The Week Ahead: 2Q GDP data of Malaysia, Singapore in focus

This article first appeared in The Edge Malaysia Weekly, on August 12, 2019 - August 18, 2019.

Singapore will announce the final reading of its 2Q GDP on Aug 13

-A +A

It is a short week for several nations in the region with the Aidil Adha celebration on Aug 11 being observed with a public holiday on Aug 12 in Malaysia, Singapore and India. In Singapore, the long weekend began with last Friday’s National Day celebration. Monday is also a holiday in Thailand as it is the Queen’s birthday while Thursday is a holiday to mark India’s Independence Day and North and South Korea’s Liberation Day.

In Malaysia, Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus will release the second-quarter gross domestic product (GDP) data on Friday. However, all eyes will be on the governor’s reading of the economy for an indication of whether the central bank will trim its key policy rate further in September.

Economists expect the 2Q GDP data to remain firm, possibly showing an uptick from the first quarter. UOB Malaysia senior economist Julia Goh, for instance, expects the 2Q GDP reading to be 4.6%, up from 4.5% in 1Q2019. ING Groep NV raised its projection for Malaysia’s 2Q2019 GDP growth to 4.8% from 4.6% last Thursday as relatively firmer export and manufacturing figures led to optimism about the country’s economy.

ING also expects Malaysia’s inflation data for July — due to be released on Aug 16 — to underscore the lack of pressure, therefore allowing Bank Negara to cut the interest rate should growth deteriorate. “That’s not quite our baseline, though with a forecast of stable Bank Negara policy maintained for now,” ING says in an Aug 8 report. Bank Negara cut its overnight policy rate (OPR) by 25 basis points to 3% in May.

Across the Causeway, Singapore will announce the final reading of its 2Q GDP on Aug 13. United Overseas Bank Ltd senior economist Alvin Liew expects a small upward revision of the number to a contraction of 2.9%. Trade-reliant Singapore reported that its economy shrank by an annualised 3.4% in 2Q2019 from the previous quarter based on its advanced release on July 12.

The city state’s July non-oil domestic exports data, which will be released on Aug 16, will also be watched. After contracting 17.3% year on year in June, another double-digit contraction is expected by economists in July.

China, which last week said US dollar-denominated exports rose 3.3% year on year in July, is slated to release its industrial production and retail sales for July on Aug 14. The data will provide more clues to the impact of the ongoing trade war on the world’s second largest economy and whether economic growth will be much slower in the third quarter.

ING’s China economist Iris Pang expects manufacturing and retail sales to have grown 6.5% and 9.5% respectively year on year in July, above consensus estimates of 6% and 8.6%.

In the US, the Federal Reserve Bank of New York will be releasing its 2Q2019 household debt and credit report on Aug 13. In the first quarter, the country’s household debt increased by US$124 billion or 0.9% year on year to US$13.67 trillion.

The reading of the country’s Consumer Price Index for July will also be released on Aug 13 and on Aug 15, the July data for industrial production and advanced retail sales will be announced, underscoring the effect of the trade war with China.

In the UK, notable data to be released include the June unemployment rate and July jobless claims on Aug 13, the July CPI and Retail Price Index readings on Aug 14 and retail sales figure on Aug 15.

Europe’s largest economy, Germany, will be releasing its Wholesale Price Index and CPI readings for July on Aug 13. Consensus data points to a growth of 1.7% year on year in the CPI in July. The engine of Europe will also be announcing its preliminary 2Q2019 GDP growth data on Aug 14 with consensus expecting the economy to have shrunk 0.1% quarter on quarter.

Back home, corporate earnings reporting is picking up pace. Public Bank Bhd and Petronas Chemicals Group Bhd will be releasing their respective financial results for the second quarter ended June 30, 2019 (2QFY2019), on Aug 16. Bank Negara’s OPR cut in May is expected to have impacted Public Bank’s 2QFY2019 margins, before gradually improving from 4QFY2019 due to downward repricing of deposits. Meanwhile, Petronas Chemicals’ bottom line is expected to be stronger on a quarterly basis due to minimal turnaround and maintenance activities.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.