Economic forecasts for Asia from the world's leading economists
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• Asia continues to rebound strongly, as countries continue to reportbetter-than-expected growth figures in the second quarter. As a resultof continued strong growth, regional behemoth, China, surpassedJapan to become the world’s second largest economy in the secondquarter.
• Consensus Forecast panellists have lifted their estimate for ex-JapanAsian growth this year from the 8.6% expected last month to thecurrent 8.7% forecast. In 2011, panellists see the regional economygrowing 7.6%.
• Amid persistent upward price pressures, Consensus Forecastpanellists have left their inflation estimates for this year unchangedat 4.0%. In 2011, regional inflation will moderate and average 3.6%.
ASIA | Regional outlook improves a notchThe outlook for the Asian economies improved over last month, as ConsensusForecast panellists lifted their forecast for ex-Japan Asia output growth in 2010from the 8.6% expected last month to the current 8.7% projection. Theimprovement represents the fourteenth consecutive monthly upgrade and marksa notable improvement compared to the 6.1% expansion recorded in 2009.Quarterly forecasts show that growth is estimated to have peaked at 10.6%year-on-year expansion in the first quarter, as many economies experienced astrong rebound from last year’s first quarter slump. Throughout the remainderof the year, growth will moderate as the favourable base effect progressivelyfades away, with year-on-year growth decelerating to 9.5% in the second quarterand averaging 7.7% in the second half of the year.
This month, Consensus Forecast panellists lifted their GDP growth forecast fornine of the eleven economies surveyed (Hong Kong, India, Indonesia, Korea,Malaysia, Philippines, Singapore, Taiwan and Thailand), left the forecast forone country unchanged (Vietnam) and cut the forecast for another country(China).
CHINA | Growth continues to slowDespite having surpassed Japan as the world’s second largest economy in thesecond quarter, recent data confirm the notion of an overall slowdown in theChinese economy. The moderation is the result of concerted government policiesaimed at slowing the rapid expansion of the economy, as policy makersimplemented a series of measures such as shutting down old facilities in specificindustries as well as policies to cool the housing market. As a result of thecontinued slowdown as well as the newly implemented policies, China’s growth
Note: Data refer to GDP-weighted Asian (ex Japan) average based onmarket exchange rates. For details see note at end of publication.
Note: Change between September and August 2010 in percentage points.Source: FocusEconomics Consensus Forecast.
-0.3 0.0 0.3 0.6 0.9
ChinaVietnam
IndiaAsia (ex Japan)
IndonesiaKorea
PhilippinesHong Kong
MalaysiaNIEs
AseanTaiwan
SingaporeThailand
Summary September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia | 4
forecast was cut for the second consecutive month from the 10.1% expectedlast month to 10.0% this month.
Thailand | Growth forecasts improve after strong second quarter resultThailand experienced the strongest adjustment to this year’s growth forecast.Consensus Forecast panellists raised their projection for GDP growth by 0.8percentage points over last month, lifting the Consensus Forecast to 6.8%. Inthe second quarter, the Thai economy expanded a faster-than-expected 9.1%annually. The strong result was buttressed by robust external demand thathelped to compensate for a weaker domestic sector, which had been adverselyaffected by political unrest in April and May. As a result, the government raisedits official forecast for 2010 GDP growth from 3.5% – 4.5% to 6.5% - 7.5%.
KOREA | Outlook improves furtherIn Korea, Consensus Forecast panellist raised their projections for output growththis year by 0.1 percentage points over last month and now expect GDP toexpand 5.8% in 2010. The improvement continued to reflect the country’s stronggrowth momentum, as both the domestic and external sectors remain robust.Industrial production continues to expand at a double-digit pace and exportshave rebounded to above their pre-crisis peak.
INDIA | Growth prospects improves despite amid moderating industrialproductionConsensus Forecast panellists have raised their projection for the region’ssecond largest economy, by a notch this month, from the 8.2% expansionexpected in August to 8.3%. Although the June industrial sector readingundershot expectations, exports continue to surge ahead. However, owing torising inflationary pressures, the Reserve Bank of India (RBI) decided to lift therepurchase rate by 25 basis points to 5.75% on 27 July. The bank alsoannounced that it would change the periodicity of its monetary policy meetings.The Bank will now hold policy meetings every six weeks, instead of the previousthree-month interval. The current tighter monetary policy may dent growthsomewhat in the coming months.
INFLATION | Inflation expectations unchangedAfter raising their inflation estimate in August, Consensus Forecast panellistsleft their forecasts unchanged this month. Panellists currently estimate 2010inflation for ex-Japan Asia to average 4.0% this month, which is well above the0.8% inflation recorded in 2009.
Inflationary pressures expected to remain moderate in China but strongin IndiaCompared to last month, Consensus Forecast panellists cut their 2010 inflationforecast for three of the eleven economies surveyed (China, Hong Kong andPhilippines). The panel raised its estimate for three countries (India, Indonesiaand Thailand) and maintained their projections for the remaining five economies(Korea, Malaysia, Singapore, Taiwan and Vietnam). India experienced thestrongest upward revision, as panellists lifted their forecast by 0.3 percentagepoints from 7.8% last month to 8.1% this month. Wholesale price inflation inIndia moderated but still remained in double-digit territory in July. Owing to themounting price pressures driven by strong domestic demand growth, the RBIhas embarked on a policy-tightening course. Meanwhile, Consensus Forecastpanellists cut their inflation estimate for China from 3.3% to 3.2%. If attained,the level would be only slightly above the 3.0% inflation target set by PrimerWen Jiabao for this year.
Note: Change between September and August 2010 in percentage points.Source: FocusEconomics Consensus Forecast.
Change in 2010 Inflation Forecast
-0.2 -0.1 0.0 0.1 0.2 0.3
PhilippinesChinaKorea
Hong KongNIEs
MalaysiaSingapore
VietnamAsia (ex Japan)
TaiwanThailand
AseanIndonesia
India
Summary September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia | 5
Gross Domestic Product, annual variation in % GDP Growth, 2010
Note: Gross domestic product, real annual variation in %. Alldata for India refer to fiscal year ending in March.Sources: National statistical institutes and central banks.
Notes and sources
GDP per capita, USD GDP per capita, 2010
Note: GDP per capita in current USD.Sources: National statistical institutes and central banks.
Private Consumption, annual variation in % Private Consumption Growth, 2010
Note: Private consumption, real annual variation in %. Datafor China are based on FocusEconomics estimates.Sources: National statistical institutes and central banks.
Notes and sources
Investment, annual variation in % Investment Growth, 2010
Note: Gross fixed investment, real annual variation in %. Datafor China refer to nominal urban investment in fixed assets.Sources: National statistical institutes and central banks.
Note: End-of-year unemployment rate. China end-of-year urbanunemployment. India has no official unemployment statistics.Sources: National statistical institutes.
Notes and sources
Fiscal Balance, % of GDP Fiscal Balance, 2010
Note: Fiscal balance in % of GDP.Sources: National statistical institutes, finance ministries andAsian Development Bank (ADB) for China.
Note: Nominal end-of-year interest rates in %.China: 12-month lending rate.Hong Kong: 91-day Hong Kong interbank offered rate(HIBOR).India: RBI repurchase rate.Indonesia: Overnight BI rate.Korea: Overnight call rate.Malaysia: Overnight policy rate.Philippines: 91-day Treasury bill rate.Singapore: 3-month Singapore interbank rate (SIBOR).Taiwan: CB discount rate.Thailand: 1-day repurchase rate.Vietnam: Base rate.Sources: National central banks.
Notes and sources
Inflation, annual average variation of consumer prices in % Inflation, 2010
Note: Annual average variation of consumer price index in %.Data for India refer to wholesale price index (WPI).Sources: National statistical institutes and central banks.
Current Account Balance, % of GDP Current Account Balance, 2010
Note: Current account balance as % of GDP.Sources: National statistical institutes and central banks.China: State Administration of Foreign Exchange (SAFE).
Notes and sources
Nominal Depreciation vs. USD, in % Depreciation versus USD, 2010
Note: Nominal depreciation of national currencies versusUSD in %. Positive number means currency is losing valueagainst USD. Regional aggregates provided only as indicativeinformation.Sources: National statistical institutes and central banks.China: State Administration of Foreign Exchange (SAFE).
Date Country Event1 September Indonesia August Consumer Prices
Korea August Consumer Prices
2 September India July Merchandise Trade
Malaysia July Merchandise Trade
Thailand August Consumer Prices
6 September Taiwan August Consumer Prices
Taiwan August Producer Prices
7 September Philippines August Consumer Prices
Taiwan August Merchandise Trade
9 September Malaysia July Industrial Production
10 September India July Industrial Production
Philippines July Merchandise Trade
11 September Indonesia July Industrial Production
13 September China August Consumer Prices
China August Fixed Asset Investment
China August Retail Sales
China August Industrial Production
14 September India August Wholesale Prices
15 September Korea August Merchandise Trade
Korea August Unemployment
Philippines Q2 2010 Unemployment
16 September Hong Kong August Unemployment
17 September Philippines Q2 2010 Balance of Payments
Singapore August Merchandise Trade
21 September Hong Kong August Consumer Prices
22 September Malaysia August Consumer Prices
23 September Singapore August Consumer Prices
Taiwan August Industrial Production
Taiwan August Unemployment
24 September Singapore August Industrial Production
27 September Hong Kong August Merchandise Trade
28 September Philippines July Industrial Production
| 14
China September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
REAL SECTOR | China surpasses Japan to become world’s second largesteconomyAccording to second quarter data published by the National Bureau of Statisticsof China (NBS) and the numbers published by the Cabinet Office (CO) in Japan,China surpassed Japan as the world’s second largest economy in U.S. dollarsterms. In the second quarter, China’s GDP reached USD 1.34 trillion, whereasJapan’s GDP was USD 1.29 trillion. Quarterly comparisons are fully dependable,as the numbers do not take into account the seasonal variations in eacheconomy.
For the full year, Consensus Forecast panellists expect China to surpass Japanin total output, which will mean that China will officially become the world’ssecond largest economy, right behind the United States. Currently, estimatesfor when China will surpass the U.S. as the world’s largest economy vary greatly,with some analysts seeing China taking the number one spot as early as 2027and others not expecting it to do so until more than a decade later.
For this year, the government maintains an 8.0% economic growth target, butthe private sector expects growth to come in well above this level. Panellistshave cut their projections 0.1 percentage points over the previous month andexpect the economy to expand 10.0%. For next year, panellists expect theeconomy to expand 8.9% which is unchanged over last month’s Consensus.
ChinaOutlook deteriorates
Keith CatlinSenior Economist
• According to data recently published in China and Japan, the Chineseeconomy overtook Japan’s to become the world’s second largesteconomy in the second quarter. Going forward, China is expected tocontinue to gain ground on the world’s largest economy, the UnitedStates, but it will be decades before it can seize the No 1 spot.
• Consensus Forecast panellists have cut their forecasts for GDPgrowth by 0.1 percentage points over last month and expect theeconomy to grow 10.0% this year. For 2011, the panel sees economicgrowth slowing to 8.9%.
• Inflation rose from 2.9% in June to 3.3% in July. Panellists expectinflation to average 3.2% this year, which is down 0.1 percentagepoints over last month’s projection. In 2011, the panel expects inflationto moderate a notch to 3.1%.
Note: Nominal value of GDP in current USD bn.Source: National Bureau of Statistics of China (NBS), the Cabinet Office ofJapan (CO) and FocusEconomics calculations.
| 15
China September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
REAL SECTOR | Government announces plant closuresIn July, industrial production expanded 13.4% over the same month last year.The reading came in below the previous month’s 13.7% expansion but was inline with market expectations.
One of the primary drivers behind the monthly slowdown was automobilemanufacturing, which increased 9.7% year-on-year, slightly down from 9.9% inJune. Automobile manufacturing has been spurred by a tax incentive on smallcar purchases, which are being partially rolled back throughout 2010.
Despite the July slowdown, annual average growth in industrial productionincreased for the eleventh consecutive month, rising from 16.5% in June to16.7%.
On 8 August, the Ministry of Industry and Information Technology ordered 2,087plants to close outdated facilities by the end of September. The move wasaimed at “eliminating backward production capacity” as well as improving theenvironmental efficiency of the economy, according to the government. Thefirms targeted by the policy are mostly in high-polluting, resource-intensiveindustries, such as steel, coal, glass and paper production. The governmentdid not order the complete closure of all these plants, but only specificcomponents with “backward production capacity”, such as outdated blastfurnaces and coke ovens.
Consensus Forecast participants expect industrial output growth to slow to15.3% for the full year 2010, which is unchanged over last month’s estimate.For 2010, the panel expects industrial production to moderate further to 13.6%.
REAL SECTOR | Retail sales come up short
In July, nominal retail sales increased 17.9% over the same month last year.The figure came in below the 18.3% increase registered in June and undershotmarket expectations, which had seen retail sales accelerating to a 18.5%increase.
The slowdown in retail was, in part, the result of weaker automobile sales growth,which fell from 28.3% year-on-year growth in June to 27.6% in July. Car saleshave been a key component of the strength of the retail sector during the lastyear, as government incentives helped spur car purchases.
Despite the slowdown observed in the June reading, annual average retailsales continued to rise, improving from 17.2% in June to 17.4%, which is thehighest level since July 2009.
Consensus Forecast panellists expect retail sales to grow 19.2% this year,which is unchanged over last month’s forecast. For 2010, the panel anticipatesretail sales to slow to 17.1%.
REAL SECTOR | Investment continues to slowIn the first seven months of the year, nominal urban fixed-asset investmentincreased 24.9% over the same period last year. The reading was down fromthe 25.5% figure tallied in the first half of the year and undershot marketexpectations, which had seen investment adding 25.3%.
29.9
33.635.1
31.6
24.3
20.5
26.6 26.6 26.325.4 25.4 24.9
22.3
20.0
25.0
30.0
35.0
40.0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
%
Year-on-year
Annual Average
Nominal Urban Fixed Investment | variation in %
Note: Year-on-year and annual average variation of nominal urban fixed in-vestment in %. Owing to seasonal factors related to the Lunar New Year,January and February data are reported together.Source: National Bureau of Statistics of China (NBS) and FocusEconomicscalculations.
15.2 15.4 15.516.2
15.8
17.5
15.2
22.1
18.018.5 18.7
18.317.9
14.0
16.0
18.0
20.0
22.0
24.0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
%
Year-on-year Annual Average
Nominal Retail Sales | variation in %
Note: Year-on-year and annual average variation of retail sales in %. Janu-ary and February data are affected by to seasonal factors related to theLunar New Year.Source: National Bureau of Statistics of China (NBS) and FocusEconomicscalculations.
Industrial Production | variation in %
Note: Year-on-year and annual average var. of industrial production in %.Owing to seasonal factors related to the Lunar New Year, January and Feb-ruary data are reported together.Source: National Bureau of Statistics of China (NBS) and FocusEconomicscalculations.
10.812.3
13.9
16.1
19.218.5
20.7 20.7
18.1 17.816.5
13.7 13.4
5.0
10.0
15.0
20.0
25.0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
%
Year-on-year Annual Average
| 16
China September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
Based on the seven-month growth rate published by the National StatisticalOffice (NBS), urban fixed-asset investment grew 22.3% year-on-year in July,which was down from the previous month’s 24.9% reading, and representedthe slowest rate of expansion so far this year.
Consensus Forecast participants expect urban fixed-asset investment growthto expand 25.0% for the full year 2008, which is unchanged from last month’sestimate. For 2011, the panel expects investment to moderate to 21.7%.
OUTLOOK | PMI continues to fall in JulyThe July Purchasing Managers’ Index (PMI) from the National Bureau ofStatistics (NBS) and the China Federation of Logistics and Purchasing (CFPL)fell by 0.9 percentage points to 51.2%, which was in line with market forecasts.Despite the moderation in July, the index has now tallied 17 consecutive monthsabove 50% threshold after plummeting far below that level in November 2008.A reading above 50% indicates that the manufacturing sector is expanding,while a reading below 50% implies a contraction.
The weakening was broad-based, as all but one of the 11 componentscomposing the index fell over the previous month. That said, the category thatexperienced the most marked decrease was production, which may augur fora continued deceleration in industrial output, as the government tries to coolthe economy.
MONETARY SECTOR | Inflation rises to highest level in nearly two yearsIn July, consumer prices rose by 3.3% annually. The figure came in above the2.9% year-on-year increase registered in the previous month, but was in linewith market expectations. Furthermore, the reading represented the highestlevel observed since November 2008. The main drivers behind the increasewere higher prices for food as well as for housing. Higher food prices werepartially caused by flooding that disrupted food supplies. As a result of the Julyfigure, annual average inflation jumped from the 1.1% posted in June to 1.6%.
Producer prices, in contrast, continue to moderate. In June, the producer priceindex (PPI) added a less-than-expected 4.8% annually, which came in wellbelow the previous month’s 6.4% reading. A moderation in producer pricesmay feed into lower consumer prices going forward.
Although the People’s Bank of China (PBOC) has kept interest rates on hold at5.31% since December 2008, monetary authorities continue to tighten the reinsby raising the reserve requirement ratio (RRR). The PBOC raised the RRRthree times this year, but has left ratio unchanged since May.
Going forward, higher wages could feed through to higher prices, according toSheng Laiyun, spokesman for the National Bureau of Statistics (NBS). Despitethe warning, Sheng stated that the country would be able to meet this year’s3.0% inflation target. Consensus Forecast participants expect inflation toaverage 3.2% in 2010, which is 0.1 percentage points down from last month’sestimate. For 2011, the panel expects inflation to moderate a notch to 3.1%.
EXTERNAL SECTOR | Export growth moderates slightly in JulyIn July, exports added 38.1% over the same month last year to reach USD145.5 billion. The figure came in below the 43.9% expansion in June, butovershot market expectations, which had seen exports growing 35.0%.
-1.8-1.2
-0.8-0.5
0.6
1.91.5
2.72.4
2.83.1 2.9
3.3
-4.0
-2.0
0.0
2.0
4.0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
%
Year-on-year
Annual Average
Inflation | Consumer Price Index
Note: Annual and annual average variation of consumer price index in %.Source: Source: National Bureau of Statistics of China (NBS) .
Purchasing Managers’ Index
Note: Purchasing Managers’ Index from the National Bureau of Statistics ofChina (NBS) and the China Federation of Logistics and Purchasing (CFLP).A reading above 50 shows an increase while a value below 50 shows adecrease.Source: National Bureau of Statistics of China (NBS) and the China Federa-tion of Logistics and Purchasing (CFLP).
Meanwhile, imports grew 22.7% year-on-year (June: +34.1% yoy) to reach USD116.8 billion. As a result, the trade surplus rose from USD 20.0 billion in July toUSD 28.0 billion in June, the largest surplus tallied since January 2009. As aresult, the three month average in exports reached USD 138.2 billion, which isabove the USD 136.0 billion pre-crisis peak reached in September 2008.Consensus Forecast panellists estimate year exports to grow 23.5% this yearand 14.1% in 2011.
Merchandise Trade | USD bn
Note: Monthly exports, imports and trade balance in USD billion.Source: General Administration of Customs of the People’s Republic of Chinaand FocusEconomics calculations.
Real GDP growth in % 2 | Real GDP | Q1 07-Q4 11 | % variation
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts
General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the National Bureau of Statistics of China (NBS),Asian Development Bank (ADB) and FocusEconomics estimates. See be-low for details. Forecasts based on FocusEconomics Consensus Fore-cast.
