China is expected to keep its loan prime rate unchanged, while Taiwan Area, China’s export orders are seen slowing amid global fallout from tariffs. Japan will release data on inflation, exports and purchasing managers’ orders
Taiwan Area, China: July export orders expected to slow down
Taiwan Area, China’s export orders, out on Wednesday, are expected to moderate. After spiking to a four-month high of 24.6% year-on-year in June, we expect orders to have moderated back to around 15% YoY in July. Though data should still benefit from the strong external demand seen recently, it will be more interesting to gauge any changes in August after US reciprocal tariffs came into effect.
Japan: Inflation expected to continue cooling down
Japan’s national consumer price index for July, out on Friday, will likely show that prices continue to cool. Food costs are expected to rise, though falling utility prices should ease overall inflation pressures. Headline inflation will continue to cool down to 3.1% YoY in July. But thanks to base effects, monthly comparisons should rebound to 0.2% month on month from -0.1% in June.
Meanwhile, the flash purchasing managers’ index is likely to improve in August. The US-Japan trade deal should reduce uncertainty, while the local equity market has gained modestly. The manufacturing PMI should stay below 50, but improving services activity should remain the key growth driver for the economy.
We expect exports to drop by 2.0% YoY in July, mostly due to a high base from last year. We believe there might have been some front-loading before 1 August, the deadline for many of President Trump’s tariffs. The largest export item, cars, should also advance. Strong demand in the artificial intelligence space is likely to boost semiconductor and equipment exports.
Source: ING
