Asia’s manufacturing surveys picked up in September. In India, Indonesia, Taiwan, South Korea and Vietnam the PMIs were more positive, while in China the PMIs rose only marginally. In India and South Korea, however, the PMIs are still below the 50 mark. Moreover, the two most affected Asian countries; India and Indonesia seem to be recovering after the announcement that the Fed would delay its tapering. Both currencies peaked against the dollar during the summer, but they have been gradually gaining strength. Indonesia’s latest data has also beat expectations. Inflation moderated to 8.4% yoy in September from 8.8% the previous month. The improvement of Indonesia’s trade balance was also welcome. India’s current account deficit in the quarter ending June deteriorated, coming in at 4.9% of GDP, up from 3.6% of GDP in the previous quarter. However, the increase in the deficit is in line with seasonal trends and it should not overshadow the improvement that has been made in reducing gold imports. All in all, we think that growth in the region as a whole will ease in the second half of the year as a result of the adjustment measures taken in several countries and the uncertainty related to the US government shut down. However, we expect growth to strengthen again next year.
Weekly Asia1.pdf ()