1 GDP, annual variation in %. Source: NBS.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: NBS.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: FocusEconomicsestimate.6 Nominal urban fixed investment, annual variation in %. Source: NBS.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Nominal urban fixed investment, change in 2010 and 2011 forecastsduring the last 18 months.9 Industrial production, annual variation in %. Source: NBS.10 Urban unemployment, % of active population. Source: NBS.11 Balance of central government, % of GDP. Source: ADB.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Balance of central government, evolution of 2010 and 2011 forecastsduring the last 18 months.
Notes and sources
1 | Real GDP | 1995 - 2014 | % variation
Individual Forecasts 2010 2011Allianz 10.0 9.0ANZ 10.2 9.6Bank of China (Hong Kong) 9.5 9.0Capital Economics 10.0 8.0Citigroup Global Markets Inc. 9.5 8.8Core Pacific-Yamaichi 9.5 -Credit Suisse 9.7 8.8Daiwa Capital Markets 9.8 8.6DBS Bank 11.0 10.0Deutsche Bank 9.6 8.6Goldman Sachs 10.1 10.0Hang Seng Bank 9.5 9.0HSBC 10.0 8.9ING 10.0 9.0JPMorgan 10.8 9.4Lloyds TSB Corp. Mrkts. 9.5 8.7Morgan Stanley 10.0 9.5RBC Capital Markets 9.7 8.8Standard Chartered Bank 10.0 8.0UBS 10.0 8.7United Overseas Bank 10.0 8.3Wing Hang Bank 12.0 -SummaryMinimum 9.5 8.0Maximum 12.0 10.0Median 10.0 8.9Consensus 10.0 8.9History30 days ago 10.1 8.960 days ago 10.2 9.090 days ago 10.0 9.1Additional Forecasts IMF (July 2010) 9.8 9.6ADB (July 2010) 9.6 9.1
Monetary Sector | Inflation, Money, Producer Prices and Stock Market
19 | Producer Prices | % var.
15 | Inflation | 1995 - 2014 | in % Inflation | annual avg. var. of consumer price index in %
17 | Inflation 2010 | evolution of fcst
21 | MSCI Broad China Index 22 | Stock Market | SSE
20 | Money | % variation
18 | Inflation 2011 | evolution of fcst
16 | Inflation | Q1 07-Q4 11 | in %
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the National Bureau of Statistics of China(NBS) and People’s Bank of China (PBOC). See below for details. Fore-casts based on FocusEconomics Consensus Forecast.
15 Inflation, annual average variation in consumer price index (CPI) in%. Source: NBS.16 Quarterly inflation, average variation in consumer price index (CPI) in%. Source: NBS.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Producer price index, annual variation in % (eop). 2000-2009.Source: NBS.20 Money, annual variation of M1 in %. 1995-2009. Source: PBOC.21 Daily MSCI Broad China index in USD. From Jan. 2008 until end ofprevious month. Source: MSCI Barra.22 Daily index levels, Shanghai Stock Exchange Composite Index(SSE). Jan. 2008 until end of previous month. Source: Shanghai StockExchange.
Notes and sources
Individual Forecasts 2010 2011Allianz 3.2 3.0ANZ - -Bank of China (Hong Kong) 4.0 2.8Capital Economics 2.8 2.0Citigroup Global Markets Inc. 3.0 3.6Core Pacific-Yamaichi 2.6 -Credit Suisse 3.7 5.2Daiwa Capital Markets 3.5 2.5DBS Bank 4.0 3.0Deutsche Bank 3.0 2.5Goldman Sachs 2.4 1.3Hang Seng Bank 3.0 2.5HSBC 2.9 2.5ING 2.5 2.5JPMorgan 3.2 2.5Lloyds TSB Corp. Mrkts. 3.8 4.4Morgan Stanley 2.8 2.5RBC Capital Markets - -Standard Chartered Bank 2.5 4.0UBS 3.0 4.0United Overseas Bank 3.9 4.7Wing Hang Bank 4.0 -SummaryMinimum 2.4 1.3Maximum 4.0 5.2Median 3.0 2.7Consensus 3.2 3.1History30 days ago 3.3 3.160 days ago 3.3 3.390 days ago 3.4 3.4Additional Forecasts IMF (Apr. 2010) 3.1 2.4ADB (Mar. 2010) 3.6 3.2
| 22
China September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
4
6
8
10
12
14
1995 2000 2005 20105
6
7
8
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
3
4
5
6
7
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
4
5
6
7
8
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
5
6
7
8
9
1995 2000 2005 20106.0
6.5
7.0
7.5
8.0
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
5.5
6.0
6.5
7.0
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
5.5
6.0
6.5
7.0
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
Monetary Sector | Interest Rate and Exchange Rate
29 | CNY/USD 2010 | evolution of fcst
27 | Exchange Rate | CNY per USD 28 | Exchange Rate | CNY per USD
25 | Int. Rate 2010 | evolution of fcst 26 | Int. Rate 2011 | evolution of fcst
30 | CNY/USD 2011 | evolution of forecasts
Policy Interest Rate and Exchange Rate
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the National Bureau of Statis-tics of China (NBS), the People’s Bank of China (PBOC), State Adminis-tration of Foreign Exchange (SAFE) and General Administration of Cus-toms of the People’s Republic of China (Customs). See below for details.Forecasts based on FocusEconomics Consensus Forecast.
23 Interest rate, 12-month Lending Rate in % (eop). Source: PBOC.24 Quarterly interest rate, 12-month Lending Rate in % (eop). Source:PBOC.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate,CNY per USD (eop). Source: SAFE.28 Quarterly exchange rate, CNY per USD (eop). Source: PBOC.29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP. Source: SAFE.32 Trade balance, imports and exports, in USD bn. Source: Customs.33 International reserves, months of imports. Source: PBOC.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: Customs.36 External debt as % of GDP. Source: SAFE.
Notes and sources
Individual Forecasts 2010 2011 2010 2011Allianz - - 6.60 6.30ANZ 6.12 - 6.62 6.21Bank of China (Hong Kong) - - 6.40 6.20Capital Economics 5.31 6.12 6.70 6.50Citigroup Global Markets Inc. - - 6.70 6.50Core Pacific-Yamaichi 5.85 - 6.62 -Credit Suisse - - 6.70 6.47Daiwa Capital Markets 5.58 5.58 6.45 6.20DBS Bank 5.85 - 6.69 -Deutsche Bank - - 6.70 6.47Goldman Sachs - - 6.70 6.49Hang Seng Bank 5.30 5.60 6.65 6.50HSBC 5.31 5.31 6.67 -ING - - 6.75 6.60JPMorgan 5.85 6.12 6.60 6.20Lloyds TSB Corp. Mrkts. 5.60 6.90 6.61 6.38Morgan Stanley - - - -RBC Capital Markets 5.58 6.12 6.60 6.20Standard Chartered Bank 5.31 5.85 6.63 6.35UBS - - 6.55 6.20United Overseas Bank 5.85 - 6.77 -Wing Hang Bank 5.40 - 6.80 -SummaryMinimum 5.30 5.31 6.40 6.20Maximum 6.12 6.90 6.80 6.60Median 5.58 5.99 6.65 6.37Consensus 5.61 5.95 6.64 6.36History30 days ago 5.66 6.01 6.64 6.3660 days ago 5.74 6.28 6.62 6.2990 days ago 5.86 6.35 6.59 6.27
Interest Rate Exchange Rate% CNY per USD
| 23
China September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
-5
0
5
10
15
1995 2000 2005 2010
ChinaAsia (ex Japan)
0
600
1,200
1,800
2,400
1995 2000 2005 2010
Trade Balance ExportsImports
-30
-15
0
15
30
45
1995 2000 2005 2010
ChinaAsia (ex Japan)
5
10
15
20
25
30
1995 2000 2005 2010
ChinaAsia (ex Japan)
0
15
30
45
60
1995 2000 2005 2010
ChinaAsia (ex Japan)
250
300
350
400
450
Apr Jul Oct Jan Apr Jul
20102011
External Sector | Current Account, Trade and International Reserves
34 | Current Account | evol. of fcst
33 | Int. Reserves | months of imports
36 | External Debt | % of GDP 35 | Exports | annual variation in %
32 | Trade Balance | USD billion 31 | Current Account | % of GDP
REAL SECTOR | Hong Kong grows more than expected in Q2In the second quarter, gross domestic product (GDP) expanded 6.5% overthe same quarter last year. The reading fell short of the 8.0% growth recordedin the first quarter (previously reported: +8.2% year-on-year) but was slightlyahead of market expectations of 6.3%.
The slowdown over the previous quarter was driven by weaker growth indomestic demand, as the contribution from the external sector improved.Private consumption decelerated from a 7.1% expansion in the first quarterto 4.6% increase in the second, while government consumption slowed downfrom 3.4% to 2.7%. Gross fixed investment, in contrast, accelerated from a8.2% annual expansion in the first quarter to 15.2% growth in the secondquarter. Nevertheless, domestic demand receded from a 16.2% expansionin the first quarter to 11.7%.
Exports of goods and services continued to fare strongly in the second quarter,amid the sustained global economic recovery. Exports grew 19.5%, followingon a 20.7% expansion in the first quarter, while imports rose 22.4% (Q1:+25.8% yoy). As a result, the net contribution from the external sector to overallgrowth improved from a 6.8 percentage-point detraction in the first quarter toa 4.5 percentage-point detraction in the second.
A quarter-on-quarter comparison corroborates the robust expansionsuggested by the annual figures, as the economy increased 1.4% over thefirst quarter in seasonally adjusted terms. The government recently revisedup its forecast for full-year growth to between 5.0% and 6.0% (previouslyexpected: 4.0% to 5.0%). That said, for the time being, the government remainscautious as the outlook for exports remains somewhat uncertain, and expectsgrowth to moderate slightly in the second half of the year.
Hong KongOutlook improves
Joan Enric DomeneEconomist
• In the second quarter, gross domestic product expanded 6.5% annuallyon the back of spurring demand and service exports. Although thereare concerns that the debt crisis in Europe will slow demand, inboundtourism is expected to buttress consumption.
• Consensus Forecast panellists anticipate the economy will expand5.6% this year, which is up 0.2 percentage points from last month’sforecast. For 2011, the panel expects the economy to expand 4.5%.
• Inflation dropped sharply to 1.3% in July from June’s 2.8%. However,government expects inflation to increase again in the coming monthsdue to strong domestic demand. Panellists expect inflation to average2.7% this year, which is down 0.1 percentage points from last month’sprojection. In 2011, the panel expects inflation to rise to 3.0%.
Note: Year-on-year changes in %.Source: Census and Statistics Department Hong Kong and FocusEconomics cal-culations.
| 26
Hong Kong September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
0.1
-1.6
0.7
2.1
0.10.4
0.1
1.0
-0.4
0.4
-0.2
0.1
-1.4-2.0
-1.0
0.0
1.0
2.0
3.0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
%
-2.0
0.0
2.0
4.0
%
Monthly (left scale)
Annual (right scale)
-4.1 -5.2
-0.9
1.2
8.310.0 11.4
3.2
31.5
17.3
12.4
16.3
12.1
-10.0
0.0
10.0
20.0
30.0
40.0
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
%
YoY Annual average
Consensus Forecast panellists are also upbeat about this year’s prospectsand anticipate the economy will expand 5.6%, which is up 0.2 percentagepoints from last month’s forecast. For 2011, the panel expects the economyto grow 4.5%.
REAL SECTOR | Retail sales moderate in JuneIn June, retail sales rose 12.1% over the same moth last year in volumeterms. The figure was well below the 16.3% increase recorded in May andalso undershot market expectations that had seen retail sales expanding14.7%. Despite the slowdown, June’s reading represented the fifthconsecutive month of retail sales expanding at a double-digit pace, reflectinga strong rebound in local consumption and inbound tourism.
The monthly expansion was broad-based. That said, the main drivers behindthe strong increase were sales of motor vehicles and parts which increasedby 35.1% year-on-year, as well as jewellery, watches and valuable gifts, whichrose 18.3%. However, seasonally adjusted figures do not corroborate thestrong growth suggested by the annual figures, as retail sales fell 2.6% inthe three-month period ending in June, compared to the preceding periodending in March. The trend, however, continues to point up, as annual averagegrowth in retail sales increased from 8.0% in May to 9.4% in June.
A government spokesman stated that looking ahead, recovery in localconsumer demand will be subject to uncertainties due to the evolvingEuropean debt crisis. Nevertheless, the expected strength in inbound tourismshall aid retail businesses.
MONETARY SECTOR | Inflation moderates unexpectedly in JulyIn July, consumer prices declined 1.4% over the previous month, whichcontrasted the 0.1% rise recorded in June. The drop in prices was the resultof lower housing prices due to the government’s provision of two-monthpayment for public housing tenants which started in July. Moreover, lowerprices for electricity, gas and water as well as for clothing more than offsethigher prices for food and transport.
In line with the monthly price fall, annual inflation dropped from 2.8% in Juneto 1.3%, the lowest level in six months. The figure undershot marketexpectations, which had seen prices rising 2.9%. Finally, annual averageinflation rose from 1.2% in June to 1.5%.
A government spokesman stated that consumer prices should still be subjectto moderate upward pressures. That said, despite the expected economicexpansion, the sustained growth in productivity in the economy should helpto alleviate part of the domestic cost pressures. The government sees inflationaveraging 2.3% this year.
Consensus Forecast panellists anticipate inflation to average 2.7% this year,which is down 0.1 percentage points from last month’s forecast. For 2011,the panel expects annual average inflation to rise further to 3.0%.
Inflation | Consumer Price Index
Note: Annual and monthly variation of consumer price index in %.Source: Census and Statistics Department Hong Kong.
Retail Sales | variation in %
Note: Year-on-year changes and annual average variationin %.Source: Census and Statistics Department Hong Kong and FocusEconomics cal-culations.
Real GDP growth in % 2 | Real GDP | Q1 07-Q4 11 | % variation
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts
General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the Census and Statistics Department Hong Kong(C&SD) and the Treasury of Hong Kong (Treasury). See below for details.Forecasts based on FocusEconomics Consensus Forecast.
1 GDP, annual variation in %. Source: C&SD.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: C&SD.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: C&SD.6 Gross fixed investment, annual variation in %. Source: C&SD.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: C&SD.10 Unemployment, % of active population. Source: C&SD.11 Consolidated fiscal balance, % of GDP. Source: Treasury.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Consolidated fiscal balance, evolution of 2010 and 2011 forecastsduring the last 18 months.
Notes and sources
1 | Real GDP | 1995-2014 | % variation
Individual Forecasts 2010 2011ANZ 5.3 4.3Bank of China (Hong Kong) 5.0 4.5Capital Economics 6.5 4.0Citigroup Global Markets Inc. 5.5 4.7Core Pacific-Yamaichi 4.0 -Credit Suisse 5.3 4.3Daiwa Capital Markets 3.5 2.5DBS Bank 7.0 4.5Deutsche Bank 6.5 5.5Goldman Sachs 6.0 5.3Hang Seng Bank 5.0 4.5HSBC 5.4 4.7ING 6.2 5.8JPMorgan 6.8 4.2Morgan Stanley 6.0 4.0Standard Chartered Bank 5.4 5.0UBS 6.0 4.3United Overseas Bank 5.5 4.5Wing Hang Bank 6.0 -SummaryMinimum 3.5 2.5Maximum 7.0 5.8Median 5.5 4.5Consensus 5.6 4.5History30 days ago 5.4 4.660 days ago 5.4 4.690 days ago 5.2 4.6Additional ForecastsGovernment (Aug. 2010) 5.0-6.0 -IMF(July 2010) 6.0 4.4ADB (July 2010) 5.4 4.3
Monetary Sector | Inflation, Money, Producer Prices and Stock Market
19 | Producer Prices | % var.
15 | Inflation | 1995 - 2014 | in %
17 | Inflation 2010 | evolution of fcst
21 | MSCI Price Index 22 | Stock Market | HSI
20 | Money | % variation
18 | Inflation 2011 | evolution of fcst
16 | Inflation | Q1 07-Q4 11 | in %
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the Census and Statistics DepartmentHong Kong (C&SD) and the Hong Kong Monetary Authority (HKMA). Seebelow for details. Forecasts based on FocusEconomics Consensus Fore-cast.
15 Inflation, annual variation in consumer price index (CPI) in % (eop).Source: C&SD.16 Quarterly inflation, year-on-year variation in consumer price index(CPI) in % (eop). Source: C&SD.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Producer price index, annual variation in % (eop). 1995-2009. Source:C&SD.20 Money, annual variation of M1 in %.1995-2009 Source: HKMA.21 Daily MSCI Price index in USD. Jan. 2008 until end of previousmonth. Source: MSCI Barra.22 Daily index levels, Hang Seng Index (HSI). Jan. 2008 until end ofprevious month. Source: Hang Seng Bank.
Notes and sources
Individual Forecasts 2010 2011ANZ - -Bank of China (Hong Kong) 3.0 2.8Capital Economics 2.5 3.0Citigroup Global Markets Inc. 2.7 2.4Core Pacific-Yamaichi 3.0 -Credit Suisse 3.1 5.1Daiwa Capital Markets 3.0 2.6DBS Bank 3.0 3.0Deutsche Bank 2.2 3.0Goldman Sachs 3.3 3.5Hang Seng Bank 2.2 3.7HSBC 2.4 3.4ING 2.5 2.1JPMorgan 2.7 2.1Morgan Stanley 2.8 2.5Standard Chartered Bank 2.0 3.5UBS 2.0 3.0United Overseas Bank 2.7 3.0Wing Hang Bank 4.0 -SummaryMinimum 2.0 2.1Maximum 4.0 5.1Median 2.7 3.0Consensus 2.7 3.0History30 days ago 2.8 2.960 days ago 2.7 3.090 days ago 2.6 3.0Additional ForecastsGovernment (Aug. 2010) 2.3 -IMF (Apr. 2010) 2.0 1.7ADB (Mar. 2010) 2.2 2.8
Inflation | annual avg. var. of consumer price index in %
| 31
Hong Kong September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
0
2
4
6
8
10
1995 2000 2005 20100
2
4
6
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
0
1
2
3
4
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
0
1
2
3
4
5
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
7.70
7.75
7.80
7.85
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
7.65
7.70
7.75
7.80
7.85
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
7.70
7.75
7.80
7.85
1995 2000 2005 20107.70
7.75
7.80
7.85
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Monetary Sector | Interest Rate and Exchange Rate
29 | HKD/USD 2010 | evolution of fcst
27 | Exchange Rate | HKD per USD 28 | Exchange Rate | HKD per USD
25 | Int. Rate 2010 | evolution of fcst 26 | Int. Rate 2011 | evolution of fcst
30 | HKD/USD 2011 | evolution of forecasts
Policy Interest Rate and Exchange Rate
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the Census and StatisticsDepartment Hong Kong (C&SD) and the Hong Kong Monetary Authority(HKMA). See below for details. Forecasts based on FocusEconomicsConsensus Forecast.
23 Interest rate, 91-day HIBOR in % (eop). Source: HKMA.24 Quarterly interest rate, 91-day HIBOR in % (eop). Source: HKMA25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, HKD per USD (eop). Source: HKMA.28 Quarterly exchange rate, HKD per USD (eop). Source: HKMA.29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP. Source: HKMA.32 Trade balance, imports and exports, in USD bn. 1995-2010. Source:C&SD.33 International reserves, months of imports. Source: C&SD.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: C&SD.36 International reserves in USD bn., evolution of 2010 and 2011forecast during the last 18 months.
