This article first appeared in The Edge Malaysia Weekly on October 14, 2024 - October 20, 2024
The main focus in Malaysia this week will be on Budget 2025, which is scheduled to be tabled by the prime minister on Friday. Many economists expect the overall budget to remain expansionary, with supportive measures to address the elevated cost of living, improve the people’s quality of life, enhance rural development and transform the economy at a sustainable pace.
“[This is] despite the endeavours of narrowing the fiscal deficit to a projected 3.8% of gross domestic product (GDP) in 2025, compared with the estimated 4.3% for 2024, with further subsidy rationalisation measures,” said UOB Global Economics & Markets Research economist Alvin Liew in a report last Friday.
“The announcement of most budget measures or policies including tax-related proposals are foreseen to further solidify the country’s economic and financial fundamentals, suggesting that the government may anticipate a robust GDP growth outlook of 4.5% to 5.5% in 2025, compared with a revised estimate of 5% to 5.5% for 2024 from 4% to 5% previously.”
UOB estimates a 5.4% growth for 2024 and 4.7% for 2025.
The Department of Statistics Malaysia is slated to release the monthly external trade statistics for September 2024 on Friday. Economists polled by Bloomberg expect export growth to slow to 7% from 12.1% in August.
On the global economic front, the second most powerful economy in the world will be holding a briefing on fiscal policy on Saturday (Oct 12), during which China’s Finance Minister Lan Fo’an will introduce moves to strengthen fiscal policy to shore up growth, and answer questions from reporters, according to the State Council Information Office. A joint briefing on enhancing support for firms will follow on Monday.
Key data from China will include its third quarter (3Q) GDP report, along with the remainder September macro data releases such as the Consumer Price Index (CPI) — for which economists polled by Bloomberg estimated will chart a 0.6% year-on-year gain, as was the case in August — and the Producer Price Index (PPI), on Sunday (Oct 13). The PPI is estimated to rise 2.6% y-o-y as opposed to a decline of 1.8% in August.
Liew holds a different view. “PPI deflation is expected to deepen while CPI stays slightly positive, unchanged from August. For 3Q2024 GDP, we pencil in a slightly above consensus growth, similar to the second quarter. This will bring China’s GDP growth in the first three quarters to 4.9% y-o-y, below the 5% average in the first half,” he said.
China’s September external trade data is then expected on Monday, while data for 3Q2024 GDP, September industrial production, retail sales, surveyed jobless rate, fixed assets ex-rural year to date and new home prices will be on Friday.
Note that Hong Kong Chief Executive John Lee will deliver the third policy address of his term on Wednesday, focusing on economic growth and addressing livelihood issues.
Meanwhile, the Monetary Authority of Singapore will release its Monetary Policy Statement (MPS) on Monday, together with the Ministry of Trade and Industry’s (MTI) issuance of the advance 3Q2024 GDP data.
“Following the strong outperformance in August industrial production (IP), we project 3Q2024 GDP to accelerate to 3.7% y-o-y from 2.9% y-o-y last quarter, factoring in the likelihood of a sequential pullback in September’s IP reading following two consecutive months of strong readings. Thus, risks to our full-year 2024 GDP growth forecast of 2.9% are to the upside and could potentially exceed MTI’s 2024 official forecast range of 2% to 3%,” said Liew, adding that the city state’s next major data release will be the September non-oil domestic exports on Thursday.
Other regional central banks with monetary policy decisions include the Bank of Thailand (BoT), the Philippine Central Bank (BSP) and Bank Indonesia (BI) on Wednesday, while the European Central Bank (ECB) will announce its monetary policy decision on Thursday, followed by ECB President Christine Lagarde’s press conference.
According to a Bloomberg poll as at Oct 11, all four economists expect the ECB to lower its deposit facility rate by 25bps to 3.25% and its main refinance rate by 25bps to 3.4%, while a separate poll on BoT showed that 12 of the 14 analysts surveyed expect BoT to keep its repo rate unchanged at 2.5%, while six of nine economists polled expect the BI rate to be unchanged at 6%, with the remaining three expecting a 25bps cut to 5.75%.
Meanwhile, UOB expects BSP to deliver a back-to-back interest rate cut of 25bps to 6%.
Note that Indonesia will also release its September external trade data on Tuesday.
Other upcoming regional data include 3Q2024 CPI for New Zealand on Wednesday, India’s September CPI on Monday and Australia’s September jobs report on Thursday.
Japan will release its September trade data on Thursday as well as the numbers for its September CPI inflation, core CPI ex-food and core CPI ex-food and energy, the next day.
Over in the US, the 3Q earnings season is expected to accelerate over the week with 462 US firms reporting (44 of which are S&P 500 companies) and the early focus will still be on major US banks and financial institutions.
People will be watching for the US Empire manufacturing for October on Tuesday; US industrial production and initial jobless claims on Thursday; as well as September building permits and housing starts on Friday.
Key data in Europe will include August industrial production for the eurozone on Tuesday and UK September CPI the next day.
On the local corporate front, Capital A Bhd (KL:CAPITALA) will hold its extraordinary general meeting on Monday and Syarikat Takaful Malaysia Keluarga Bhd (KL:TAKAFUL) on Thursday.
Monday will also see the continuation of former prime minister Tun Dr Mahathir Mohamad’s lawsuit against Deputy Prime Minister Datuk Seri Ahmad Zahid Hamidi over his “kutty” remarks, while the hearing of SRC International Sdn Bhd’s civil suit against former premier Datuk Seri Najib Razak, with Najib taking the witness stand for cross examination, will continue on Wednesday and Thursday.
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