In today’s briefing:
- China: More Stimulus Will Help Boost the Economy but the Turnaround Could Be Lacklustre
- China’s Belt and Road Initiative: A Recalibration Is Long Overdue
- The Philippines: Inching Toward Another 50bps Rate Hike
- UK: Inflation Squeezes Less in Aug-22
China: More Stimulus Will Help Boost the Economy but the Turnaround Could Be Lacklustre
- Chinese exports have slowed significantly while import data showed that domestic demand weakened further.
- Policymakers are signalling an intensification of stimulus to arrest the economic descent and contain the fallout from the lockdowns.
- But weak consumer and business confidence constrain their impact, in view of the scarring effect from the repeated lockdowns from the zero-Covid approach.
China’s Belt and Road Initiative: A Recalibration Is Long Overdue
- China’s BRI loans that funded infrastructure projects in emerging markets are turning sour. A more hostile West is seeking to disrupt China’s BRI-related soft-power objectives.
- Many BRI projects have stalled due to oversights and excessive top-down supervision. But China will not give up on the BRI – expect a recalibration of the BRI.
- The financing approach could change to focus more on project viability. The emphasis will shift from transport infrastructure to digital connectivity & clean energy , alongside a more geostrategic emphasis.
The Philippines: Inching Toward Another 50bps Rate Hike
- Domestic demand remains firm, given the spirited performance by the bevy of lagging indicators.
- The Bangko Sentral ng Pilipinas is poised to rate rates by 50bps in this month’s policy review, given the hot core inflation print for August.
- Market expectations for another jumbo 75bps hike by the Fed have translated into record weakness for the Philippine Peso as well.
UK: Inflation Squeezes Less in Aug-22
- UK inflation undershot forecasts for a change, as the CPI and RPI rates slowed in August. The news was more mixed for us, with small offsetting surprises.
- Some past shocks are not repeating, with negative payback compounding the effect on transport prices. Underlying inflation remains far too high, though.
- CPI inflation is in line with the BoE’s August forecast, while the new energy price cap has hacked down the peak. Forceful rate hikes should moderate after Sep-22’s jump.
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