Notes and sources
Individual Forecasts 2010 2011 2010 2011ANZ - - 7.75 7.80Bank of China (Hong Kong) - - 7.80 7.80Capital Economics - - 7.80 7.80Citigroup Global Markets Inc. 0.60 - 7.75 7.75Core Pacific-Yamaichi - - 7.80 -Credit Suisse 0.50 1.80 7.80 7.80Daiwa Capital Markets - - 7.78 7.80DBS Bank 0.65 - 7.75 -Deutsche Bank 0.50 - 7.80 7.80Goldman Sachs 0.50 0.50 7.80 7.80Hang Seng Bank - - 7.80 7.80HSBC 0.30 1.40 7.80 7.80ING 0.70 1.70 7.79 7.76JPMorgan - - 7.80 7.80Morgan Stanley 0.45 1.30 7.80 7.80Standard Chartered Bank 0.30 0.30 7.78 7.76UBS 0.30 1.50 7.80 7.80United Overseas Bank 0.50 - 7.80 -Wing Hang Bank - - 7.80 -SummaryMinimum 0.30 0.30 7.75 7.75Maximum 0.70 1.80 7.80 7.80Median 0.50 1.40 7.80 7.80Consensus 0.48 1.21 7.79 7.79History30 days ago 0.48 1.50 7.79 7.7960 days ago 0.66 1.74 7.79 7.7990 days ago 0.83 2.08 7.79 7.79
Interest Rate Exchange Rate% HKD per USD
| 32
Hong Kong September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
-10
-5
0
5
10
15
1995 2000 2005 2010
Hong KongAsia (ex Japan)
-200
0
200
400
600
1995 2000 2005 2010
Trade Balance ExportsImports
0
5
10
15
20
1995 2000 2005 2010
Hong KongAsia (ex Japan)
-30
-15
0
15
30
1995 2000 2005 2010
Hong KongAsia (ex Japan)
10
20
30
40
Apr Jul Oct Jan Apr Jul
20102011
External Sector | Current Account, Trade and International Reserves
34 | Current Account | evol. of fcst
33 | Int. Reserves | months of imports
36 | Int. Reserves | evol. of fcst 35 | Exports | annual variation in %
32 | Trade Balance | USD billion 31 | Current Account | % of GDP
Transportation (2009) Airports: 2Roadways (km): 2,049Chief Ports: Hong Kong
Agency Rating OutlookMoody’s: Aa2 PositiveS&P: AA+ StableFitch Ratings: AA Stable
| 34
India September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
REAL SECTOR | Industrial production returns to single-digit growthIn June, industrial production expanded 7.1% over the same month last year,according to the so-called quick estimate for the index of industrial production.The reading was well below the 11.3% expansion recorded in May (previouslyreported: +11.5% year-on-year) and market expectations, which had industrialoutput rising 8.4%.
The figure marked, in fact, the slowest pace in 13 months, as the favourablebase effect that has partly fuelled annual growth rates in previous months isfading away (industrial output increased a solid 8.3% in June 2009).
The slowdown over the previous month was broad-based. The manufacturingsector, which accounts for over three quarters of total industrial production,expanded 7.3% in June, well below the 12.0% increase registered in May.Mining added 9.5% year-on-year (May: +10.1% yoy) and, finally, electricityproduction increased 3.5% (May: +6.4% yoy). On a use-based classification,the monthly slowdown was driven by slower growth in capital goods (May:+34.2% yoy; June: +9.7% yoy) as well as in basic goods.
Based on the preliminary monthly figures, industrial production rose 11.5% inthe April-June period, the first quarter of the fiscal year 2010/11, which wasbelow the 15.0% expansion observed in the January-March period. Moreover,as a result of the slower growth in June, annual average growth in industrialproduction ended the upward trend initiated a year ago, inching down from12.4% in May to 12.3%.
Consensus Forecast panellists expect industrial production to expand 9.3% inthe current fiscal year, which is unchanged from last month’s forecast. For theFY 2011/12, the panel expects industrial production to expand 8.8%.
IndiaOutlook improves
Ángel TalaveraSenior Economist
• Growth in the industrial sector moderated to 7.1% in June, the slow-est pace in 13 months, as the favourable base effect that had boostedgrowth in the previous months is fading away.
• Consensus Forecast panellists anticipate the economy to grow 8.3%this fiscal year, which is up 0.1 percentage points over last month’sforecast. For 2011/12, the panel sees economic growth at 8.4%.
• Wholesale price inflation is hovering around 10.0%, which pressuredthe Central Bank to continue tightening monetary policy. ConsensusForecast panellists expect wholesale price inflation to average 8.1%this fiscal year, which is up 0.3 percentage points from last month’sforecast. For 2011/12, the panel sees inflation moderating to 5.4%.
Note: Year-on-year and annual average variation of industrial productionindex in %.Source: Ministry of Statistics and Programme Implementation (MOSPI) andFocusEconomics calculations.
8.37.2
10.69.3
10.2
12.0
17.716.3
14.7 14.5
16.5
11.3
7.1
0.0
5.0
10.0
15.0
20.0
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
%
Year-on-Year
Annual Average
| 35
India September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
Finance Minister Pranab Mukherjee recently stated that an economic expan-sion of 8.5% in the current fiscal year, which will end in March 2011, would besatisfactory. The government aims at reaching a sustained growth rate of 10%by 2014. In the same vein, the Reserve Bank of India anticipates GDP willexpand 8.5% this current fiscal year.
Consensus Forecast panellists anticipate GDP to grow 8.3% this fiscal year,which is up 0.1 percentage points from last month’s forecast. For the financialyear 2011/12, the panel sees economic growth reaching 8.4%.
MONETARY SECTOR | Inflation moderates in JulyIn June, the consumer price index for industrial workers (CPI IW) added 1.16%over the previous month, which was broadly unchanged from 1.18% increaserecorded in May. Despite the monthly rise, annual consumer price inflationinched down from 13.9% in May to 13.7%.
The more recent and comprehensive wholesale price index seems to corrobo-rate the notion of moderating inflation. In July, wholesale prices increased 1.04%over the previous month, which contrasted the 0.23% price drop recorded inJune. Despite the monthly rise, annual wholesale inflation fell from 10.6% inJune to 10.0%, undershooting market expectations, which had anticipatedwholesale inflation would drop to only 10.4%. The figure marks, in fact, thelowest inflation rate in six months. Nonetheless, the inflation trend continues topick up. Annual average wholesale price inflation increased for the eighth con-secutive month, rising nearly a full percentage point from 6.3% in June to 7.2%% in July.
Inflation continues to hover close to double digits mainly fuelled by high pricesfor food (July: +11.4% year-on-year) as well as for fuels (+14.3% yoy). How-ever, food inflation appears to be starting to moderate, which helps to accountfor the stabilisation of the wholesale price index.
The Central Bank expects wholesale price inflation to moderate to 6.0% by theend of the current fiscal year, which will end in March 2011 (recently revisedfrom the previous 5.5% estimate).
Consensus Forecast panellists expect wholesale inflation to average 8.1% thiscurrent fiscal year, which is up 0.3 percentage points over last month. For thefinancial year 2011/12, the panel expects average wholesale inflation to mod-erate to 5.4%.
MONETARY SECTOR | Central Bank raises interest rates againAt its most recent meeting on 27 July, the Reserve Bank of India (RBI) decidedto lift the repurchase rate by 25 basis points to 5.75%, in a decision that was inline with market expectations. The RBI also raised the reverse repurchase rateby 50 basis points, from 4.00% to 4.50%. The move represented the fourthinterest rate hike in as many months.
Monetary authorities argued that controlling inflation has now become moreimportant than stimulating economic growth, with wholesale prices hoveringnear double-digit territory for six months, as a result of surging food and fuelprices. The Bank added that the recovery in the domestic economy remainsfirmly in place and, in fact, is intensifying, even with a marginal contributionfrom the important agricultural sector, which highlights the resilience of theIndian economy.
Inflation | Wholesale Price Index
Note: Monthly and annual variation of wholesale price index in %.Source: Reserve Bank of India and FocusEconomics calculations.
1.57
0.880.75
-0.04
1.94
0.44
0.89
0.00
1.16
1.62
1.13
-0.23
1.04
-0.5
0.0
0.5
1.0
1.5
2.0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
The RBI also announced that it would change the periodicity of its monetarypolicy meetings, in an attempt to adapt to a rapidly evolving macroeconomicscenario as well as to avoid a large gap between policy reviews. The Bank willnow hold policy meetings every six weeks, instead of the previous three-monthperiod. The next policy meeting is scheduled for 16 September, and analystsare currently divided regarding a further monetary tightening move, as recentdata from the industrial sector suggest that economic growth is cooling, whileinflation has fallen to a six-month low in July.
EXTERNAL SECTOR | Exports remain strongIn June, exports rose 30.4% over the same month last year to reach USD 17.7billion. The figure was down from the 35.1% expansion recorded in May. Thatsaid, despite the slowdown, the monthly figure marked the sixth consecutivemonth of double-digit growth rates in exports.
On a quarterly basis, exports expanded a strong 33.8% year-on-year in theApril-June period – the first quarter of the fiscal year 2010/11 – virtually un-changed from the 33.4% increase recorded in the previous quarter. Further-more, exports continue to creep towards pre-crisis levels, with the 3-monthsum of exports at USD 50.8 billion in June, still below the USD 56.9 billionpeak reached in July 2008 but well above the USD 37.3 billion trough in April2009.
Meanwhile, imports increased 23.0% year-on-year (May: +38.5% yoy) to USD28.3 billion. The monthly figure was led by oil imports, which increased 26.5%over the same month last year. As a result of the monthly figures, the tradedeficit narrowed from USD 11.3 billion in May to USD 10.6 billion in June.
During the last twelve months exports have amounted to USD 183.6 billion.The government is targeting exports to reach USD 200 billion this current fis-cal year, which will end on March 2011. Consensus Forecast panellists antici-pate exports will expand 19.9% this fiscal year and 18.6% in 2011/12.
Merchandise Trade | USD bn
Note: Monthly exports, imports and trade balance in USD billion.Source: Ministry of Commerce and Industry.
Real GDP growth in % 2 | Real GDP | Q1 07-Q4 11 | % variation
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts
General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the Ministry of Statistics and ProgrammeImplementation (MOSPI) and the Ministry of Finance. See below for details.Forecasts based on FocusEconomics Consensus Forecast.
1 GDP, annual variation in %. Source: MOSPI.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: MOSPI.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: MOSPI.6 Gross fixed investment, annual variation in %. Source: MOSPI.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: MOSPI.10 Industrial production, evolution of 2010 forecasts during the last 18months.11 Industrial production, evolution of 2011 forecasts during the last 18months.12 Central government balance, % of GDP. Source: Ministry of Finance.13 Central government balance, evolution of 2010 forecasts during thelast 18 months.14 Central government balance, evolution of 2011 forecasts during thelast 18 months.
Notes and sources
1 | Real GDP | 1995 - 2014 | % variation
Individual Forecasts 2010/11 2011/12Allianz 7.5 7.5AnandRathi 6.5 9.0BofA Merrill Lynch 8.1 8.0Capital Economics 9.2 9.5Citigroup Global Markets Inc. 8.4 8.6Credit Suisse 8.3 8.3Cris il 8.0 -Daiwa Capital Markets 8.7 8.8DBS Bank 8.8 8.5Deutsche Bank 8.1 8.4Goldman Sachs 8.2 8.7HSBC 8.8 8.3ING Financial Markets 8.2 9.0JPMorgan 8.3 8.5Kotak Securities 8.1 7.8Morgan Stanley 8.5 8.4RBC Capital Markets 8.1 8.0Standard Chartered Bank 8.1 8.5State Bank of India 8.5 -UBS 9.0 8.0SummaryMinimum 6.5 7.5Maximum 9.2 9.5Median 8.3 8.5Consensus 8.3 8.4History30 days ago 8.2 8.560 days ago 8.2 8.590 days ago 8.2 8.4Additional ForecastsReserve Bank of India (July 2010) 8.5 -IMF (July 2010) 9.4 8.4ADB (Mar. 2010) 8.2 8.7
Monetary Sector | Inflation, Money, Producer Prices and Stock Market
19 | CPI-IW | % variation
15 | Inflation | 1995 - 2014 | in % Inflation | ann. avg. variation of wholesale price index in %
17 | Inflation 2010 | evolution of fcst
21 | 10-Year Bond | in % 22 | Stock Market | BSE SENSEX
20 | Money | % variation
18 | Inflation 2011 | evolution of fcst
16 | Inflation | Q1 07-Q4 11 | in %
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the Reserve Bank of India (RBI) , the Ministryof Commerce and Industry and the Labour Bureau. RBI inflation forecastrefers to year-on-year wholesale inflation. See below for details. Forecastsbased on FocusEconomics Consensus Forecast.
15 Inflation, annual average variation in wholesale price index (WPI) in%. Source: Ministry of Commerce and Industry.16 Quarterly inflation, average variation in wholesale price index (WPI) in%. Source: Ministry of Commerce and Industry.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Consumer price index for industrial workers (CPI-IW), in %. Source:Labour Bureau.20 Money, annual variation of M1 in %. Source: RBI.21 10-Year bond yield in %. Jan. 2005 until end of previous month.Source: RBI.22 Daily index levels, BSE SENSEX. Jan. 2008 until end of previousmonth. Source: Bombay Stock Exchange.
Notes and sources
Individual Forecasts 2010/11 2011/12Allianz - -AnandRathi 6.9 4.5BofA Merrill Lynch - -Capital Economics - -Citigroup Global Markets Inc. 8.8 6.5Credit Suisse 8.2 5.5Crisil 8.8 -Daiwa Capital Markets 7.3 4.2DBS Bank 8.0 5.3Deutsche Bank - -Goldman Sachs 7.5 6.0HSBC - -ING Financial Markets - -JPMorgan - -Kotak Securities 9.5 6.6Morgan Stanley - -RBC Capital Markets - -Standard Chartered Bank 8.2 5.0State Bank of India - -UBS - -SummaryMinimum 6.9 4.2Maximum 9.5 6.6Median 8.2 5.4Consensus 8.1 5.4History30 days ago 7.8 5.460 days ago 7.0 5.390 days ago 6.9 5.4Additional ForecastsReserve Bank of India (July 2010) 6.0 -ADB (Mar. 2010) 5.0 5.5
| 41
India September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
2
4
6
8
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
4
6
8
10
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
30
40
50
60
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
35
40
45
50
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
4
6
8
10
12
14
1995 2000 2005 20104
6
8
10
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
30
40
50
60
1995 2000 2005 201035
40
45
50
55
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Monetary Sector | Interest Rate and Exchange Rate
29 | INR/USD 2010 | evolution of fcst
27 | Exchange Rate | INR per USD 28 | Exchange Rate | INR per USD
25 | Int. Rate 2010 | evolution of fcst 26 | Int. Rate 2011 | evolution of fcst
30 | INR/USD 2011 | evolution of forecasts
Policy Interest Rate and Exchange Rate
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the Reserve Bank of India(RBI) and the Ministry of Commerce and Industry. See below for details.Forecasts based on FocusEconomics Consensus Forecast.
23 Interest rate, RBI Repurchasing Rate in % (eop). Source: RBI.24 Quarterly interest rate, RBI Repurchasing Rate in % (eop). Source:RBI.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, INR per USD (eop). Source: RBI.28 Quarterly exchange rate, INR per USD (eop). Source: RBI.29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP. Source: RBI.32 Trade balance, imports and exports, in USD bn. Source: Departmentof Commerce.33 International reserves, months of imports. Source: RBI.34 Current account in USD billion, evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: Deparment of Commerce.36 External debt as % of GDP. Source: RBI.
Notes and sources
Individual Forecasts 2010/11 2011/12 2010/11 2011/12Allianz - - 44.5 44.0AnandRathi 5.50 7.00 42.0 40.0BofA Merrill Lynch 6.50 7.50 43.5 -Capital Economics 6.25 7.00 42.0 42.0Citigroup Global Markets Inc. - - 43.5 40.0Credit Suisse 6.25 7.50 43.5 42.0Crisil - - 43.8 -Daiwa Capital Markets - - 45.0 43.3DBS Bank 6.50 - 45.4 -Deutsche Bank 6.75 - 44.0 42.0Goldman Sachs - - 44.0 43.0HSBC 6.25 6.75 45.5 43.5ING Financial Markets 6.25 7.50 43.5 41.5JPMorgan 6.50 - 43.0 -Kotak Securities 6.50 7.00 47.0 46.0Morgan Stanley - - 45.4 42.2RBC Capital Markets 6.25 7.00 44.0 42.0Standard Chartered Bank 6.50 - 44.0 -State Bank of India - - 44.0 -UBS - - 46.5 41.0SummaryMinimum 5.50 6.75 42.0 40.0Maximum 6.75 7.50 47.0 46.0Median 6.38 7.00 44.0 42.0Consensus 6.33 7.16 44.2 42.3History30 days ago 6.30 7.16 43.9 42.160 days ago 6.18 7.21 43.6 41.690 days ago 6.15 7.04 43.4 41.5
Interest Rate Exchange Rate% INR per USD
| 42
India September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
-5
0
5
10
1995 2000 2005 2010
IndiaAsia (ex Japan)
-200
0
200
400
600
1995 2000 2005 2010
Trade Balance ExportsImports
-20
0
20
40
1995 2000 2005 2010
IndiaAsia (ex Japan)
0
5
10
15
20
1995 2000 2005 2010
IndiaAsia (ex Japan)
0
20
40
60
1995 2000 2005 2010
IndiaAsia (ex Japan)
-50
-40
-30
-20
-10
Apr Jul Oct Jan Apr Jul
20102011
External Sector | Current Account, Trade and International Reserves
34 | Current Account | evol. of fcst
33 | Int. Reserves | months of imports
36 | External Debt | % of GDP 35 | Exports | annual variation in %
32 | Trade Balance | USD billion 31 | Current Account | % of GDP
REAL SECTOR | Economic growth accelerates amid stronger domesticdemandIn the second quarter, gross domestic product (GDP) expanded 6.2% over thesame quarter last year. The reading beat last month’s Consensus Forecastpanellists’ expectations of a 5.9% increase and came in ahead of the previousquarter’s 5.7% growth pace. Furthermore, the reading represented the fastestexpansion tallied since the third quarter of 2008.
The acceleration compared to the previous quarter was due to positivedevelopments in the domestic sector. Private consumption increased 5.0%year-on-year (Q1: +3.9% yoy), which more than compensated for the 9.0%contraction observed in government consumption. Moreover, investmentcontinued to grow robustly and added 8.0% (Q1: +7.8% yoy). In contrast, thenet contribution from the external sector to overall growth deteriorated and fellfrom 1.0 percentage points in the first quarter to 0.4 percentage points.
At the sector level, the acceleration over the previous quarter was broad-based,with all sectors improving with the exception of electricity, gas and water supply.The acceleration was led by the manufacturing sector, which accounts for nearlya quarter of GDP, and which increased 4.3% (Q1: +3.7% yoy). Nonetheless,the largest contribution to growth came form the trade, hotel and restaurantssector, which expanded a robust 9.6% (Q1: +9.4% yoy).
The Central Bank expects the economy to grow 5.6% this year and to acceleratefurther to between 6.0% and 6.5% in 2011. Consensus Forecast panellistsbroadly share the Bank’s assessment and anticipate the economy to grow 6.0%this year, which is up 0.1 percentage points from last month’s projection. Nextyear, the panel expects economic growth to reach 6.2%.
