Monday 25 Sep 2023
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This article first appeared in The Edge Malaysia Weekly on February 13, 2023 - February 19, 2023

This week, conversations will invariably focus on Budget 2023 as the date of its retabling nears. Malaysians are waiting to see what policies the new government will announce to alleviate the people’s burden due to the high cost of living. Prime Minister Datuk Seri Anwar Ibrahim had said that Budget 2023, scheduled to be presented again in parliament on Feb 24, will not be tied to the budget presented by the previous government in October 2022.

However, it will be a quiet week on Malaysia’s economic calendar.

Elsewhere, monetary policy decisions are expected from two central banks in Asia-Pacific. The Philippine Central Bank (BSP) and Bank Indonesia (BI) will announce their decisions on Feb 16.

A Bloomberg poll as at Feb 10 shows that five analysts expect a 25-basis-point (bps) hike to 5.75%, while two expect an aggressive hike of 50bps to 6%, for BSP.

“We think the slower-than-expected headline inflation outturn in December is less likely to throw BSP off its rate hike path. But, the softer inflation reading coupled with gloomier global growth prospects will allow BSP to continuously embark on a slower rate hike path in the coming months. We are thus sticking to our BSP call for two more 25bps hikes in the first quarter of 2023 before taking a pause at 6% thereafter,” UOB Global Economics and Markets Research senior economist Alvin Liew said in a report last Friday.

For BI, four Bloomberg analysts expect the central bank’s policy rate to stay put at 5.75% while one analyst expects a 25bps hike to 6%.

“We keep our BI rate forecast for a terminal rate of 6% that is likely to occur this month, though there is an increasing risk that January’s rate hike might be the last one for the current hiking cycle,” Liew says.

Following Bank Negara Malaysia’s 4Q2022 gross domestic product announcement last Friday, which saw 7% year-on-year (y-o-y) growth, bringing 2022’s full-year GDP growth to 8.7%, attention will be on Japan’s and Singapore’s GDP data for 4Q2022 on Feb 13 and Thailand’s on Feb 17.

“We expect the [Japanese] economy to recover from the previous quarter’s contraction, led mostly by private consumption and investment. The reopening and government travel subsidy programmes should lead to a great improvement in hospitality-related activities.

“However, due to high inflation, the rebound will likely be limited to 0.6% (quarter on quarter, seasonally adjusted),” ING THINK Economic and Financial Analysis forecasts.

For Singapore, UOB’s Liew estimates a small upward revision to 2.3% y-o-y (from 2.2%) and expects its full-year 2022 GDP to be revised 0.1 percentage point lower to 3.7% (from 3.8%). “This assumes no major change to the construction (10.4% y-o-y) and services sectors (4.1% y-o-y),” he says.

At the same time, Singapore Finance Minister Lawrence Wong will table the nation’s 2023 budget in parliament on Feb 14.

Meanwhile, India, the US and the UK are due to release their Consumer Price Index (CPI) data on Feb 13, Feb 14 and Feb 16 respectively. January’s inflation data for India is expected to be 5.94% y-o-y, while the US and the UK are estimated at 6.2% and 10.1%, respectively.

“US January inflation figures will be awaited keenly after the last Federal Open Market Committee (FOMC) meeting, in which Fed chair Powell noted that inflation has started to cool but expected ‘ongoing’ hikes.

“The consensus currently points to a forecast of 0.5% month-on-month for the headline figure and 0.4% m-o-m for core CPI, which are higher than prior readings,” S&P Global says.

In the US, eyes will also be peeled for data on Producer Price Index (PPI) prices, retail sales, housing, initial jobless claims and the US Empire manufacturing survey for February.

In the UK, elevated inflation saw the Bank of England raise rates for a 10th meeting in a row to 4%, which is the highest since 2008.

“Although inflation in the UK has been trending lower, it remains sticky and concerns persist around the tightness of the labour market. Hence, although the official January CPI data will be eagerly watched in the coming week, it may be the labour market data that garners the most attention, especially the wage growth numbers.

“Retail sales data, on the other hand, will be tracked in the UK for the extent that consumption is being eroded by the current cost of living crisis,” S&P Global says.

In the local courts, Feb 15 will see the continued hearing of Bagan member of parliament Lim Guan Eng’s undersea tunnel graft case.

Lim is accused of using his position as the then Penang chief minister to solicit a 10% cut in the RM6.3 billion undersea tunnel project’s profit from Consortium Zenith Construction Sdn Bhd director Datuk Zarul Ahmad Mohd Zulkifli, in return for aiding the businessman’s company secure the project. He is also accused of accepting RM3.3 million in kickbacks from Zarul.

On the corporate front, Bursa Malaysia-listed companies holding their annual general meetings include AHB Holdings Bhd on Feb 13; Sunsuria Bhd and Anzo Holdings Bhd on Feb 15; MKH Bhd and Asdion Bhd on Feb 16; and Lotus KFM Bhd (formerly known as Kuantan Flour Mills Bhd) on Feb 17.

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