World Economy

Asia, brace for a busy week ahead

An advertisement is displayed at a subway station in Shanghai, China.
Tomohiro Ohsumi | Bloomberg via Getty Images

Fresh easing measures from China over the weekend, alongside a barrage of economic data and policy releases, will likely keep Asian financial markets on a bumpy ride this week.

The People's Bank of China unleashed a 25-basis-point cut in benchmark lending rates and one-year deposit rates, respectively, on Sunday, after growth for the first three months of 2015 slowed to 7 percent, its slowest pace since 2009. Sunday's move marked Beijing's third interest rate reduction since November.

China: Stimulus enough?

With Chinese stocks in the spotlight following last week's wild moves, a data deluge from Beijing will be closely eyed. The benchmark ended the week 5.3 percent lower - its biggest weekly loss since May 2010 - following a three-day selloff sparked by worries over a clampdown on margin trading and upcoming new-share sales.

Read MoreIs the honeymoon over for China stocks?

Among data scheduled for release on Wednesday, industrial output likely accelerated last month, with economists in a Reuters poll predicting an annual rise of 6.00 percent, higher than March's 5.60 percent gain.

Retail sales may grow 10.50 percent on-year in April, following March's 10.20 percent increase, while year-to-date fixed asset investment is expected to hold steady at 13.50 percent, the Reuters poll said.

But, analysts say this still leaves room for further policy support.

"There could be a slowdown in their deficit reduction plans like tax cuts for exporters.. and expect further spending measures like infrastructure projects. Basically, small-scale things that could add a bigger lift to the economy," Alaistair Chan, economist at Moody`s Analytics, told CNBC early Monday.

"The actual cut won't do much by itself, but it works more in terms of a signalling effect showing that the government is stepping up on the stimulus. It's a positive for the markets," he added.

PBOC unleashes fresh policy easing


Tuesday brings Canberra's annual federal budget, which will likely show the nation's deficit ballooning to 41 billion Australian dollars ($32.46 billion) in the 12 months to June, more than the A$40.4 billion forecasted in December's mid-year economic outlook.

Although the country headed into the 2008 global financial crisis with virtually no debt, Australia has since witnessed its net debt rise due to headwinds such as a strong domestic currency, slowing growth in its biggest trading partner, China, and most recently, plunging commodity prices. This prompted the country's conservative government to roll out a politically contentious budget packed with tough spending cuts last year.

"The continuing delay in returning to surplus is a cause for concern and begs the question whether we will ever get there. There are real reasons for concern here because demographic pressures on the budget will start to build early next decade and we now don't have a lot of flexibility to provide stimulus should our luck turn against us," a report by Shane Oliver, head of Investment Strategy and chief economist at AMP Capital, said.

India: Benign inflation woes?

Asia's third-largest economy is set to release trade and industrial output data this week, but market attention will likely fall on the wholesale prices-based inflation due on Thursday.

According to economists polled by Reuters, deflation could persist for the sixth consecutive month on the back of cooling oil and manufacturing costs. India's wholesale price index (WPI) is seen falling 2.3 percent in April, following a 2.33 percent decline in March - its steepest fall on record.

Subdued price pressures could pave the way for another rate cut by the Reserve Bank of India before June, Moody's Analytics wrote in a note last week.

Read MoreIndia finance chief on beating China's growth

South Korea: Rate cut or not?

Following recent comments by South Korean officials which affirm positive signals in the economy, the Bank of Korea is expected to hold policy rates unchanged at 1.75 percent when it meets on Friday.

Last month, Finance Minister Choi Kyung-hwan said sequential growth in the April-June quarter may come in above 1 percent, higher than the better-than-expected growth of 0.8 percent in the first quarter.

Meanwhile, central bank chief Lee Ju-yeol told local media last week that the effects of rate cuts on consumer spending need to be re-examined due to rising household debt.

As such, the Bank of Korea will likely delay a 25-basis-point cut in interest rates until the third quarter, said HSBC economist Ronald Man in a note.

Also on tap this week are employment and trade data from Seoul.


Malaysia's gross domestic product (GDP) likely slowed to 5.2 percent in the first three months of 2015, according to forecasts by Moody's Analytics, lower than the 5.8 percent in the previous quarter.

While the front-loading of purchases ahead of April's good and services tax may have spurred domestic consumption, overall export growth remains soft due to falling oil prices and subdued demand from China, experts said.

Hong Kong's economy is expected to continue its recovery from last year's political protests, likely expanding 2.3 percent year-on-year after growing 2.2 percent over the October-December period, Moody's Analytics said.

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