IndonesiaOutlook improves
Gerardo MoránEconomist
• The Indonesian economy, which was less affected by the globaldownturn, as it is less dependant on the external sector than most ofits regional peers, which continues to pick up steam. In the secondquarter, the economy increased 6.2%, represented the fastest rate innearly two years.
• Consensus Forecast panellists anticipate the economy will grow 6.0%this year, which is up 0.1 percentage points from last month’sprojection. Next year, the panel expects the economy to expand 6.2%.
• Annual inflation reached 6.2% in July, marking the highest readingin over 15 months. The panel anticipates inflation will continue risingin the months ahead and will average 4.8%, this year, which is 0.1percentage points below last month’s forecast. Next year, the panelsees inflation rising to 5.9%.
Note: Year-on-year changes in %.Source: Statistics Indonesia (BPS) and FocusEconomics calculations.
-9.0
0.0
5.0
6.2
8.0
17.7
14.6
-20.0 -10.0 0.0 10.0 20.0 30.0
Governmentconsumption
Domestic Demand
Privateconsumption
GDP
Investment
Exports
Imports
%
| 45
Indonesia September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
MONETARY SECTOR | Inflation soars amid higher food pricesIn July, consumer prices jumped 1.57% over the previous month. The readingcame in well above June’s 0.97% price rise as well as market expectations,which had prices increasing 1.10%. The sharp monthly price hike was almostentirely driven by higher food prices (+4.69% month-on-month), in particularfor rice, which has risen steadily in recent months. Owing to July’s high reading,annual inflation soared from 5.0% in June to 6.2%, which represented thehighest level in over a year, lifting annual average inflation to 3.6%.
Going forward, the government announced it will sell 500,000 metric tons ofrice at below market prices in an effort to contain inflation during the fastingmonth of Ramadan, when Muslims usually spend more on food products, beganon 11 August. Nonetheless, inflation is likely to soar again in August as thegovernment increased electricity tariffs for the first time in seven years.
Despite the sharp raise in inflation, at its most recent meeting on 4 August theCentral Bank left its current monetary policy stance unaltered for the twelfthconsecutive month at 6.50%, in a decision broadly expected by the market.The Bank has set an inflation target of 5% ±1% for this year and next, andremains confident inflation will fall within range this year.
Consensus Forecast panellists broadly share the Bank’s assessment and expectinflation to average 4.8% this year, which is up 0.1 percentage points from lastmonth’s forecast. For next year, panellists see inflation rising to 5.9% by year-end.
0.450.56
1.05
0.19
-0.03
0.33
0.84
0.31
-0.16
0.150.29
0.97
1.57
-0.5
0.0
0.5
1.0
1.5
2.0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
%
2.0
4.0
6.0
8.0
%
Monthly (left scale) Annual (right scale)
Inflation | Consumer Price Index
Note: Annual and monthly variation of consumer price index in %.Source: Statistics Indonesia (BPS).
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts
1 | Real GDP | 1995 - 2014 | % variation Real GDP growth in %
Individual Forecasts 2010 2011ANZ 5.9 6.2Bank Danamon Indonesia 5.6 6.2BII 6.1 6.3Capital Economics 6.0 6.2Citigroup Global Markets Inc. 6.1 6.2Credit Suisse 5.9 5.6Daiwa Capital Markets 6.5 6.1Danareksa Securities 6.2 6.4DBS Bank 6.0 5.8Deutsche Bank 5.7 6.5Goldman Sachs 5.8 6.0HSBC 6.0 6.0ING 6.2 6.0JPMorgan 6.2 5.7Mandiri Sekuritas 5.8 6.3Morgan Stanley 6.0 6.5OCBC Bank 6.1 6.1RBC Capital Markets 6.0 6.5Standard Chartered Bank 6.2 6.5UBS 6.0 6.0United Overseas Bank 6.0 6.2SummaryMinimum 5.6 5.6Maximum 6.5 6.5Median 6.0 6.2Consensus 6.0 6.2History30 days ago 5.9 6.160 days ago 5.8 6.090 days ago 5.8 6.1Additional ForecastsCentral Bank (Aug. 2010) 5.6 6.0-6.5IMF (July 2010) 6.0 6.2ADB (July 2010) 6.0 6.0
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allreal sector data are from the Statistics Indonesia (BPS) and the CentralBank (BI, Bank Indonesia). See below for details. Forecasts based onFocusEconomics Consensus Forecast.
1 GDP, annual variation in %. Source: BPS.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: BPS.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: BPS.6 Gross fixed investment, annual variation in %. Source: BPS.7 Private consumption, change in 2010 and 2011 forecasts during thelast 18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: BPS.10 Unemployment, % of active population. Source: BPS.11 Balance of central government, % of GDP. Source: BI.12 Industrial production, evolution of 2010 and 2011 forecasts duringthe last 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last18 months.14 Balance of central government, evolution of 2010 and 2011forecasts during the last 18 months.
Monetary Sector | Inflation, Money, Producer Prices and Stock Market
Inflation | annual avg. var. of consumer price index in %
Individual Forecasts 2010 2011ANZ - -Bank Danamon Indonesia 4.6 6.2BII 5.0 5.7Capital Economics 5.3 4.5Citigroup Global Markets Inc. 5.1 6.0Credit Suisse 4.3 6.2Daiwa Capital Markets 4.5 4.8Danareksa Securities - -DBS Bank 5.1 6.5Deutsche Bank 5.0 6.5Goldman Sachs 5.1 5.0HSBC 4.6 6.0ING 4.0 4.5JPMorgan 4.4 5.4Mandiri Sekuritas - -Morgan Stanley 5.0 5.7OCBC Bank 5.0 6.7RBC Capital Markets - -Standard Chartered Bank 5.4 6.1UBS 5.0 7.0United Overseas Bank 4.7 6.7SummaryMinimum 4.0 4.5Maximum 5.4 7.0Median 5.0 6.0Consensus 4.8 5.9History30 days ago 4.7 5.860 days ago 4.8 5.990 days ago 4.9 5.8Additional ForecastsCentral Bank (Aug. 2010) 5.8-6.0 -IMF (Apr. 2010) 4.7 5.8ADB (Mar. 2010) 5.6 6.2
200
400
600
800
Jan Jul Jan Jul Jan Jul
0
15
30
45
60
1995 2000 2005 2010
IndonesiaAsia (ex Japan)
-5
0
5
10
15
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
IndonesiaAsia (ex Japan)
2
4
6
8
10
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
3
6
9
12
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
0
10
20
30
2000 2003 2006 2009-10
0
10
20
30
40
1995 1998 2001 2004 2007
1,000
1,500
2,000
2,500
3,000
3,500
Jan Jul Jan Jul Jan Jul
19 | Producer Prices | % var.
15 | Inflation | 1995 - 2014 | in %
17 | Inflation 2010 | evolution of fcst
22 | Stock Market | IDX
20 | Money | % variation
18 | Inflation 2011 | evolution of fcst
16 | Inflation | Q1 07-Q4 11 | in %
21 | MSCI Price Index General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allreal sector data are from the Statistics Indonesia (BPS) and the CentralBank (BI, Bank Indonesia). See below for details. Forecasts based onFocusEconomics Consensus Forecast.
15 Inflation, annual average variation in consumer price index (CPI) in%. Source: BPS.16 Quarterly inflation, year-on-year variation in consumer price index(CPI) in %. Source: BPS.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Producer price index, annual variation in % (eop). 2000-2009.Source: BPS.20 Money, annual variation of M1 in %. 1995-2009. Source: BI.21 Daily MSCI Price index in USD. From Jan. 2008 until end ofprevious month. Source: MSCI Barra.22 Daily index levels, IDX. From Jan. 2008 until end of previousmonth. Source: Indonesia Stock Exchange.
Notes and sources
| 50
Indonesia September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
0
10
20
30
40
50
1995 2000 2005 20106
7
8
9
10
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
0
3,000
6,000
9,000
12,000
1995 2000 2005 20108,000
9,000
10,000
11,000
12,000
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
4
6
8
10
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
4
6
8
10
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
6,000
9,000
12,000
15,000
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
8,000
9,000
10,000
11,000
12,000
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
Monetary Sector | Interest Rate and Exchange Rate
29 | IDR/USD 2010 | evolution of fcst
27 | Exchange Rate | IDR per USD 28 | Exchange Rate | IDR per USD
25 | Int. Rate 2010 | evolution of fcst 26 | Int. Rate 2011 | evolution of fcst
30 | IDR/USD 2011 | evolution of forecasts
Policy Interest Rate and Exchange Rate
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allreal sector data are from the Statistics Indonesia (BPS) and theCentral Bank (BI, Bank Indonesia). See below for details. Forecastsbased on FocusEconomics Consensus Forecast.
23 Interest rate, BI Rate in % (eop). Source: BI.24 Quarterly interest rate, BI Rate in % (eop). Source: BI.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, IDR per USD (eop). Source: BI.28 Quarterly exchange rate, IDR per USD (eop). Source: BI.29 Exchange rate, evolution of 2010 forecast during the last 18months.30 Exchange rate, evolution of 2011 forecast during the last 18months.31 Current account balance as % of GDP. Source: BPS.32 Trade balance, imports and exports, in USD bn. Source: BPS.33 International reserves, months of imports. Source: BI.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: BPS.36 External debt as % of GDP. Source: BI.
Notes and sources
Individual Forecasts 2010 2011 2010 2011ANZ 6.75 7.75 9,500 9,250Bank Danamon Indonesia 6.50 7.50 9,150 9,325BII 6.50 7.50 9,150 9,355Capital Economics 8.00 8.50 8,750 8,600Citigroup Global Markets Inc. 7.00 7.50 9,050 9,125Credit Suisse 6.75 7.25 9,000 9,000Daiwa Capital Markets - - 8,700 8,500Danareksa Securities 6.50 6.75 9,286 9,430DBS Bank 7.00 - 9,100 -Deutsche Bank 7.25 - 8,925 8,700Goldman Sachs - - 8,700 8,400HSBC 6.50 7.50 8,800 -ING 6.50 7.00 9,050 9,000JPMorgan 6.50 7.00 8,900 9,300Mandiri Sekuritas 7.00 7.50 8,927 9,083Morgan Stanley - - - -OCBC Bank 7.00 7.50 8,843 8,598RBC Capital Markets 7.00 8.00 8,800 8,500Standard Chartered Bank 7.00 8.00 8,800 8,500UBS 7.50 8.00 9,400 9,500United Overseas Bank 7.75 - 8,950 -SummaryMinimum 6.50 6.75 8,700 8,400Maximum 8.00 8.50 9,500 9,500Median 7.00 7.50 8,939 9,000Consensus 6.94 7.55 8,989 8,951History30 days ago 6.93 7.52 9,032 9,01660 days ago 7.03 7.57 9,036 9,08690 days ago 7.08 7.63 9,071 9,079
Interest Rate Exchange Rate% IDR per USD
| 51
Indonesia September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
External Sector | Current Account, Trade and International Reserves
REAL SECTOR | Industrial production beats market expectationsIn June, industrial production rose 16.9% over the same month last year. Thefigure was down from the revised 21.7% increase (previously reported: 21.5%)recorded in May but came in slightly above market expectations of a 16.6%rise.
The slowdown over the previous month was mainly driven by a moderation inmanufacturing. Production in this category, which accounts for the bulk of in-dustrial output, increased 17.4% annually, which was down from the 22.4%increase observed in May. Meanwhile, mining rose 4.3%, contrasting the 10.7%fall recorded in May and, finally, electricity and gas improved slightly comparedto the previous month, growing 7.7% (May: +7.5% yoy).
A month-on-month comparison corroborates the moderation suggested by theannual figures, as industrial production grew 1.43% over the previous monthon a seasonally adjusted basis, which was down from the 2.71% increaserecorded in May.
Based on monthly data, industrial production expanded 19.5% in the secondquarter over the same period last year, coming short of the 25.8% expansionrecorded in the previous quarter. That said, annual average variation in indus-trial production rose from 14.4% in May to 16.1%, marking the strongest read-ing since December 2000.
Consensus Forecast participants lifted their estimates for full-year 2010 indus-trial output growth by 0.1 percentage points over last month to the current13.6%. Panellists expect industrial production to expand 7.7% next year, whichis unchanged from last month’s forecast.
KoreaOutlook improves
Armando CiccarelliEconomist
• Tensions with North Korea are growing, as the United States andSouth Korea conducted an 11-day military drill in the Sea of Japan inmid-August. Moreover, the U.S. announced further exercises for thebeginning of September.
• Industrial production growth moderated in July but exceeded mar-ket expectations. Consensus Forecast panellists remain upbeat andhave revised their forecast to the upside, seeing the economy grow-ing 5.8% this year, up 0.1 percentage points from last month’s fore-cast. For next year, panellists expect growth to moderate to 4.3%.
• In July, inflation remained unchanged at June’s 2.6%. For the timebeing, monetary authorities decided to refrain from raising interestrates. Panellists expect inflation to average 2.9% this year and 3.1%next year.
Note: Seasonally adjusted month-on-month and annual average changes ofindustrial production index in %.Source: KOSTAT-KOSIS and FocusEconomics calculations.
5.55
2.22
-1.29
4.15
-2.97
1.772.38
0.00
3.40
1.87
0.22
2.71
1.57
-4.0
0.0
4.0
8.0
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
%
-8.0
0.0
8.0
16.0
24.0
%
MoM s.a. (left scale) Annual Average (right scale)
| 54
Korea September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
OUTLOOK | Consumer confidence drops in AugustIn August, the Consumer Survey Index (CSI) published by the Bank of Koreadropped to 110 points, down from July’s 112. However, at the current levelconsumer confidence remained above the 100-point threshold that separatesoptimism from pessimism for the thirteenth consecutive month, suggesting thatconsumption should continue to support the recovery in the coming months.
While households’ assessment on their living standards remained unchangedover the previous month, the evaluation of the domestic economic situationdeteriorated. Moreover, consumers lowered their expectations both about theirliving standards in the next six months as well as with regards to the situationof the general economy.
MONETARY SECTOR | Inflation remains unchanged in JulyIn July, consumer prices rose 0.35% over the previous month. The readingcontrasted both the 0.17% decline recorded in June as well as market expec-tations which saw prices falling 0.07%. The main drivers behind the monthlyprice rise were higher prices for culture and recreation as well as for food andalcoholic beverages.
Despite the monthly price increase, annual inflation remained unchanged atJune’s 2.6%. Core inflation, which excludes more volatile items such as freshfood and energy, added 0.17% over the previous month. Mirroring the devel-opments in the general index, annual core inflation remained unchanged atJune’s 1.7%. The three-year average inflation rate, which is the basis of theCentral Bank’s monetary policy, remained stable at 3.4% for a seventh con-secutive month, thus exceeding the Central Bank’s inflation target of 3.0% butremaining within the tolerance range of ±1.0 percentage points.
Consensus Forecast panellists expect inflation to average 2.9% in 2010, whichis unchanged from last month’s forecast. According to the panel, average infla-tion will inch up to 3.1% in 2011, which is also unchanged from last month’sprojection.
MONETARY SECTOR | Central Bank keeps policy rate unchangedAt the most recent monetary policy meeting on 12 August, the Central Bankdecided to keep the policy rate unchanged at 2.25%, in a decision widely ex-pected by market analysts, which considered last month’s decision to raiseinterest rates only as a fine tuning towards “normal” interest rate levels.
In its monetary policy statement, the Central Bank suggests upward inflationrisks in the months to come as a consequence of demand-pull pressures as-sociated with the upturn in economic activity. In fact, recovery in the domesticeconomy is expected to continue, as external risks due to instability in thefinancial markets in the wake of the Greek debt crisis have now waned.
According to market analysts, the phrasing of the monetary statement sug-gests future interest rate hikes. In particular, there is no reference to maintain-ing an accommodative policy going forward and the reference to “price stabil-ity” precedes that to “economic growth”, thus suggesting a shift in priorities.Therefore, the market expects the Central Bank to raise interest rates by afurther 25 basis points in next meeting on 9 September.
Consensus Forecast panellists expect on average the policy rate to end theyear at 2.65%. For next year, panellists forecast on average the policy rate toend the year at 3.43%
Consumer Confidence
Note: Consumer Survey Index (CSI). An index value above 100 indicates anoptimistic outlook while a value below 100 indicates a pessimistic outlook.Source: Bank of Korea (BoK).
Note: Month-on-month and year-on-year changes of cons. price index in %.Source: KOSTAT-KOSIS and FocusEconomics calculations.
0.36 0.35
0.09
-0.26
0.18
0.35 0.35 0.35 0.35
0.52
0.09
-0.17
0.35
-0.6
-0.3
0.0
0.3
0.6
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
%
1.0
2.0
3.0
4.0
%
Monthly (left scale) Annual (right scale)
| 55
Korea September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
EXTERNAL SECTOR | Current account surplus expands in the secondquarterIn the second quarter, the current account incurred a surplus of USD 10.3billion. The reading was down from the of the USD 13.1 million surplus regis-tered in the same quarter the year before but marked a strong improvementcompared to the USD 1.3 billion surplus observed in the previous quarter.
The increase over the preceding quarter reflected a higher surplus in the tradebalance, which rose from USD 7.4 billion in the first quarter to USD 15.7 billionin the second. Both exports and imports accelerated compared to the previousquarter. Exports increased 34.6% annually in the second quarter (Q1: +34.1%year-on-year) while imports rose 45.7% (Q1: +37.7% yoy).
Despite the improvement in quarterly figures, the moving annual current ac-count balance narrowed to a USD 53.3 billion surplus, down from the USD55.3 billion surplus recorded in the first quarter. Consensus Forecast panellistsexpect the annual current account surplus to narrow further to US$ 17.7 billionthis year.
EXTERNAL SECTOR | Exports continue to expand, albeit at slower rateIn July, exports rose 28.3% over the same month last year to reach USD 40.9billion, according to the latest data released by Korea Customs Services (KCS).The figure was down from the 30.2% expansion recorded in June. However,despite the slowdown, the monthly figure marked the ninth consecutive double-digit increase in exports after having contracted for a full year.
The July increase confirms the strong recovery of the external sector, withexport figures outperforming pre-crisis levels in nominal terms, as the three-month average topped a record USD 40.6 billion in July, above the USD 39.2billion peak previously reached in July 2008 and, in fact, the highest level sincerecords began in 1990.
According to the Ministry of Knowledge Economy (MKE), the July reading wasdriven by strong increases in exports of semiconductors, which increased 70.6%over the previous year, and by a 55.9% annual rise in exports of automobileparts.
Meanwhile, according to KCS figures, imports increased 28.0% year-on-yearin July (June: +38.0% yoy), reaching USD 35.4 billion. As a result of the monthlyfigures, the trade surplus fell from USD 6.5 billion in June to USD 5.5 billion inJuly.
Consensus Forecast panellists anticipate exports will expand 22.3% this yearand 10.9% in 2011
Current Account Balance | USD billion
Note: Quarterly current account balance in USD billion.Source: Bank of Korea (BoK).
13.1
10.4 10.6
1.3
10.3
0.0
5.0
10.0
15.0
Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010
Merchandise Trade | USD bn
Note: Monthly exports, imports and trade balance in USD billion.Source: Korea Customs Services (KCS).
Real GDP growth in % 2 | Real GDP | Q1 07-Q4 11 | % variation
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts
General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the Korea National Statistics Office (KOSTAT), KoreanStatistical Information Service (KOSIS), Ministry of Finance and Economyand the Bank of Korea (BoK). See below for details. Forecasts based onFocusEconomics Consensus Forecast.
