World Economy

Asia’s week ahead: All eyes on Greece

Michael Debets | Pacific Press | LightRocket | Getty Images

The long-running Greek drama is nearing a potentially catastrophic denouement, likely hijacking the market's attention away from economic pulse checks on China and Japan this week.

Greece's Prime Minister Alexis Tsipras submitted a new reforms package Sunday, offering the potential for a last minute deal to break the logjam in talks with the country's international creditors. Greece desperately needs more aid before it runs out of cash and potentially defaults on loans to creditors.

Euro zone leaders are set to hold an emergency summit on Monday to "urgently discuss the situation of Greece at the highest political level" after Thursday's meeting yielded no progress, with both sides refusing to compromise over what reforms Greece should make in exchange for more aid. The emergency summit comes just eight days before Athens needs to make a crucial 1.6 billion euro ($1.8 billion) payment to the International Monetary Fund (IMF) to avoid a possible default.

But after months of talks, it isn't clear that one last emergency meeting will make much progress and Greece may start feeling the effects on Monday.

The European Central Bank told a meeting of euro zone finance ministers on Thursday that it was not sure if Greek banks would be able to open Monday, Reuters reported. Around 2 billion euros flowed out over Monday to Wednesday last week, or around 1.5 percent of the deposits the country's banks held, Reuters reported, citing unnamed banking sources.

In Asia, a health check on China will come on Tuesday, when the Markit China flash purchasing managers index (PMI) will be released; the data set were previously called the HSBC PMI.

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A slew of recent data from the mainland has disappointed expectations but some analysts believe the worst of the slowdown may be over.

In the first quarter, China's economic growth slowed to 7.0 percent, its slowest in six years, spurring a round of easing measures from the People's Bank of China (PBOC), including three interest rate cuts over the past six months and two rounds of reserve requirement ratio (RRR) cuts. Analysts believe further stimulus measures may be on the cards.

On Wednesday, the Bank of Japan (BOJ) will release the minutes of its May 21 meeting, at which it kept its monetary stimulus program intact and revised its assessment of the economy higher. The previous set of minutes indicated the committee was concerned the central bank's 2 percent inflation goal would be difficult to hit.

Two central bank decisions -- from the Philippines and Taiwan -- will be on tap regionally on Thursday.

The Philippine central bank, Bangko Sentral Ng Pilipinas (BSP), is set to announce whether it will keep its benchmark rate unchanged at 4.0 percent, a level it has held for the previous five meetings.

"BSP and the IMF find no compelling reason to shift monetary policy from neutral to accommodative. Headline inflation in the near term is likely to ease further. The impact of the dry spell on agriculture production is limited so far. But an extended dry spell may have more telling impact onheadline inflation and economic activity," Joey Cuyegkeng, senior economist for Asia at ING, said in a note last week.

"This together with volatile global oil prices [will] keep BSP from engaging in monetary easing."

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Japan will also be releasing a flotilla of May data on Friday, including the consumer price index (CPI), employment figures and household expenditures.

"Japan's May data will show an economy perennially struggling to get on track. Core inflation has weakened markedly as the effects of the April 2014 tax hike fade from the numbers," Moody's Analytics said in a note last week. "Employment has barely risen over the past year, while the labour force has shrunk. Household spending is stubbornly sluggish, unsurprising with incomes barely growing."

Moody's forecasts May CPI will rise just 0.2 percent from the year-earlier period, within the BOJ's expectations for a 0-0.5 percent increase. The unemployment rate likely remained around 3.3 percent in May, near 20-year lows, while household expenditure likely only edged up 0.5 percent on-year, Moody's forecast.

In April of 2013, the BOJ launched a massive quantitative easing program, which was later expanded to purchase 80 trillion yen worth of assets a year, as a part of Abenomics – a series of policy measures unveiled under Prime Minister Shinzo Abe to jump start the economy. But Abenomics has had a mixed track record and despite government pressure, firms haven't moved only slowly to increase wages.

--Ansuya Harjani contributed to this article

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1