China GDP, Bank of Korea in Asia spotlight

April 10, 2011 - 0:0

TOKYO (MarketWatch) — China’s first-quarter growth figures and other data will be in the Asian spotlight next week, as well as central bank meetings in South Korea and Indonesia.

On Monday, Japan will release core machinery orders data for February,. a report that’s usually a leading indicator of corporate investment. But this time, it won’t reflect the impact of the earthquake and tsunami that struck on March 11, so economists are looking ahead to the March output report.
The Bank of Korea’s policy decision will come on Tuesday.
South Korea’s raised its policy rate by 100 basis points since July, and it’s expected to hold steady this time, after a quarter-point hike in March, which brought its benchmark rate to 3%.
But some economists say it could surprise with a hike because of inflation, which the bank says remains a “challenge” for the economy. Annual consumer inflation in March came in at a more than two-year high, well above the Bank of Korea’s target band.
Also Tuesday, Bank Indonesia is expected to leave rates unchanged at 6.75% after annual inflation slowed in March, helped by the start of the rice harvest.
But bank of American Merrill Lynch economist Hak Bin Chua calls the Bank Indonesia decision a “close call,” and expects the central bank to resume tightening with a 25 basis-point hike, bringing its policy rate to 7%.
The banks’ last statement signaled that it’s “on a ‘tight bias,’ which suggests the odds of tightening remain high after a pause last month,” Chua said.
Both the South Korean won and the Indonesian rupiah have strengthened recently, and that takes away some of the need to tighten policy.
On Friday, China’s expected to say that its economy grew at a slower pace in the first quarter of this year than in the final quarter of 2010, due to the government’s efforts to curb the booming economy.
Economists polled by Reuters expect gross domestic product growth to slow to 9.5% from the year-ago quarter, down from the previous quarter’s 9.8% year-on-year increase.
China will also release inflation data. Chinese state media Xinhua reports that many economists expect the consumer price index for March to climb above 5%, well above the government’s 4% full-year CPI target.
That could set the stage for yet another interest rate hike, after the People’s Bank of China raised interest rates for the fourth time in six months on Tuesday.