1 GDP, annual variation in %. Source: BoK2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: BoK.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: BoK.6 Gross fixed investment, annual variation in %. Source: BoK.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: KOSTAT-KOSIS.10 Unemployment, % of active population. Source: KOSTAT-KOSIS.11 Balance of central government, % of GDP. Source: Ministry of Financeand Economy.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Balance of central government, evolution of 2010 and 2011 forecastsduring the last 18 months.
Notes and sources
1 | Real GDP | 1995 - 2014 | % variation
Individual Forecasts 2010 2011ANZ 5.9 3.9Capital Economics 6.0 4.0Citigroup Global Markets Inc. 5.5 4.3Credit Suisse 6.7 4.9Daiwa Capital Markets 7.0 5.2DBS Bank 6.2 3.9Deutsche Bank 5.5 3.9Goldman Sachs 5.3 4.6HSBC 5.8 4.3ING 7.1 4.8JPMorgan 5.9 4.0KERI 6.1 -Korea Invest. & Securities 5.0 4.0LG 5.0 -Morgan Stanley 6.0 4.5RBC Capital Markets 5.0 4.5SERI 5.1 -Standard Chartered Bank 6.0 4.1UBS 6.0 3.3United Overseas Bank 5.7 4.1Woori I&S 5.6 4.6SummaryMinimum 5.0 3.3Maximum 7.1 5.2Median 5.9 4.2Consensus 5.8 4.3History30 days ago 5.7 4.360 days ago 5.5 4.390 days ago 5.3 4.3Additional ForecastsCentral Bank (July 2010) 5.9 4.5IMF (July 2010) 5.7 5.0ADB (July 2010) 5.5 4.6
Monetary Sector | Inflation, Money, Producer Prices and Stock Market
19 | Core and Producer Prices | % var.
15 | Inflation | 1995-2004 | in % Inflation | annual avg. var. of consumer price index in %
17 | Inflation 2010 | evolution of fcst
21 | 10-Year Bond | in % 22 | Stock Market | KOSPI
20 | Money | % variation
18 | Inflation 2011 | evolution of fcst
16 | Inflation | Q1 07 - Q4 11 | in %
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the Korea National Statistics Office(KOSTAT), Korean Statistical Information Service (KOSIS), Korea Exchange(KRX) and the Bank of Korea (BoK). See below for details. Forecasts basedon FocusEconomics Consensus Forecast.
15 Inflation, annual average variation in consumer price index (CPI) in%. Source: KOSTAT-KOSIS16 Quarterly inflation, average variation in consumer price index (CPI) in%. Source: KOSTAT-KOSIS.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Core and producer price indices, annual variation in % (eop). 2004-2009. Source: KOSTAT-KOSIS.20 Money, annual variation of M1 in %. 1995-2009. Source: BoK.21 10-year bond yield in %. Jan 2002 until end of previous month.Source: BoK.22 Daily index levels, KOSPI. Jan. 2008 until end of previous month.Source: KRX.
Notes and sources
Individual Forecasts 2010 2011ANZ - -Capital Economics 3.5 3.0Citigroup Global Markets Inc. 2.9 3.0Credit Suisse 3.0 3.6Daiwa Capital Markets 2.8 2.7DBS Bank 2.9 3.1Deutsche Bank 2.9 3.9Goldman Sachs 3.2 3.2HSBC 2.7 3.1ING 2.4 2.7JPMorgan 3.0 3.5KERI 2.9 -Korea Invest. & Securities 2.7 2.9LG 2.8 -Morgan Stanley 3.1 3.2RBC Capital Markets - -SERI 3.1 -Standard Chartered Bank 2.7 2.8UBS 2.7 2.6United Overseas Bank 2.8 3.2Woori I&S 3.0 3.3SummaryMinimum 2.4 2.6Maximum 3.5 3.9Median 2.9 3.1Consensus 2.9 3.1History30 days ago 2.9 3.160 days ago 3.0 3.290 days ago 3.0 3.1Additional ForecastsCentral Bank (July 2010) 2.8 3.4IMF (Apr. 2010) 2.9 3.0ADB (Mar. 2010) 3.0 3.0
| 60
Korea September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
0
2
4
6
Q1 07 Q1 08 Q1 09 Q1 10 Q1 110
8
16
24
1995 2000 2005 2010
KoreaAsia (ex Japan)
0
2
4
6
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
2
3
4
5
6
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
800
1,000
1,200
1,400
1,600
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
800
1,000
1,200
1,400
1,600
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
600
1,000
1,400
1,800
1995 2000 2005 2010800
1,000
1,200
1,400
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Monetary Sector | Interest Rate and Exchange Rate
29 | KRW/USD 2010 | evolution of fcst
27 | Exchange Rate | KRW per USD 28 | Exchange Rate | KRW per USD
25 | Int. Rate 2010 | evolution of fcst 26 | Int. Rate 2011 | evolution of fcst
30 | KRW/USD 2011 | evolution of forecasts
Policy Interest Rate and Exchange Rate
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the Bank of Korea (BoK).Forecasts based on FocusEconomics Consensus Forecast.
23 Interest rate, Overnight Call Rate in % (eop).24 Quarterly interest rate, Overnight Call Rate in % (eop).25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, KRW per USD (eop).28 Quarterly exchange rate, KRW per USD (eop).29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP.32 Trade balance, imports and exports, in USD bn.33 International reserves, months of imports.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %.36 External debt as % of GDP.
Notes and sources
Individual Forecasts 2010 2011 2010 2011ANZ - - 1,345 1,200Capital Economics 3.00 3.50 1,050 1,000Citigroup Global Markets Inc. - - 1,150 1,060Credit Suisse 2.75 4.25 1,120 1,050Daiwa Capital Markets 2.50 2.75 1,100 1,060DBS Bank 3.00 - 1,150 -Deutsche Bank 3.00 - 1,180 1,150Goldman Sachs - - 1,100 1,050HSBC 2.50 3.50 1,130 -ING 2.25 3.75 1,200 1,150JPMorgan 2.50 3.50 1,150 1,120KERI - - - -Korea Invest. & Securities - - 1,060 1,050LG 2.50 - 1,070 -Morgan Stanley - - - -RBC Capital Markets 2.75 3.25 1,050 1,000SERI 2.50 - 1,100 -Standard Chartered Bank 2.50 3.50 1,140 1,050UBS 2.75 2.75 1,275 1,175United Overseas Bank 2.75 - 1,160 -Woori I&S 2.50 3.50 1,050 980SummaryMinimum 2.25 2.75 1,050 980Maximum 3.00 4.25 1,345 1,200Median 2.50 3.50 1,130 1,055Consensus 2.65 3.43 1,136 1,078History30 days ago 2.65 3.42 1,133 1,07660 days ago 2.70 3.50 1,095 1,04290 days ago 2.68 3.47 1,071 1,021
Interest Rate Exchange Rate% KRW per USD
| 61
Korea September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
-6
0
6
12
1995 2000 2005 2010
KoreaAsia (ex Japan)
-300
0
300
600
900
1995 2000 2005 2010
Trade Balance ExportsImports
-30
-15
0
15
30
45
1995 2000 2005 2010
KoreaAsia (ex Japan)
0
5
10
15
20
1995 2000 2005 2010
KoreaAsia (ex Japan)
0
20
40
60
1995 2000 2005 2010
KoreaAsia (ex Japan)
0
10
20
30
Apr Jul Oct Jan Apr Jul
20102011
External Sector | Current Account, Trade and International Reserves
34 | Current Account | evol. of fcst
33 | Int. Reserves | months of imports
36 | External Debt | % of GDP 35 | Exports | annual variation in %
32 | Trade Balance | USD billion 31 | Current Account | % of GDP
Agency Rating OutlookMoody’s: A1 StableS&P: A StableFitch Ratings: A+ Stable
| 63
Malaysia September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
REAL SECTOR | Economic growth slows down in second quarterIn the second quarter, gross domestic product (GDP) expanded 8.9% over thesame period last year. The reading came in below the 10.1% expansion recordedin the first quarter but overshot market expectations of an 8.1% increase.Although the figure confirms a strong economic recovery, it also reflects a lowbase of comparison, as GDP had fallen 3.9% in the same quarter last year.Consequently, growth rates are expected to continue moderating in the comingquarters as the base effect fades away.
The second quarter’s deceleration was mostly the result of a lower netcontribution from the external sector to overall growth, which fell from minus2.7 percentage points in the first quarter to minus 5.3 percentage points in thesecond quarter as growth in imports (Q2: +21.9% year-on-year) continued tooutpace that of exports (Q2: +13.8% yoy). In contrast, the domestic sectorcontinued to improve. Gross fixed investment led the way by expanding 12.9%(Q1: +5.4% yoy), while private consumption increased 7.9% (Q1: +5.1% yoy).
At the sector level, the deceleration was broad-based, with all major sectorsslowing down compared to the previous quarter. That said, deceleration wasmostly driven by the services sector, which accounts for more than a half oftotal GDP, and which moderated from an 8.5% expansion in the first quarter toa 7.3% increase. Meanwhile, the manufacturing sector, which accounts fornearly a quarter of total GDP, expanded a robust 15.9% (Q1: +17.0% yoy).
Despite the slowdown in exports, International Trade Minister, MustapaMohamed, stated that the country is on track to achieve the 6.0% growth targetset for this year. Consensus Forecast panellists are more optimistic and seeGDP growing 7.1% this year, which is up 0.2 percentage points from last month’sforecast. Next year, the panel expects the economy to grow 5.3%.
MalaysiaOutlook improves
Gerardo MoránEconomist
• The economy continues to recover vigorously from last year’s slumpalbeit gradually moderating the pace. In the second quarter, GDPincreased 8.9% in annual terms, which was below the previousquarter’s 10.1% expansion.
• Consensus Forecast panellists raised their growth forecast by 0.2percentage and now see the economy growing 7.1% this year. Nextyear, the panel expects economic growth to moderate to 5.3%.
• Inflation maintained on its upward trend, in place since the beginningof the year, rising from 1.7% in June to 1.9% in July. Panellists expectthe trend to continue and project inflation to average 2.0% this year,which is unchanged from last month’s projection. Next year, the panelsees inflation at 2.6%.
Note: Year-on-year changes in %.Source: Department of Statistics Malaysia (DSM) and FocusEconomics cal-culations.
6.9
7.7
7.9
8.9
12.9
13.8
21.9
0.0 8.0 16.0 24.0
Governmentconsumption
Total consumption
Private consumption
GDP
Investment
Exports
Imports
%
| 64
Malaysia September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
Inflation | Consumer Price Index
Note: Annual and monthly variation of consumer price index in %.Source: Department of Statistics Malaysia (DSM).
0.1
0.2
0.3
0.1
0.3
0.2 0.2
0.0 0.0 0.0
0.3
0.2
0.3
0.0
0.1
0.2
0.3
0.4
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
%
-4.0
-2.0
0.0
2.0
4.0
%
Monthly (left scale) Annual (right scale)
Industrial Production | variation in %
Note: Year-on-year and annual average variation of industrial production in-dex in %.Source: Department of Statistics Malaysia (DSM) and FocusEconomics cal-culations.
-9.7
-7.0 -6.1
0.9
-0.8
7.5
13.8
4.8
14.2
10.712.3
9.4
-7.9
-16.0
-8.0
0.0
8.0
16.0
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
%
Year-on-year Annual Average
REAL SECTOR | Industrial output growth slows downIn June, industrial output increased 9.4% over the same month last year. Thefigure represented a deceleration compared to May’s 12.3% expansion(previously reported: +12.5% year-on-year) and also came in below marketexpectations, which had industrial output rising 11.4%.
The deceleration was broad-based, as only output in the mining sector improvedin annual terms compared to the previous month (May: -0.2 yoy; June: +1.3 %yoy). In contrast, growth in the all-important manufacturing sector, whichaccounts for nearly two thirds of total industrial production, slowed to a 13.3%expansion (May: +18.5% yoy), while electricity production moderated to a 5.2%increase (May: +11.5% yoy).
Based on monthly figures, in the second quarter, industrial output increased10.8% compared to the same quarter last year, which was down from the 11.1%expansion recorded in the first quarter. Moreover, annual average growth inindustrial production jumped from 2.2% in May to 3.9%.
Consensus Forecast panellists anticipate industrial output to grow 7.2% thisyear, which is 0.1 percentage points above last month’s forecast. Next year,the panel sees industrial production adding 4.7%.
MONETARY SECTOR | Inflation rises amid cut in fuel and sugar subsidiesIn July, consumer prices added 0.3% over the previous month, which came inabove June’s 0.2% increase but was in line with market expectations. Themonthly reading was mostly driven by higher prices for transportation, as thegovernment recently cut fuel subsidies in an attempt to rein in the fiscal deficit,which reached a 20-year high in 2009. Owing to the monthly reading, annualinflation rose for the fifth consecutive month, increasing from 1.7% in June to1.9% in July. Moreover, annual average inflation also increased from 0.1% inJune to 0.4%.
Amid the steady rise in prices, on 8 July the Central Bank raised the overnightpolicy rate from 2.50% to 2.75%, which represented the third interest rate hikethis year, as the economy is showing signs of a strong recovery. Monetarypolicy makers stated that the current monetary policy stance remains supportiveof economic growth.
The Central Bank expects inflation to average between 2.0% and 2.5% thisyear. Consensus Forecast panellists broadly share the Bank’s assessment andanticipate inflation to average 2.0% this year, which is unchanged over lastmonth’s forecast. For next year, participants expect average inflation to inch upto 2.6%.
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts
1 | Real GDP | 1995 - 2014 | % variation Real GDP growth in %
Individual Forecasts 2010 2011ANZ 7.7 6.1Capital Economics 7.5 5.5Citigroup Global Markets Inc. 7.2 5.0Credit Suisse 6.7 5.5Daiwa Capital Markets 7.8 5.6DBS Bank 8.0 5.5Deutsche Bank 6.7 4.5Goldman Sachs 7.3 5.2HSBC 7.1 5.2ING 6.9 6.0JPMorgan 7.7 4.8Kenanga Investment Bank 6.8 5.5Maybank Investment Bank 7.5 6.1Morgan Stanley 6.5 5.0OCBC Bank 6.7 5.4RHB Research Institute 7.3 5.0Standard Chartered Bank 6.2 4.5UBS 7.0 5.0United Overseas Bank 6.1 5.1Summary Minimum 6.1 4.5Maximum 8.0 6.1Median 7.1 5.2Consensus 7.1 5.3History 30 days ago 6.9 5.460 days ago 6.6 5.490 days ago 6.3 5.3Additional Forecasts Central Bank 4.5 - 5.5 -IMF (Aug. 2010) 6.7 5.3ADB (July 2010) 6.8 5.0
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allreal sector data are from the Department of Statistics Malaysia (DSM)and the Central Bank (BNM, Bank Negara Malaysia). See below fordetails. Forecasts based on FocusEconomics Consensus Forecast.
1 GDP, annual variation in %. Source: DSM.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: DSM.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: DSM.6 Gross fixed investment, annual variation in %. Source: DSM.7 Private consumption, change in 2010 and 2011 forecasts during thelast 18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: DSM.10 Unemployment, % of active population. Source: DSM.11 Balance of central government, % of GDP. Source: BNM.12 Industrial production, evolution of 2010 and 2011 forecasts duringthe last 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last18 months.14 Balance of central government, evolution of 2010 and 2011forecasts during the last 18 months.
Monetary Sector | Inflation, Money, Producer Prices and Stock Market
Inflation | annual avg. var. of consumer price index in %
Individual Forecasts 2010 2011ANZ - -Capital Economics 2.5 2.8Citigroup Global Markets Inc. 2.0 3.0Credit Suisse 1.7 2.8Daiwa Capital Markets 2.2 2.4DBS Bank 1.8 2.4Deutsche Bank 1.5 2.0Goldman Sachs 2.8 3.0HSBC 2.0 2.6ING 1.6 2.0JPMorgan 2.2 2.4Kenanga Investment Bank 2.0 2.5Maybank Investment Bank 2.0 2.7Morgan Stanley 1.7 1.9OCBC Bank 2.0 3.3RHB Research Institute 2.0 2.8Standard Chartered Bank 2.0 2.5UBS 1.9 2.2United Overseas Bank 2.3 3.6Summary Minimum 1.5 1.9Maximum 2.8 3.6Median 2.0 2.6Consensus 2.0 2.6History 30 days ago 2.0 2.660 days ago 2.1 2.690 days ago 2.2 2.6Additional Forecasts Central Bank 2.0-2.5 -IMF (Aug. 2010) 2.0 2.1ADB (Mar. 2010) 2.4 3.0
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allreal sector data are from the Department of Statistics Malaysia (DSM)and the Central Bank (BNM, Bank Negara Malaysia). See below fordetails. Forecasts based on FocusEconomics Consensus Forecast.
15 Inflation, annual average variation in consumer price index (CPI) in%. Source: DSM.16 Quarterly inflation, year-on-year variation in consumer price index(CPI) in %. Source: DSM.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Producer price indiex, annual variation in % (eop). 1995-2009.Source: DSM.20 Money, annual variation of M1 in %. 1995-2009. Source: BNM.21 Daily MSCI Price index in USD. From Jan. 2008 until end ofprevious month. Source: MSCI Barra.22 Daily index levels, FTSE Bursa Malaysia KLCI. From Jan. 2008until end of previous month. Source: FTSE Bursa Malaysia.
25 | Int. Rate 2010 | evolution of fcst 26 | Int. Rate 2011 | evolution of fcst
30 | MYR/USD 2011 | evolution of forecasts
Policy Interest Rate and Exchange Rate
Individual Forecasts 2010 2011 2010 2011ANZ 2.75 3.25 3.38 3.20Capital Economics 3.00 3.50 3.10 -Citigroup Global Markets Inc. - - 3.19 3.12Credit Suisse 2.50 3.00 3.18 3.08Daiwa Capital Markets - - 3.08 2.97DBS Bank 3.00 - 3.20 -Deutsche Bank 3.00 - 3.15 3.06Goldman Sachs - - 3.10 3.05HSBC 2.75 3.00 3.05 -ING 2.75 2.75 3.21 3.21JPMorgan 3.00 3.00 3.10 3.05Kenanga Investment Bank 2.75 3.50 3.15 3.07Maybank Investment Bank 2.75 3.25 3.13 3.03Morgan Stanley - - 3.32 3.15OCBC Bank 2.75 3.50 3.20 3.12RHB Research Institute 2.75 3.25 3.15 3.10Standard Chartered Bank 2.75 3.50 3.15 3.00UBS 2.75 3.00 3.30 3.15United Overseas Bank 2.75 - 3.18 -Summary Minimum 2.50 2.75 3.05 2.97Maximum 3.00 3.50 3.38 3.21Median 2.75 3.25 3.15 3.08Consensus 2.80 3.21 3.17 3.09History 30 days ago 2.77 3.08 3.21 3.1160 days ago 2.76 3.09 3.21 3.1290 days ago 2.74 3.06 3.20 3.13
Interest Rate Exchange Rate% MYR per USD
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allreal sector data are from the Department of Statistics Malaysia (DSM)and the Central Bank (BNM, Bank Negara Malaysia). See below fordetails. Forecasts based on FocusEconomics Consensus Forecast.
