Weekly provides an overview of global economic trends and key events for the week of 08–15 January 2016. The report highlights the challenges faced by various regions, particularly China, and discusses central bank policy decisions and upcoming data releases that may influence market sentiment.

Main Points

Global Market Outlook

• Global markets are experiencing a shaky start to 2016, with China being a central concern due to its ongoing economic issues.
• China's trade data continues to show contraction, with exports and imports both declining year-on-year.
• China's trade surplus is expected to remain high at USD 51bn for December, contributing to a full-year 2015 surplus of USD 600bn.
• The report forecasts a modest recovery in economic momentum for December, but highlights the risk of headline GDP growth decelerating to 6.7% in Q4.

US Economic Outlook

• The US non-farm payroll (NFP) is expected to show a slightly below-consensus increase of +180,000 in December, indicating slowing momentum in the labor market.
• Hourly earnings data is expected to reflect a 0.2% increase, with some base effects influencing year-on-year comparisons.
• The report anticipates the Federal Reserve's next rate hike in March 2016, but warns that a print near +120,000 or below may challenge this trajectory.

Central Bank Policy

• The Bank of Korea (BoK) is expected to keep the interest rate unchanged at 1.50% for its January meeting, due to external uncertainties and the recent Fed rate hike.
• Bank Indonesia (BI) is likely to cut the reference rate by 25bps in January, as economic growth and inflation remain manageable.
• Federal Reserve (Fed) is expected to maintain its gradual tightening policy, with the next rate hike anticipated in March 2016.
• European Central Bank (ECB) and Bank of England (BoE) are likely to hold off on further monetary easing, with the ECB waiting for the impact of its quantitative easing (QE) program and the BoE holding asset purchases at GBP 375bn until after the first rate hike.

Asia Economic Outlook

• Asia data is expected to show signs of consolidation rather than renewed growth.
• Malaysia's industrial production growth is forecast to ease to 4.0% y/y, with export-oriented sectors possibly benefiting from a weaker currency.
• India's industrial production is expected to decline as base effects subside, with a likely slowdown in investment in Q4 before gradual improvement in FY17.
• Japan's data shows a contraction in trade balance and machinery orders, with the BoJ unlikely to ease further in the near term.
• China's economic data for December shows a modest recovery, but headline GDP growth is expected to decelerate, with FX reserves likely to continue declining.

Key Data Releases and Events

Key Central Bank Policy Calls

Economic Alerts

• Angola: The kwanza was devalued by 15% to 156.4 against the USD, with further depreciation expected due to persistent external imbalances.
• Pakistan: CPI inflation increased to 3.2% y/y, slightly below expectations, and the central bank is expected to keep the policy rate on hold.
• India: Investment improved temporarily in Q3-FY16, but is likely to slow in Q4 before gradual improvement in FY17.
• China: December data shows a modest recovery, but headline GDP growth is expected to decelerate to 6.7% y/y.
• China SMEs: SMEs ended 2015 weak, with a reading of 54.7, dragged down by the expectations sub-index.
• US: 2015 GDP growth was strong but may not be reflected in the actual performance, with consumption and construction growth being key contributors.
• China: Government bond issuance is expected to reach CNY 5tn in 2016, with a budget deficit of 3.3% of GDP.
• China: Reducing excess capacity is a top priority in 2016, with a focus on mergers and restructuring rather than bankruptcy.
• Japan: The BoJ announced a technical QQE adjustment, but no further easing is expected unless unexpected shocks occur.

Summary Tables

Central Bank Outlook

Forecasts - Rates

Key Events and Data

• China's trade balance is expected to remain near USD 51bn, with continued contraction in exports and imports.
• US NFP is forecast to be +180,000, slightly below the consensus of +200,000.
• Bank of Korea will keep rates unchanged, while Bank Indonesia is expected to cut the reference rate by 25bps.
• Malaysia's industrial production growth is expected to ease to 4.0% y/y.
• India's industrial production is expected to drop due to base effects.
• Japan's trade balance and machinery orders are expected to show contraction.
• China's SMEI is weak at 54.7, but some sectors, such as South China and IT, show improvement.
• US GDP growth may slow in 2016 due to Fed tightening and energy-sector issues.

Conclusion

The report emphasizes the global economic uncertainty, particularly in China, and outlines the expected central bank responses, including rate decisions and policy adjustments. It also highlights the importance of upcoming data releases and events in shaping market expectations and policy directions in the coming weeks.