Real gross domestic product (GDP) growth in Indonesia slowed marginally to 4.94% year-on-year (y-o-y) in the fourth quarter (Q4) of 2016 from 5.01% y-o-y in the third quarter of 2016. For

To read the full report, data and graphs go to http://asianbondsonline.adb.org/newsletters/abowdh20170213.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 6 - 10 February 2017

Real gross domestic product (GDP) growth in Indonesia slowed marginally to 4.94% year-on-year (y-o-y) in the fourth quarter (Q4) of 2016 from 5.01% y-o-y in the third quarter of 2016. For full-year 2016, Indonesia’s economy grew 5.0%, up slightly from 4.9% growth in 2015. Japan’s real GDP growth eased to 0.2% quarter-on-quarter (q-o-q) in Q4 2016 from 0.3% q-o-q in the third quarter 2016. On an annualized basis, Japan’s economy expanded 1.0% in Q4 2016, lower than the 1.4% growth posted in the previous quarter. In the People’s Republic of China (PRC), the Caixin General Services Purchasing Managers Index (PMI) fell to 53.1 in January from 53.4 in the prior month; however, a reading above 50.0 still indicates an expansion. Industrial production growth in Malaysia dropped to 4.7% y-o-y in December from 6.2% y-o-y in November.

*     The Bangko Sentral ng Pilipinas decided to keep the policy rate unchanged at 3.00% at its monetary policy meeting on 9 February. The decision was influenced by both manageable inflation and uncertainties in the advanced economies. The Monetary Policy Committee of the Bank of Thailand maintained the policy rate at 1.50% during its meeting on 8 February. The committee projects the economy will grow at a faster pace compared to previous assessments and inflation is expected to trend upward.

*     Inflation in the Philippines inched higher in January to 2.7% y-o-y from 2.6% y-o-y in December, well within the government’s 2.0%–4.0% target range. The Bangko Sentral ng Pilipinas announced that it will closely monitor the inflation impacts of the tax reform proposal that is being debated in the Philippine Congress.

*     The PRC’s exports rose 15.9% y-o-y in January while imports rose 25.2% y-o-y, resulting in a trade surplus of CNY354.5 billion. Malaysia recorded a trade surplus of MYR8.7 billion in December as exports increased 10.7% y-o-y and imports increased 11.5% y-o-y. In the Philippines, exports were up 4.5% y-o-y and imports increased 19.1% y-o-y in December, resulting in a trade deficit of USD2.6 billion.

*     Indonesia’s current account deficit narrowed to USD1.8 billion in Q4 2016, equivalent to 0.8% of GDP. Japan’s current account surplus narrowed to JPY1.1 trillion in December from JPY1.4 trillion in November. Japan posted a current account surplus of JPY20.6 trillion in full-year 2016, higher than the JPY16.4 trillion recorded in 2015.

*     The PRC’s foreign exchange reserves fell for the seventh straight month in January to USD2.99 trillion from USD3.01 trillion in December as the government continued to intervene in the currency market. Foreign exchange reserves in Indonesia, Malaysia, and the Philippines were up in January.

*     On 8 February, Moody’s Investors Service revised its outlook on Indonesia’s sovereign credit rating to positive. The ratings agency also affirmed Indonesia’s issuer rating at Baa3.

*     Hong Kong Airlines International Holdings issued a USD250 million perpetual bond last week, which is callable after 3.5 years, at a yield of 7.125%.

*     Local currency government bond yields fell for most tenors in Indonesia, Malaysia, Singapore, and Thailand, and for all tenors in Hong Kong, China; the Republic of Korea; and Viet Nam. On the other hand, yield movements in the PRC and the Philippines were mixed. Yield spreads between the 2-year and 10-year tenors widened in all markets except in Indonesia, Malaysia, and Thailand.

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