23 Interest rate, Central Bank Overnight Policy Rate in % (eop).Source: BNM.24 Quarterly interest rate, Central Bank Overnight Policy Rate in %(eop). Source: BNM.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, MYR per USD (eop). Source: BNM.28 Quarterly exchange rate, MYR per USD (eop). Source: BNM.29 Exchange rate, evolution of 2010 forecast during the last 18months.30 Exchange rate, evolution of 2011 forecast during the last 18months.31 Current account balance as % of GDP. Source: DSM.32 Trade balance, imports and exports, in USD bn. Source: BNM.33 International reserves, months of imports. Source: BNM.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: DSM.36 External debt as % of GDP. Source: BNM.
Notes and sources
| 70
Malaysia September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
External Sector | Current Account, Trade and International Reserves
Prime Minister: Najib Tun RazakLast elections: 8 March 2008Next elections: March 2013Central Bank Governor: Zeti Akhtar Aziz
• Scarcity of qualified labour
• Vulnerability to external shocks
• Low productivity
• Competitive labour costs
• Advanced financial sector
• Net exporter of oil and gas
0%
25%
50%
75%
100%
2003 2005 2007 2009
Private Consumption Government ConsumptionInvestment Net exports
25.8 27.4
11.013.2
9.911.7
4.35.3
30.726.9
10.0 7.9
8.2 7.7
0%
25%
50%
75%
100%Agriculture, hunting,forestry
Mining and Quarrying
Manufacturing
Real Estates andBusiness Services
Finance and Insurance
Wholesale and RetailTrade
Other
2004 2009
| 72
Philippines September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
REAL SECTOR | Economy expands faster-than-expected in the secondconsecutive quarterIn the second quarter, gross domestic product (GDP) expanded 7.9% over thesame period the year before, marking the fastest growth rate since the secondquarter of 2007 and the second consecutive quarter with annual growth rateabove 7%. The reading virtually mirrored the robust 7.8% annual expansion(previously reported: +7.3% year-on-year) registered in the first quarter andalso overshot market expectations of a 6.3% annual expansion.
According to the Philippine National Statistical Coordination Board (NSCB),growth was driven by the external demand, as the domestic demand deceler-ated over the previous quarter. In particular, growth in private consumptionslowed from 5.4% in the first quarter to 4.9%. Furthermore, investment slowedto 11.0%, well below the strong 21.9% surge recorded in the first quarter.
In the external sector, exports accelerated strongly to grow 27.4% (Q1: 22.4%yoy), while imports also improved, albeit less sharply (Q1: +22.4% yoy; Q2:+23.9% yoy). As a result, the net contribution from the external sector to over-all economic growth improved from a 0.1 percentage-point detraction in thefirst quarter to a 1.6 percentage-point contribution in the second.
At the sector level, the second quarter reading was driven by the 15.8% ex-pansion recorded in industry, as the El Niño phenomenon negatively affectedthe agricultural sector, which contracted 3.0% annually (Q1: -2.7% yoy). Sea-sonally adjusted figures corroborate the strong growth suggested by the an-nual data, as the economy grew 1.3% over the first three months of the year.Accordingly, the National Economic Development Authority revised thegovernment’s official 2010 GDP growth target from 5.0% to 6.0% to 5.9% to6.9%.
PhilippinesOutlook improves
Marcos Felipe CasarinEconomist
• The government raised the official GDP forecast to 5.9 - 6.9% (from aprevious 5.0 - 6.0% estimate) after the economy posted a 7.9% ex-pansion in the second quarter. The reading, which marked the fast-est pace since 2007, came in slightly above the previous quarter’srobust 7.8% expansion and was driven by strong investment and abuoyant external sector.
• Consensus Forecast panellists accordingly raised their 2010 GDPforecasts for a third consecutive month and now expect economicgrowth to reach 5.6%. In 2011, growth is expected to moderate to4.8%.
• In July, inflation remained unchanged at June’s 3.9%. Panellists low-ered their forecasts for a third consecutive month and now expectconsumer prices to increase 4.4% in 2010. In 2011, the panel antici-pates inflation to moderate slightly to 4.2%.
Note: Year-on-year changes in %.Source: National Statistical Coordination Board (NSCB) and FocusEconomicscalculations.
4.9
5.6
7.9
11.0
23.9
27.4
0.0 7.5 15.0 22.5 30.0
PrivateConsumption
GovernmentConsumption
GDP
Investment
Imports
Exports
%
| 73
Philippines September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
The Consensus Forecast panel also raised their forecasts and expects eco-nomic growth to reach 5.6% in 2010, which is 0.2 percentage points above lastmonth’s Consensus Forecast. The panel expects the economy to grow 4.8%next year.
MONETARY SECTOR | Inflation remains unchanged in JulyIn July, consumer prices added 0.24% over the previous month, which mir-rored June’s reading of a 0.24% rise (previously reported: +0.18% month-on-month). The monthly price rise was broad-based, as prices rose in all the sixmain categories surveyed by that compose the index. In particular, the 0.43%mom price increase for services was the main driver of July’s reading.
Despite the monthly increase, annual headline inflation remained unchangedat 3.9% in July, undershooting market expectations of a 4.1% rate. Meanwhile,core inflation, which excludes more volatile price categories such as oil andfresh food, increased 0.25% over the previous month. As a result, annual coreinflation inched up to 3.9% (June: +3.8% year-on-year).
Annual average inflation, which is the reference rate for the Central Bank’spolicy making, accelerated further to 3.2% (June: +2.9%), although still re-mains well below the target of 4.5% with a ± 1.0 percentage-point tolerancemargin set for this year. Therefore, owing to the benign inflation outlook and tothe increasing productive capacity of the economy, the monetary board de-cided to keep interest rates unchanged at its most recent meeting on 26 Au-gust. Furthermore, monetary authorities also announced the new inflation tar-get for the 2012-14 period at 4.0% with a ± 1.0 percentage-point tolerancemargin.
Consensus Forecast panellists anticipate annual inflation to average 4.4% thisyear, which is down 0.1 percentage points from last month’s forecast. For 2011,the panel expects consumer prices to moderate to 4.2%.
Inflation | Consumer Price Index
Note: Annual and monthly variation of consumer price index in %.Source: National Statistics Office (NSO).
0.57
0.31
0.12
0.56
0.43
0.24
-0.18
0.24 0.240.24
0.55
0.19
0.550.62
-0.3
0.0
0.3
0.6
0.9
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Real GDP growth in % 2 | Real GDP | Q1 07-Q4 11 | % variation
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts
General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the National Statistical Coordination Board (NSCB),the National Statistics Office (NSO) and the Central Bank of Philippines(BSP, Bangko Sentral ng Pilipinas). See below for details. Forecasts basedon FocusEconomics Consensus Forecast.
1 GDP, annual variation in %. Source: NSCB.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: NSCB.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: NSCB.6 Gross fixed investment, annual variation in %. Source: NSCB.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: NSO.10 Unemployment, % of active population. Source: NSO.11 Balance of national government, % of GDP. Source: BSP.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Balance national government, evolution of 2010 and 2011 forecastsduring the last 18 months.
Notes and sources
1 | Real GDP | 1995 - 2014 | % variation
Individual Forecasts 2010 2011ANZ 7.4 6.6Banco de Oro 5.0 5.5BPI AMTG 5.0 -Capital Economics 5.5 5.0Citigroup Global Markets Inc. 5.8 4.9Credit Suisse 5.7 3.9DBS Bank 6.2 5.0Deutsche Bank 4.5 5.0Goldman Sachs 4.2 5.0HSBC 5.0 4.6ING 6.1 4.2JPMorgan 6.8 4.3Metropolitan Bank and Trust 5.9 -Philippine Equity Partners 5.0 4.0Standard Chartered Bank 5.9 5.0UBS 5.5 4.6United Overseas Bank - -SummaryMinimum 4.2 3.9Maximum 7.4 6.6Median 5.6 5.0Consensus 5.6 4.8History30 days ago 5.4 4.760 days ago 5.1 4.590 days ago 3.9 4.4Additional ForecastsADB (July 2010) 5.0 4.6IMF (July 2010) 6.0 4.0
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the National Statistics Office (NSO) and theCentral Bank of Philippines (BSP, Bangko Sentral ng Pilipinas). See belowfor details. Forecasts based on FocusEconomics Consensus Forecast.
15 Inflation, annual average variation in consumer price index (CPI) in%. Source: NSO.16 Quarterly inflation, average variation in consumer price index (CPI) in%. Source: NSO.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Core and producer price indices, annual variation in % (eop). 2004-2009. Source: NSO.20 Money, annual variation of M1 in %. 1995-2009. Source: BSP.21 Daily MSCI Price Index in USD. Jan. 2008 until end of previousmonth. Source: MSCI Barra.22 Daily index levels, Phisix Composite Index. Jan. 2008 until end ofprevious month. Source: The Philippine Stock and Exchange.
Notes and sources
Individual Forecasts 2010 2011ANZ - -Banco de Oro 4.0 3.8BPI AMTG 4.8 -Capital Economics 4.5 3.0Citigroup Global Markets Inc. 3.8 3.4Credit Suisse 4.4 4.4DBS Bank 4.0 4.4Deutsche Bank 4.4 5.0Goldman Sachs 4.7 4.2HSBC 4.7 4.6ING 4.5 4.8JPMorgan 5.3 4.9Metropolitan Bank and Trust 4.1 -Philippine Equity Partners 4.3 4.5Standard Chartered Bank 3.8 3.3UBS 4.1 4.2United Overseas Bank - -SummaryMinimum 3.8 3.0Maximum 5.3 5.0Median 4.4 4.4Consensus 4.4 4.2History30 days ago 4.5 4.260 days ago 4.6 4.590 days ago 4.7 4.6Additional ForecastsCentral Bank (June 2010) 4.7 3.0 - 5.0IMF (Apr. 2010) 5.0 4.0ADB (Mar. 2010) 4.7 4.5
| 78
Philippines September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
2
4
6
8
Q1 07 Q1 08 Q1 09 Q1 10 Q1 110
4
8
12
16
20
1995 2000 2005 2010
20
30
40
50
60
1990 1995 2000 2005 201040
42
44
46
48
50
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
3
4
5
6
7
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
3
4
5
6
7
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
30
40
50
60
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
30
40
50
60
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
Monetary Sector | Interest Rate and Exchange Rate
29 | PHP/USD 2010 | evolution of fcst
27 | Exchange Rate | PHP per USD 28 | Exchange Rate | PHP per USD
25 | Int. Rate 2010 | evolution of fcst 26 | Int. Rate 2011 | evolution of fcst
30 | PHP/USD 2011 | evolution of forecasts
Interest Rate and Exchange Rate
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the National Statistics Office(NSO) and the Central Bank of Philippines (BSP, Bangko Sentral ngPilipinas). See below for details. Forecasts based on FocusEconomicsConsensus Forecast.
23 Treasury Bill 91-days interest rate in % (eop). Source: BSP.24 Quarterly Treasury Bill 91-days interest rate in % (eop). Source: BSP.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, PHP per USD (eop). Source: BSP.28 Quarterly exchange rate, PHP per USD (eop). Source: BSP.29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP. Source: NSO.32 Trade balance, imports and exports, in USD bn. Source: NSO.33 International reserves, months of imports. Source: BSP.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: NSO.36 External debt as % GDP. Source: BSP.
Notes and sources
Individual Forecasts 2010 2011 2010 2011ANZ 4.50 - 48.3 46.9Banco de Oro 4.00 4.00 44.5 43.5BPI AMTG 5.00 - 43.2 -Capital Economics 4.50 5.25 43.0 -Citigroup Global Markets Inc. 6.00 6.50 43.5 43.3Credit Suisse - - 45.0 43.0DBS Bank 4.50 - 45.5 -Deutsche Bank 4.80 5.20 45.0 43.5Goldman Sachs - - 44.0 42.0HSBC 4.25 5.00 44.0 41.5ING 4.00 4.50 47.3 42.8JPMorgan 4.25 5.00 43.8 42.3Metropolitan Bank and Trust 4.25 - 44.5 -Philippine Equity Partners 4.50 5.00 45.5 46.0Standard Chartered Bank 4.25 5.25 44.5 41.5UBS 4.50 5.50 46.0 44.0United Overseas Bank 4.50 - 45.4 -SummaryMinimum 4.00 4.00 43.0 41.5Maximum 6.00 6.50 48.3 46.9Median 4.50 5.10 44.5 43.1Consensus 4.52 5.12 44.9 43.4History30 days ago 4.67 5.26 44.9 43.560 days ago 4.85 5.42 44.6 43.490 days ago 4.96 5.43 44.3 43.3
Interest Rate Exchange Rate% PHP per USD
| 79
Philippines September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
2
4
6
8
10
Apr Jul Oct Jan Apr Jul
20102011
-8
-4
0
4
8
1995 2000 2005 2010
PhilippinesAsia (ex Japan)
-60
0
60
120
1995 2000 2005 2010
Trade Balance ExportsImports
-30
-15
0
15
30
1995 2000 2005 2010
PhilippinesAsia (ex Japan)
0
5
10
15
20
1995 2000 2005 2010
PhilippinesAsia (ex Japan)
0
20
40
60
80
1995 2000 2005 2010
PhilippinesAsia (ex Japan)
External Sector | Current Account, Trade and International Reserves
34 | Current Account | evol. of fcst
33 | Int. Reserves | months of imports
36 | External Debt | % of GDP 35 | Exports | annual variation in %
32 | Trade Balance | USD billion 31 | Current Account | % of GDP
President: Benigno AquinoLast elections: 10 May 2010Next elections: May 2014Central Bank Governor: Amando M. Tetangco Jr.
| 81
Singapore September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
REAL SECTOR | Government maintains full-year growth forecasts de-spite downwards revisionAccording to revised figures released by the Ministry of Trade and Industry(MTI) on 11 August, gross domestic product (GDP) soared 18.8% over thesame quarter the previous year, which came in slightly below the 19.3% ex-pansion first reported on 14 July. In seasonally adjusted annualised terms, thesecond quarter reading is equivalent to a 24.0% jump.
Based on the expenditure approach, the strong second quarter figure reflectedresilient external demand, as growth in exports rose faster than imports. Incontrast, domestic demand decelerated to a 9.7% annual expansion, com-pared to the first quarter’s 11.4% rise, amid an 1.2% drop in investment (Q1:+10.6% year-on-year). On the other hand, private consumption improved froma 5.9% expansion in the first quarter to a 6.7% rise in the second. In addition,exports of goods and services rose 23.3% (Q1: +20.0% yoy) and imports ex-panded 21.1% annually, up from a 16.9% rise in the first quarter. As a result,the net contribution from the external sector to overall economic growth rosefrom 14.7 percentage points in the first to 17.3 in the second quarter.
The downward adjustment reflected a less buoyant manufacturing sector thanpreviously estimated, which was the result of a 50% monthly drop in the vola-tile pharmaceutical production in June. That said, the main driver of the sec-ond quarter reading was the industrial sector, as manufacturing soared 44.5%over the same period last year (previously reported: +45.5% yoy). Construc-tion growth was also revised downwards but remained strong, acceleratingfrom a 9.7% expansion in the first quarter to an 11.5% rise in the second (pre-viously reported: +13.5% yoy). In addition, the all-important services sector –
SingaporeOutlook improves
Marcos Felipe CasarinEconomist
• Revised second quarter data confirm the strength of the country’seconomic recovery, as GDP expanded 18.8% over the same periodlast year. However, going forward, growth is likely to slow as indus-trial production rose 9.9% year-on-year, less than half of the previ-ous month’s expansion.
• Consensus Forecast participants raised their GDP forecasts for thesixth consecutive month and now expect the economy to grow 12.8%this year, which is up 0.8 percentage points from last month’s esti-mate. In 2011, growth is likely to moderate to 5.2%.
• Inflation rose from 2.7% to 3.1% in July due to a sharp monthly pricespike. Nevertheless, Consensus Forecast panellists maintained theirprojections and expect consumer prices to average 2.7% this year.In 2011, the panel anticipates inflation to remain virtually unchangedat 2.6%.
Note: Year-on-year changes in %.Source: Ministry of Trade and Industry (MTI) and FocusEconomics calcula-tions.
| 82
Singapore September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
which accounts for two thirds of GDP – remained virtually unchanged postingan 11.2% annual expansion (Q1: +11.4% yoy).
Despite the downward revision, the government maintained its official forecastfor 2010 GDP growth at 13.0% – 15.0%. If attained, the figure would representthe fastest rate of expansion in more than two decades. Accordingly, Consen-sus Forecast panellists revised their forecasts upwards and now expect theeconomy to grow 12.8% this year. For 2011, the panel anticipates GDP toexpand 5.2%.
MONETARY SECTOR | Inflation soars in JulyIn July, consumer prices rose 1.3% over the previous month, which contrastedthe 1.0% decrease registered in June. The monthly price fall was broad-based,as all eight categories registered higher prices compared to the previous month.In particular, higher prices for clothing and footwear (+3.2% month-on-month),transport (+1.7% mom) as well as for housing (+2.6% mom) were the maindrivers behind the July figure.
As a result of the monthly price increase, annual inflation jumped from 2.7% inJune to 3.1%, which broadly matched market expectations. After falling unex-pectedly in June, inflation is now back to the upward trend, which has been inplace since the first quarter and is partially the result of the exuberant growthrecorded during the first half of the year. In July, the annual average inflationrose for the fourth consecutive month to 1.1%, from 0.9% in June.
The Monetary Authority of Singapore (MAS) conducts its monetary policythrough the management of the exchange rate, instead of using interest rates.Monetary authorities last tightened its policy stance on 14 April, when theyannounced a revaluation of the currency, while announcing they would allow agradual appreciation of the Singaporean dollar.
Monetary authorities expect inflation to range between 2.5% and 3.5% thisyear. Consensus Forecast panellists anticipate inflation to average 2.7% thisyear, which is unchanged from last month’s estimate. For 2011, the panel ex-pects average inflation to inch down to 2.6%.
1.2
0.4
-0.1
0.60.4
-0.5
0.4
0.1
0.9
0.6
-1.0
1.3
0.7
-2.0
-1.0
0.0
1.0
2.0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
%
-1.0
0.0
1.0
2.0
3.0
4.0
%
Monthly (left scale)
Annual (right scale)
Inflation | Consumer Price Index
Note: Annual and monthly variation of consumer price index in %.Source: Statistics Singapore (Singstat).
Real GDP growth in % 2 | Real GDP | Q1 07-Q4 11 | % variation
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts
General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from Statistics Singapore (Singstat), the Ministry ofManpower, the Ministry of Trade and Industry (MTI) and the InternationalMonetary Fund (IMF). See below for details. Forecasts based onFocusEconomics Consensus Forecast.
1 GDP, annual variation in %. Source: MTI and Singstat.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: MTI and Singstat.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: MTI and Singstat.6 Gross fixed investment, annual variation in %. Source: MTI and Singstat.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: Singstat.10 Unemployment, % of active population. Source: Ministry of Manpower.11 Balance of general government, % of GDP. Source: IMF.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Balance of general government, evolution of 2010 and 2011 forecastsduring the last 18 months.
