Friday 29 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on April 13, 2020 - April 19, 2020

The main focus this week will be China’s first-quarter economic growth, which will be released on Friday, for a gauge of how the world’s second-largest economy has held up against the Covid-19 onslaught.

At home, with the Movement Control Order (MCO) now extended by another two weeks to April 28, attention will on whether the number of new daily coronavirus infections continues to fall as it has in the last few days leading up to April 10.

“What I want to stress here is that we must be prepared to deal with this situation for a relatively longer period of time. It may take several months before we can really be sure that the outbreak has been contained,” Prime Minister Tan Sri Muhyiddin Yassin said last Friday when announcing the latest extension.

This is the second two-week extension to the MCO, which first began on March 18. As at Friday, the number of people infected in Malaysia was 4,346, with 1,830 recovered and 70 dead.

The Department of Statistics Malaysia will release on Monday the industrial production index for February as well as the monthly manufacturing statistics. In January, the IPI grew 0.6% year on year, helped by a 2.1% rise in manufacturing sector output. On Tuesday, DOSM will release the latest labour force statistics.

Over in China, economists expect the country’s gross domestic product to decline in the first quarter of 2020, after having grown 6% y-o-y in the same quarter last year. China is the first country to have gone through a whole quarter of battling the Covid-19, with earliest known cases in December last year.

“We currently expect 1Q2020 GDP to contract 3.4% y-o-y. However, signs of resumption to normalcy affirm the trajectory in our GDP forecast, which expects growth to recover subsequently to 5.7% y-o-y in 2Q2020, and then average at 6.5% in 2H2020.

“This is premised on further efforts by the Chinese government to accelerate the resumption of work and, clearly, the key risk is a resurgence in domestic Covid-19 infections and a more prolonged pandemic affecting the US and Europe that will cause further dislocation to global supply chains and weigh on demand,” says UOB Global Economics and Markets Research.

It expects China’s full-year growth to come in at 4.1%, which would be its worst year since 1990, when the country registered GDP growth of just 3.9%.

Other major data coming out of China includes March trade data (April 14), house price index (April 16) and industrial production and retail sales (April 17).

Investors will also be watching closely a slew of data coming out of the US for early signs of how well the world’s largest economy is doing in confronting the global turmoil caused by Covid-19.

The statistics will kick off with March import and export data (April 14), followed the next day by the latest MBA mortgage application numbers for the week ended April 6, March retail sales, industrial production, manufacturing output as well as the NAHB Housing Market Index. On April 15, the US Federal Reserve will release its latest Beige Book on economic conditions across the 12 Fed districts, which will offer some insight into how the economy is doing.

On April 16, there will be the latest initial jobless claims numbers, which is a rough indicator of job losses in the US. In the last three weekly readings since mid-March, the number of initial claims for unemployment has soared by 6.6 million, 6.8 million (a record high) and 3.3 million respectively.

To put things in perspective, prior to this, the highest single weekly reading ever was only 695,000, in 1982, according to news reports.

It is also the corporate reporting season in the US, and attention will be on major banks such as Bank of America, JPMorgan Chase & Co and Citigroup Inc, which are expected to report earnings this week.

Indonesia will make a monetary policy decision on Tuesday and, the next day, will release its March trade data. “With inflation risk rather muted at this juncture and within the target range of 2%-4%, Bank Indonesia may cut the policy rate by another 25 basis points to 4.25% ... it is likely to be the last rate cut for 2020,” says UOB.

Within the Asia-Pacific, markets in Hong Kong, Australia and New Zealand will be closed on Monday for an extended Easter holiday weekend. Thailand will have its Songkran holidays from Monday to Wednesday, although the stock market will remain open, while Myanmar will have its Thingyan festival national holiday all week, ahead of its New Year’s Day on Friday. Both countries have either postponed or cancelled the festive celebrations owing to the Covid-19 pandemic.

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