Notes and sources
1 | Real GDP | 1995 - 2014 | % variation
Individual Forecasts 2010 2011ANZ 10.4 4.3Capital Economics 14.0 6.0Citigroup Global Markets Inc. 15.5 4.6Credit Suisse 10.0 5.0Daiwa Capital Markets 16.0 6.5DBS Bank 15.0 4.5Deutsche Bank 17.0 6.0Goldman Sachs 16.5 5.2HSBC 9.7 5.5ING 15.3 5.8JPMorgan 10.5 4.3Morgan Stanley 9.0 6.0OCBC Bank 14.0 5.5OSK-DMG Group - -RBC Capital Markets 11.0 5.0Standard Chartered Bank 11.0 4.0UBS 14.5 5.0United Overseas Bank 9.0 5.0SummaryMinimum 9.0 4.0Maximum 17.0 6.5Median 14.0 5.0Consensus 12.8 5.2History30 days ago 12.3 5.260 days ago 8.8 5.390 days ago 7.8 5.3Additional ForecastsMTI (July 2010) 13.0 - 15.0 -IMF (July 2010) 9.9 4.9ADB (July 2010) 12.5 5.0
Monetary Sector | Inflation, Money, Producer Prices and Stock Market
19 | DSPI | annual variation in %
15 | Inflation | 1995 - 2014 | in % Inflation | annual avg. var. of consumer price index in %
17 | Inflation 2010 | evolution of fcst
21 | 10-year Bond Yield | in % 22 | Stock Market | Straits Times Index
20 | Money | % variation
18 | Inflation 2011 | evolution of fcst
16 | Inflation | Q1 07-Q4 11 | in %
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from Statistics Singapore (Singstat) and theMonetary Authority of Singapore (MAS). See below for details. Forecastsbased on FocusEconomics Consensus Forecast.
15 Inflation, annual variation in consumer price index (CPI) in % (eop).Source: Singstat.16 Quarterly inflation, year-on-year variation in consumer price index(CPI) in % (eop). Source: Singstat.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Domestic supply price index, annual variation in % (eop). 2004-2009.Source: Singstat20 Money, annual variation of M1 in %. 1995-2009. Source: MAS.21 10-year bond yield in %. Jan. 2005 until the end of previous month.Source: MAS.22 Daily index levels, Straits Times Index. Source: Singapore ExchangeLimited. Jan. 2008 until end of previous month.
Notes and sources
Individual Forecasts 2010 2011ANZ - -Capital Economics 3.0 2.5Citigroup Global Markets Inc. 3.3 3.2Credit Suisse 3.0 2.7Daiwa Capital Markets 1.9 2.0DBS Bank 3.0 2.7Deutsche Bank 2.3 1.5Goldman Sachs 2.5 2.8HSBC 2.4 1.9ING 2.5 2.0JPMorgan 3.2 3.8Morgan Stanley 2.0 2.0OCBC Bank 3.1 2.6OSK-DMG Group 2.5 2.8RBC Capital Markets 3.0 3.0Standard Chartered Bank 2.9 2.5UBS 2.8 1.9United Overseas Bank 3.0 3.5SummaryMinimum 1.9 1.5Maximum 3.3 3.8Median 2.9 2.6Consensus 2.7 2.6History30 days ago 2.7 2.660 days ago 2.7 2.790 days ago 2.4 2.5Additional ForecastsADB (Mar. 2010) 2.3 2.0IMF (July 2010) 2.5 2.1
| 87
Singapore September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
0
1
2
3
Q1 07 Q1 08 Q1 09 Q1 10 Q1 110
2
4
6
8
1995 2000 2005 2010
1.3
1.5
1.8
2.0
1995 2000 2005 20101.3
1.4
1.5
1.6
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
0
1
2
3
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
0
1
2
3
4
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
1.2
1.4
1.6
1.8
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
1.2
1.4
1.6
1.8
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
Monetary Sector | Interest Rate and Exchange Rate
29 | SGD/USD 2010 | evolution of fcst
27 | Exchange Rate | SGD per USD 28 | Exchange Rate | SGD per USD
25 | Int. Rate 2010 | evolution of fcst 26 | Int. Rate 2011 | evolution of fcst
30 | SGD/USD 2011 | evolution of forecasts
Interest Rate and Exchange Rate
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from Statistics Singapore (Singstat),the Monetary Authority of Singapore (MAS) and the Ministry of Trade andIndustry (MTI). See below for details. Forecasts based on FocusEconomicsConsensus Forecast.
23 Interbank 3-month interest rate in % (eop). Source: MAS.24 Quarterly Interbank 3-month interest rate in % (eop). Source: MAS.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, SGD per USD (eop). Source: MAS.28 Quarterly exchange rate, SGD per USD (eop). Source: MAS.29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP. Source: MTI.32 Trade balance, imports and exports, in USD bn. Source: MTI andSingstat.33 International reserves, months of imports. Source: MAS.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: MTI and Singstat.36 International reserves in USD bn., evolution of 2010 and 2011forecasts during the last 18 months.
Notes and sources
Individual Forecasts 2010 2011 2010 2011ANZ 0.55 - 1.45 1.37Capital Economics - - 1.35 1.36Citigroup Global Markets Inc. 0.50 0.70 1.35 1.32Credit Suisse 0.55 1.50 1.35 1.30Daiwa Capital Markets - - 1.35 1.31DBS Bank 0.41 - 1.37 -Deutsche Bank 0.50 1.50 1.33 1.27Goldman Sachs 0.70 0.90 1.33 1.31HSBC 0.65 1.10 1.39 1.34ING 0.50 1.30 1.39 1.39JPMorgan - - 1.36 1.34Morgan Stanley 1.30 2.30 1.38 1.32OCBC Bank 0.75 1.25 1.35 1.34OSK-DMG Group 0.85 2.40 1.33 1.38RBC Capital Markets 1.10 3.00 1.36 1.32Standard Chartered Bank 0.50 - 1.35 1.28UBS 0.80 1.25 1.39 1.35United Overseas Bank 1.10 - 1.36 -SummaryMinimum 0.41 0.70 1.33 1.27Maximum 1.30 3.00 1.45 1.39Median 0.65 1.30 1.36 1.33Consensus 0.72 1.56 1.36 1.33History30 days ago 0.72 1.64 1.36 1.3360 days ago 0.78 1.69 1.36 1.3490 days ago 0.97 1.91 1.35 1.34
Interest Rate Exchange Rate% SGD per USD
| 88
Singapore September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
150
175
200
225
250
Apr Jul Oct Jan Apr Jul
20102011
-10
0
10
20
30
1995 2000 2005 2010
SingaporeAsia (ex Japan)
0
200
400
600
1995 2000 2005 2010
Trade Balance ExportsImports
-30
-15
0
15
30
1995 2000 2005 2010
SingaporeAsia (ex Japan)
5
10
15
20
1995 2000 2005 2010
SingaporeAsia (ex Japan)
20
25
30
35
40
Apr Jul Oct Jan Apr Jul
20102011
External Sector | Current Account, Trade and International Reserves
34 | Current Account | evol. of fcst
33 | Int. Reserves | months of imports
36 | Int. Reserves (USD bn) | evol. of fcst 35 | Exports | annual variation in %
32 | Trade Balance | USD billion 31 | Current Account | % of GDP
REAL SECTOR | Government upgrades growth forecast as economycontinues to surgeIn the second quarter, gross domestic product surged 12.5% over the sameperiod last year. The reading came in below the 13.7% expansion recorded inthe first quarter (previously reported: +13.3% year-on-year) but well exceededmarket expectations, which had anticipated the economy would expand 10.5%.That said, the result continued to be aided by a favourable base effect, as theeconomy had plunged 6.9% in the second quarter of 2009.
The second quarter figure was mainly fuelled by strong growth in the domesticsector. Private consumption accelerated from a 3.1% increase in the first quarterto a 4.4% expansion. Furthermore, gross fixed capital formation soared 30.8%annually (Q1: +29.3% yoy). On the external side of the economy, both exportsand imports of goods and services expanded at the same 34.3% annual rate.As a result, the net contribution from the external sector to overall growth was+4.5 percentage points (Q1: +1.8 percentage points).
A quarter-on-quarter comparison corroborates the strong growth suggested bythe annual figures, as the economy increased 1.8% over the previous quarterin seasonally adjusted terms. Owing to the strong economic performance inthe first half of the year, the government recently revised its growth forecast forthe whole year to 8.2% (previously expected: +6.1%).
Consensus Forecast panellists expect the economy to expand 7.3% this year,which is up 0.4 percentage points from last month’s forecast. For 2011, thepanel anticipates economic growth to moderate to 4.3%.
TaiwanOutlook improves
Ángel TalaveraSenior Economist
• Growth remained strong in the second quarter, as the economy ex-panded a faster-than-expected 12.5% over the same period last year.Going forward, growth is likely to cool a bit, but will remain robust.
• Consensus Forecast panellists raised their growth outlook by 0.4percentage points over last month and anticipate the economy toexpand 7.3% this year. For 2011, the panel expects economic growthto moderate to 4.3%.
• Inflation inched up from 1.2% in June to 1.3% in July. ConsensusForecast participants expect inflation to average 1.3% this year, whichis unchanged over last month’s forecast. For next year, the panelsees average inflation rising to 1.6%.
Note: Year-on-year changes in %.Source: Directorate-General of Budget, Accounting and Statistics andFocusEconomics calculations.
3.9
4.4
12.5
30.8
34.3
34.3
1.7
0.0 10.0 20.0 30.0 40.0
Government consumption
Total consumption
Private consumption
GDP
Investment
Exports
Imports
%
| 91
Taiwan September 2010FOCUSECONOMICS
FocusEconomics Consensus Forecast Asia
REAL SECTOR | Industrial production continues to ease but remainsstrongIn July, industrial production expanded 20.7% over the same month last year.The figure came in below the 24.7% expansion recorded in June (previouslyreported: +24.3% year-on-year) but was broadly in line with market expectations,which had anticipated industrial output would grow 21.0%.
The monthly slowdown was driven by slower growth in the manufacturing sector,which expanded 22.2% (June: +26.5% yoy). Mining and quarrying slowed froma 10.5% expansion in June to 8.4% growth. Finally, electricity, gas and watersupply added 5.2% (June: +1.3% yoy).
A month-on-month comparison corroborates the deceleration suggested byannual figures, as industrial production declined 0.64% over the previous monthin seasonally adjusted terms, which contrasted the 0.16% rise recorded in June.
The trend in industrial production continues to point up. As a result of the monthlyreading, annual average growth in industrial production jumped from 22.1% inJune to 25.0%. Consensus Forecast panellists anticipate industrial productionto grow 19.7% this year.
MONETARY SECTOR | Inflation remains subduedIn July, consumer prices added 0.31% over the previous month. The readingwas broadly unchanged from the 0.34% price rise recorded in June but overshotmarket expectations, which had anticipated prices would add only 0.10%. Higherprices for food (+0.84% month-on-month) was the main driver behind themonthly price rise.
As a result of the monthly reading, annual inflation inched up from 1.2% inJune to 1.3%. Meanwhile, the core inflation index, which excludes volatilecategories such as fresh food and energy, added a more subdued 0.10% overthe previous month. As a result, annual core inflation inched up from 0.6% inJune to 0.7%. Finally, annual average inflation stepped up from minus 0.1% inJune to 0.2%, thus returning to positive territory for the first time in a year.
The government expects inflation to average 1.4% this year. ConsensusForecast panellists share this assessment and anticipate average inflation torise to 1.3% this year, which is unchanged from last month’s forecast. For2011, the panel expects average inflation to rise further to 1.6%.
Inflation | Consumer Price Index
Note: Monthly and annual variation of consumer price index in %.Source: Directorate-General of Budget, Accounting and Statistics andFocusEconomics calculations.
0.19
1.80
-0.66
0.41
-0.76
-0.46
0.10
0.53
-0.95
0.84
-0.16
0.34 0.31
-2.0
-1.0
0.0
1.0
2.0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
%
-4.0
-2.0
0.0
2.0
4.0
%
Monthly (left scale) Annual (right scale)
Industrial Production | variation in %
Note: Year-on-year and annual average variation of industrial productionindex in %.Source: Directorate-General of Budget, Accounting & Statistics (DGBAS)and FocusEconomics calculations.
-7.2 -9.0
2.87.4
32.0
47.8
70.1
35.539.5
32.0 31.024.7
20.7
-25.0
0.0
25.0
50.0
75.0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Real GDP growth in % 2 | Real GDP | Q1 07-Q4 11 | % variation
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts
General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the Directorate-General of Budget, Accounting andStatistics (DGBAS) and National Statistics. See below for details. Fore-casts based on FocusEconomics Consensus Forecast.
1 GDP, annual variation in %. Source: DGBAS2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: DGBAS3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: DGBAS6 Gross fixed investment, annual variation in %. Source: DGBAS7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: National Statistics.10 Unemployment, % of active population. Source: National Statistics.11 Balance of central and local government, % of GDP. Source: NationalStatistics.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Balance of central and local government, evolution of 2010 and 2011forecasts during the last 18 months.
Notes and sources
1 | Real GDP | 1995 - 2014 | % variation
Individual Forecasts 2010 2011ANZ 6.2 5.1Capital Economics 8.5 3.5Chung-Hua Institute 6.9 4.8Citigroup Global Markets Inc. 8.7 4.2Credit Suisse 6.8 4.0Daiwa Capital Markets 9.8 4.9DBS Bank 9.5 3.5Deutsche Bank 6.5 4.2Goldman Sachs 7.2 4.8HSBC 7.3 4.9ING 7.7 5.5JPMorgan 9.2 4.8Morgan Stanley 4.5 3.6Polaris Securities 5.7 3.9Standard Chartered Bank 5.9 4.1UBS 5.7 3.2United Overseas Bank 7.5 4.6SummaryMinimum 4.5 3.2Maximum 9.8 5.5Median 7.2 4.2Consensus 7.3 4.3History30 days ago 6.9 4.360 days ago 6.6 4.290 days ago 6.0 4.2Additional ForecastsDGBAS (Aug. 2010) 8.2 -IMF (July 2010) 7.7 4.3ADB (July 2010) 5.9 4.0
Monetary Sector | Inflation, Money, Wholesale Prices and Stock Market
19 | Core and Wholesale Prices | % var.
15 | Inflation | 1995 - 2014 | in % Inflation | annual avg. var. of consumer price index in %
17 | Inflation 2010 | evolution of fcst
21 | MSCI Price Index 22 | Stock Market | TAIEX
20 | Money | % variation
18 | Inflation 2011 | evolution of fcst
16 | Inflation | Q1 07-Q4 11 | in %
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the Directorate-General of Budget,Accounting and Statistics (DGBAS) and the Central Bank of the Republicof China. See below for details. Forecasts based on FocusEconomics Con-sensus Forecast.
15 Inflation, annual average variation in consumer price index (CPI) in%. Source: DGBAS.16 Quarterly inflation, average variation in consumer price index (CPI) in%. Source: DGBAS.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Core and wholesale price indices, annual variation in % (eop). 1995-2009. Source: DGBAS.20 Money, annual variation of M1 in %. 1995-2009. Source: CentralBank.21 Daily MSCI index in USD. From Jan. 2008 until end of previousmonth. Source: MSCI Barra.22 Daily index levels, TAIEX. Jan. 2008 until end of previous month.Source: Taiwan Stock Exchange.
Notes and sources
Individual Forecasts 2010 2011ANZ - -Capital Economics 1.5 1.0Chung-Hua Institute 1.5 1.5Citigroup Global Markets Inc. 1.0 1.5Credit Suisse 1.9 2.0Daiwa Capital Markets 1.9 1.6DBS Bank 0.9 1.4Deutsche Bank 1.1 1.9Goldman Sachs 1.6 1.9HSBC 1.1 2.2ING 1.5 1.8JPMorgan 1.0 1.8Morgan Stanley 1.0 2.0Polaris Securities 1.2 0.4Standard Chartered Bank 1.3 1.2UBS 0.9 1.1United Overseas Bank 1.5 2.0SummaryMinimum 0.9 0.4Maximum 1.9 2.2Median 1.2 1.7Consensus 1.3 1.6History30 days ago 1.3 1.660 days ago 1.3 1.690 days ago 1.3 1.6Additional ForecastsIMF (Apr. 2010) 1.5 1.5ADB (Mar. 2010) 1.5 1.6
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0
2
4
6
1995 2000 2005 20101
2
3
4
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
0
1
2
3
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
0
1
2
3
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
25
30
35
40
1995 2000 2005 201029
31
33
35
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
25
30
35
40
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
24
28
32
36
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
Monetary Sector | Interest Rate and Exchange Rate
29 | TWD/USD 2010 | evolution of fcst
27 | Exchange Rate | TWD per USD 28 | Exchange Rate | TWD per USD
25 | Int. Rate 2010 | evolution of fcst 26 | Int. Rate 2011 | evolution of fcst
30 | TWD/USD 2011 | evolution of forecasts
Policy Interest Rate and Exchange Rate
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the Directorate-General ofBudget, Accounting and Statistics (DGBAS) and the Central Bank of theRepublic of China. See below for details. Forecasts based onFocusEconomics Consensus Forecast.
23 Interest rate, Central Bank Overnight Borrowing Rate in % (eop).Source: Central Bank.24 Quarterly interest rate, Central Bank Overnight Borrowing Rate in %(eop). Source: Central Bank.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, TWD per USD (eop). Source: Central Bank.28 Quarterly exchange rate, TWD per USD (eop). Source: Central Bank.29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP. Source: Central Bank.32 Trade balance, imports and exports, in USD bn. Source: CentralBank.33 International reserves, months of imports. Source: Central Bank.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: Central Bank.36 External debt as % GDP. Source: Central Bank.
Notes and sources
Individual Forecasts 2010 2011 2010 2011ANZ 1.63 - 33.3 32.2Capital Economics 1.50 1.75 30.5 -Chung-Hua Institute - - 30.9 30.6Citigroup Global Markets Inc. - - 31.8 30.5Credit Suisse - - 31.2 30.5Daiwa Capital Markets 1.75 2.00 31.3 30.6DBS Bank 1.75 - 31.7 -Deutsche Bank 1.63 - 31.5 30.5Goldman Sachs - - 31.0 30.0HSBC 1.68 2.13 31.0 -ING 1.25 1.75 32.0 32.0JPMorgan 1.88 2.38 31.0 31.0Morgan Stanley - - - -Polaris Securities - - - -Standard Chartered Bank 1.63 2.13 31.0 30.0UBS 1.63 2.00 32.0 31.0United Overseas Bank 1.75 - 31.8 -SummaryMinimum 1.25 1.75 30.5 30.0Maximum 1.88 2.38 33.3 32.2Median 1.63 2.00 31.3 30.6Consensus 1.64 2.02 31.5 30.8History30 days ago 1.64 2.00 31.6 30.760 days ago 1.63 2.13 31.1 30.390 days ago 1.55 2.00 30.8 29.9
Interest Rate Exchange Rate% TWD per USD
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-10
0
10
20
1995 2000 2005 2010
TaiwanAsia (ex Japan)
0
100
200
300
400
1995 2000 2005 2010
Trade Balance ExportsImports
-30
-15
0
15
30
1995 2000 2005 2010
TaiwanAsia (ex Japan)
5
10
15
20
25
1995 2000 2005 2010
TaiwanAsia (ex Japan)
0
20
40
60
1995 2000 2005 2010
TaiwanAsia (ex Japan)
20
25
30
35
Apr Jul Oct Jan Apr Jul
20102011
External Sector | Current Account, Trade and International Reserves
34 | Current Account | evol. of fcst
33 | Int. Reserves | months of imports
36 | External Debt | % of GDP 35 | Exports | annual variation in %
32 | Trade Balance | USD billion 31 | Current Account | % of GDP
REAL SECTOR | Economic activity expands more than expectedIn the second quarter, gross domestic product expanded 9.1% over the sameperiod last year. The reading came in below the 12.0% expansion registeredin the previous quarter, but overshot market expectations, which had antici-pated the economy would rise 8.0%. In addition, the reading was aided by afavourable base of comparison, as the economy had contracted 4.9% in thesecond quarter 2009.
The slowdown in the second quarter was the result of a weaker expansion ofthe domestic demand, which was adversely affected by violent anti-govern-ment protests. In contrast, the net contribution from the external sector im-proved. On the domestic side, private consumption accelerated and expanded6.5% (Q1: +4.0% year-on-year) while government consumption increasedan annual 6.3%, down from the 7.3% expansion seen in the first quarter.Gross fixed capital formation decelerated somewhat and grew a 12.2% an-nually (Q1: +12.9 year-on-year). Finally, the domestic sector was adverselyaffected by a marked downward shift in inventories.
In the external sector, exports accelerated compared to with previous quarter,while imports slowed somewhat. Exports expanded 22.3% annually (Q1:+16.2 yoy), while imports grew an annual 23.6% in the second quarter, wellbelow the 31.5% expansion in the January-March period. As a result, the netcontribution from the external sector to overall growth swung from a 2.4 per-centage-point contraction in the first quarter to a positive 2.8 percentagepoints in the second quarter.
At the sector level, the second quarter reflected a further deterioration inagriculture, as well as slower growth in industry and services. A quarter-on-quarter comparison confirms the deceleration suggested by annual figures,
ThailandOutlook improves
Ricardo AcevesEconomist
• Gross domestic product expanded 9.1% in the second quarter,prompting the government to raise the official forecast for 2010 eco-nomic growth to 6.5% - 7.5%, up from a previous 3.5% - 4.5% projec-tion. The Central Bank also revised its forecast and now shares thegovernment’s assessment.
• Consensus Forecast participants revised their 2010 growth projec-tions upwards and now expect the economy to grow 6.8% this year,which is up 0.8 percentage points from last month’s forecast. In 2011,the panel sees economic growth moderating to 4.4%.
• Inflation inched up to 3.4% in July and the Central Bank continued themonetary tightening cycle by raising policy rates from 1.50% to 1.75%in its 25 August meeting. Consensus Forecast panellists expect infla-tion to average 3.4% this year, which is up 0.1 percentage points fromlast month’s projection. In 2011, the panel expects inflation to fall to3.1%.
Note: Year-on-year changes in %.Source: Bureau of Trade and Economics (BTE) and FocusEconomics calcu-lations.
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as the economy expanded a seasonally adjusted 0.16% over the previousquarter, which was down from the 3.30% expansion registered in the firstquarter.
According to the secretary general of the National Economic and Social De-velopment Board, the economy would have grown an annual 12.0% in thesecond quarter without the political unrest, which caused the temporary shut-down of several businesses in the commercial and financial district ofBangkok.
Meanwhile, the government recently raised its growth forecast for this year to6.5% - 7.5%, up from the previous 3.5% - 4.5% projection. In the same vein,the Central Bank lifted its 2010 growth forecast in its July inflation report fromthe 4.3% to 5.8% range expected previously to the current 6.5% - 7.5%. TheBank stated that for the rest of the year, the economy will continue to recoveron the back of strong fundamentals, gradual growth of the global economy,as well as improving consumer and investor confidence, reflecting easingpolitical risks.
Consensus Forecast participants broadly share the Central Bank’s assess-ment and anticipate overall economic activity to expand 6.8%, which is up 0.8percentage points from last month’s forecast. Next year, participants expecteconomic growth to moderate to 4.4%.
REAL SECTOR | Industrial production accelerates more than expected inJuneIn June, manufacturing production expanded 21.3% over the same monthlast year. The figure came in above the revised 17.5% rise (previously re-ported: 17.2% year-on-year) registered in May and beat market expectations,which saw industrial output adding 18.5%. Furthermore, June’s readingmarked the seventh consecutive month of double-digit growth in industrialproduction.
The main drivers behind June’s improvement were a sharp rebound in foodsproduction, which expanded 8.9%, contrasting the 18.4% contraction regis-tered in May. In addition, the production of textiles and textiles products in-creased 8.5% in June, contrasting the 2.8% decline in May. Meanwhile, elec-tronic products output also continued to expand, yet at a slower pace (May:+14.6% yoy; June: +12.9% yoy).
A month-on month comparison confirms the improvement suggested byannual figures, as manufacturing production rose a sharp 5.31% over theprevious month in seasonally adjusted terms, which contrasted the 3.93%decline recorded in May. Meanwhile, on a quarterly basis manufacturing out-put expanded 20.2% in the second quarter over the same period last year,falling short the 31.2% expansion recorded in the first quarter. As a result ofJune’s reading, the trend in manufacturing production continued to show astrong recovery, as the annual average growth in manufacturing outputjumped from 11.6% in May to 14.2% in June. Consensus Forecast panellistsanticipate manufacturing production to rise 13.9% this year.
MONETARY SECTOR | Inflation inches up in JulyIn July, consumer prices added 0.09% over the previous month, which camein at a fraction the 0.28% increase recorded in June. The main driver behindJuly’s subdued reading were lower prices for clothing and footwear, whichwere nearly offset by an increase in prices for food and beverages, especiallyfor rice.
2.09 1.82
-4.09
9.56
1.000.11
10.66
-4.01
2.754.50
-2.91-3.93
5.31
-10.0
-5.0
0.0
5.0
10.0
15.0
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
%
-12.0
-6.0
0.0
6.0
12.0
18.0
%
MoM s.a. (left scale) Annual Average (right scale)
Manufacturing Production | variation in %
Note: Annual average and seasonally adjusted month-on-month variation ofmanufacturing production index in %.Source: Bank of Thailand (BoT) and FocusEconomics calculations.
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0.00
0.38
0.19 0.19
0.28
-0.09
0.57 0.56
0.19
0.56
0.19
0.28
0.09
-0.2
0.0
0.2
0.4
0.6
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
%
-6.0
-3.0
0.0
3.0
6.0
%
Monthly (left scale) Annual (right scale)
Inflation | Consumer Price Index
Note: Annual and monthly variation of consumer price index in %.Source: Bureau of Trade and Economics.
Despite July’s subdued price increase, annual headline inflation steppedinched up a notch from 3.3% in June to 3.4% in July, undershooting marketexpectations, which had expected inflation rising 3.6%. Core inflation, whichstrips out more volatile items such as fresh food and energy, added 0.10%over the previous month. As a result, annual core inflation inched up from1.1% in June to 1.2% in July.
The inflation trend continues to point upwards, as annual average inflationjumped from 1.6% in June to 2.3% in July, which marked the highest readingsince May 2009. Nonetheless, at the current level, inflation remains withinthe Central Bank’s target range of 0.5% - 3.0%, which is based on quarterlyaverage core inflation (the current quarterly average is 1.1%).
Meanwhile, at its last monetary policy meeting on 25 August, the Bank ofThailand (BoT) decided to raise the one-day repurchase rate by 25 basispoints for the second consecutive month from 1.50% to 1.75%, in a decisionexpected by the market. Monetary authorities last raised the policy rate in 14July, when the BoT began tightening monetary policy after rates had remainedat the record low of 1.25% since April 2009. Monetary authorities argued thatthe economy is recovering at a faster-than-expected pace and that inflation-ary pressures are likely to rise in 2011 amid strong domestic demand andrising production costs. In addition, the BoT Assistant Governor PaiboonKittisrikangwan said that “interest rates remain very low compared to eco-nomic growth even after the increase” and that “rates are on an upwardtrend”. The next monetary policy meeting is scheduled for 20 October.
In its last inflation report, monetary authorities expected annual average infla-tion to rise to 4.8% this year and to moderate to 4.3% in 2011. ConsensusForecast panellists expect average inflation rising to 3.4% by the end of theyear, which is up 0.1 percentage points from last month’s Consensus Fore-cast. For 2011, panellists anticipate that average inflation will moderate to3.1%.
Real GDP growth in % 2 | Real GDP | Q1 07-Q4 11 | % variation
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts
General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the Bank of Thailand (BoT). See below for details.Forecasts based on FocusEconomics Consensus Forecast.
1 GDP, annual variation in %.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %.6 Gross fixed investment, annual variation in %.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %.10 Unemployment, % of active population.11 Balance of central government, % of GDP.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Balance of the central government, evolution of 2010 and 2011 forecastsduring the last 18 months.
Notes and sources
1 | Real GDP | 1995 - 2014 | % variation
Individual Forecasts 2010 2011ANZ 7.4 4.2Capital Economics 8.0 4.0CIMB Thai Bank 6.5 4.0Citigroup Global Markets Inc. 6.6 5.3Credit Suisse 6.4 4.5Daiwa Capital Markets 7.7 4.3DBS Bank 8.0 4.0Deutsche Bank 5.5 4.1Goldman Sachs 4.2 4.5HSBC 7.6 5.3ING 6.8 5.2JPMorgan 8.5 5.0Kasikorn Research Center 6.2 3.5Ktzmico 7.5 5.5Morgan Stanley 4.6 4.8Phatra Securities 6.7 4.2Standard Chartered Bank 6.3 4.5TISCO Securities 7.4 3.5UBS 7.7 4.0United Overseas Bank 5.5 4.7SummaryMinimum 4.2 3.5Maximum 8.5 5.5Median 6.7 4.4Consensus 6.8 4.4History30 days ago 6.0 4.460 days ago 5.4 4.490 days ago 4.7 4.5Additional ForecastsCentral Bank (Apr. 2010) 4.3-5.8 3.0-5.0IMF (July 2010) 7.0 4.5ADB (July 2010) 5.5 4.5
Monetary Sector | Inflation, Money, Producer Prices and Stock Market
19 | Core and Producer Prices | % var.
15 | Inflation | 1995 - 2014 | in % Inflation | annual avg. var. of consumer price index in %
17 | Inflation 2010 | evolution of fcst
21 | 10-Year Bond Yield | in % 22 | Stock Market | SET Index
20 | Money | % variation
18 | Inflation 2011 | evolution of fcst
16 | Inflation | Q1 07-Q4 11 | in %
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the Bureau of Trade and Economics (BTE)and the Bank of Thailand (BoT). See below for details. Forecasts basedon FocusEconomics Consensus Forecast.
15 Inflation, annual average variation in consumer price index (CPI) in%. Source: BTE.16 Quarterly inflation, year-on-year variation in consumer price index(CPI) in %. Source: BTE.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Core and producer price indices, annual variation in % (eop). 2004-2009 Source: BTE.20 Money, annual variation of M1 in %. 1995-2009 Source: BoT.21 10-Year Bond Yield. January 2005 until the end of previous month.Source: BoT.22 Monthly index levels, SET Index. January 2000 until end of previousmonth. Source: The Stock Exchange of Thailand.
Notes and sources
Individual Forecasts 2010 2011ANZ - -Capital Economics 3.5 4.0CIMB Thai Bank 3.1 1.5Citigroup Global Markets Inc. 3.3 3.4Credit Suisse 3.2 3.1Daiwa Capital Markets 1.9 2.0DBS Bank 3.0 2.5Deutsche Bank 3.6 4.4Goldman Sachs 3.6 3.0HSBC 3.5 3.7ING 3.0 2.7JPMorgan 4.8 4.0Kasikorn Research Center 3.5 3.2Ktzmico 3.3 3.0Morgan Stanley 3.8 3.0Phatra Securities 3.2 2.8Standard Chartered Bank 3.2 3.7TISCO Securities 3.5 3.4UBS 3.3 2.3United Overseas Bank 3.7 3.5SummaryMinimum 1.9 1.5Maximum 4.8 4.4Median 3.3 3.1Consensus 3.4 3.1History30 days ago 3.3 3.060 days ago 3.3 2.990 days ago 3.4 3.1Additional ForecastsCentral Bank (Apr. 2010) 3.3-4.8 2.3-4.3IMF (Apr. 2010) 3.2 1.9ADB (Mar. 2010) 3.5 3.0
-5
0
5
10
15
2004 2005 2006 2007 2008 2009
Core Price IndexPPI
-10
0
10
20
30
40
1995 1998 2001 2004 2007
| 106
Thailand September 2010FOCUSECONOMICS
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0
1
2
3
4
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
1
2
3
4
5
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
28
31
34
37
40
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
28
31
34
37
40
Apr Jul Oct Jan Apr Jul
MaximumConsensusMinimum
0
5
10
15
1995 2000 2005 20100
2
4
6
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
20
30
40
50
1995 2000 2005 201030
32
34
36
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Monetary Sector | Interest Rate and Exchange Rate
29 | THB/USD 2010 | evolution of fcst
27 | Exchange Rate | THB per USD 28 | Exchange Rate | THB per USD
25 | Int. Rate 2010 | evolution of fcst 26 | Int. Rate 2011 | evolution of fcst
30 | THB/USD 2011 | evolution of forecasts
Policy Interest Rate and Exchange Rate
General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the Bank of Thailand (BoT).Forecasts based on FocusEconomics Consensus Forecast.
23 Interest rate, 1-Day Repurchase Rate in % (eop).24 Quarterly interest rate, 1-Day Repurchase Rate in % (eop).25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, THB per USD (eop).28 Quarterly exchange rate, THB per USD (eop).29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP.32 Trade balance, imports and exports, in USD bn.33 International reserves, months of imports.34 Current account in USD bn., evolution of 2010 and 2011 forecastduring the last 18 months.35 Exports, annual variation in %.36 External debt as % of GDP.
Notes and sources
Individual Forecasts 2010 2011 2010 2011ANZ - - 33.9 32.7Capital Economics 2.00 3.00 29.5 29.0CIMB Thai Bank 2.25 1.30 32.5 33.0Citigroup Global Markets Inc. 2.75 3.75 31.9 31.7Credit Suisse 2.00 3.00 31.8 31.0Daiwa Capital Markets - - 32.0 31.8DBS Bank 2.25 - 32.2 -Deutsche Bank 1.75 2.25 32.0 31.5Goldman Sachs 2.20 2.90 32.0 31.2HSBC 2.00 2.00 31.0 30.5ING 1.75 2.25 32.4 32.5JPMorgan 1.75 2.25 31.7 -Kasikorn Research Center 2.00 3.00 31.0 30.4Ktzmico - - 30.8 31.5Morgan Stanley - - 32.3 30.7Phatra Securities 1.75 2.50 32.0 32.5Standard Chartered Bank 2.00 2.50 31.5 30.2TISCO Securities 2.00 3.00 32.0 30.6UBS 1.75 2.75 33.0 31.0United Overseas Bank 1.75 - 31.3 -SummaryMinimum 1.75 1.30 29.5 29.0Maximum 2.75 3.75 33.9 33.0Median 2.00 2.63 32.0 31.2Consensus 2.00 2.60 31.8 31.3History30 days ago 1.88 2.51 32.0 31.360 days ago 1.84 2.63 32.1 31.790 days ago 1.89 2.74 32.0 31.5
Interest Rate Exchange Rate% THB per USD
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-10
0
10
20
1995 2000 2005 2010
ThailandAsia (ex Japan)
-100
0
100
200
300
1995 2000 2005 2010
Trade Balance ExportsImports
-30
-15
0
15
30
1995 2000 2005 2010
ThailandAsia (ex Japan)
5
10
15
20
1995 2000 2005 2010
ThailandAsia (ex Japan)
0
25
50
75
100
1995 2000 2005 2010
ThailandAsia (ex Japan)
2
6
10
14
Apr Jul Oct Jan Apr Jul
20102011
External Sector | Current Account, Trade and International Reserves
34 | Current Account | evol. of fcst
33 | Int. Reserves | months of imports
36 | External Debt | % of GDP 35 | Exports | annual variation in %
32 | Trade Balance | USD billion 31 | Current Account | % of GDP
Outlook stable• Fitch Ratings lowered Vietnam’s debt rating from BB- to B+, with a
stable outlook, as the country could face economic and financialinstability due to the deterioration of its finances and a weak bankingsystem. To maintain control of trade deficit, the State Bank of Vietnamdevalued the exchange rate from 18,544 to 18,932.
• Consensus Forecast panellists anticipate the economy to grow 6.5%this year, which is unchanged from last month’s forecast. For 2011,the panel expects economic growth to accelerate to 7.0%.
• In August, annual inflation remained unchanged at July’s 8.2%. Panellistsexpect inflation to average 9.9% this year, which is unchanged fromlast month’s projection. In 2011, the panel expects inflation to moderateto 8.7%.
General:Long-term chart period from 2000 to 2011 unless otherwise stated.All data are from General Statistics Office of Vietnam (GSO, TongCuc Thong Ke), the State Bank of Vietnam (SBV) and the Minis-try of Finance. See below for details. Forecasts based onFocuseconomics Consensus Forecast.
1 GDP, annual variation in %. Source: GSO.2 Balance of non-financial public sector, % of GDP. Source: Min-istry of Finance.3 Inflation, annual average variation in consumer price index(CPI) in %. Source: GSO.4 GDP, evolution of 2010 and 2011 forecasts during the last 18months.5 Balance of non-financial public sector, evolution of 2010 and2011 forecasts during the last 18 months.6 Inflation, evolution of 2010 and 2011 forecasts during the last18 months.7 Exchange rate, VND per USD (eop). Source: SBV.8 Current account balance as % of GDP. Source: GSO.9 Exchange rate, evolution of 2010 and 2011 forecasts duringthe last 18 months.10 Current account balance in USD billion, evolution of 2010and 2011 forecasts during the last 18 months.
Notes and sources
7 | Exchange Rate | VND per USD 8 | Current Account | % of GDP
10 | Current Account | evol. of fcst 9 | VND/USD | evolution of fcst
Consensus forecasts are mean averages of projections of economic forecasters surveyed byFocusEconomics for our monthly publication. Quarterly averages may not correspond to the annualfigures due to different forecast panels.
The GDP-weighted averages for the regional aggregates refer to economies surveyed byFocusEconomics on a monthly basis, and include the following countries:
Asia (12 countries): China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Philippines,Singapore, Taiwan, Thailand and Vietnam.Asia ex-Japan (11 countries): China, Hong Kong, India, Indonesia, Korea, Malaysia, Philippines,Singapore, Taiwan, Thailand and Vietnam.Asean (Association of Southeast Asian Nations, 6 countries): Indonesia, Malaysia, Philippines,Singapore, Thailand and Vietnam. The remaining four Asean members (Brunei, Burma (Myanmar),Cambodia and Laos) are not included in the calculation of the regional average.NIEs (Newly Industrialized Economies, 4 countries): Hong Kong, Korea, Singapore and Taiwan.
Weights are based on market exchange rates and reflect the latest forecasts on GDP growth, infla-tion and exchange rates.
The FocusEconomics Consensus Forecast Asia is a monthly publication of FocusEconomics. Com-munications to the Editor or FocusEconomics in general should be addressed as follows:
The FocusEconomics Consensus Forecast Asia (“Forecast”) is based on information obtained from sources believed to be reliable.FocusEconomics and the participating panellists (“Information Providers”) do not guarantee that the information supplied in the Forecastis accurate, complete or timely. The Information Providers do not make any warranties with regard to the results obtained from theForecast. The Information Providers are not responsible for any errors or omissions, or for any injuries or damages resulting from theuse of this information, including incidental and consequential damages. Recipients should not regard the Forecast as a substitute forthe exercise of their own judgement. The recommendations made in the Forecast may be unsuitable for investors depending on theirspecific investment objectives and financial position. The Forecast has been prepared solely for informational purposes and is not asolicitation of any transaction or an offer to enter into any transaction. Any opinions expressed in this report are subject to change withoutnotice and the Information Providers are under no obligation to update the information contained herein.
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FocusEconomics Consensus Forecast Asia
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