Global risk appetite was dented after Federal Reserve Governor Christopher Waller on Tuesday indicated interest rate cuts could come later and be implemented more slowly than markets have been positioning for.
This is likely to spill over into Asia on Wednesday, where the focus will be centered on the Chinese economic ‘data dump’. Indonesia’s central bank also announces its latest interest rate decision.
Reuters polls suggest annual investment and industrial production growth rates in China held steady in December from the previous month, while retail sales growth slowed. The latest house price and unemployment figures will also be released.
On the broader GDP level, quarterly growth is expected to have slowed to 1% in the October-December period from 1.3%, while the annual rate of growth rose to 5.3% from 4.9%, largely due to base effects.
Chinese Premier Li Qiang in Davos on Tuesday said GDP growth was probably around 5.2% last year. He also said China is open for business, notable comments in light of China recently posting the first quarterly deficit in foreign direct investment since records began in 1998.
At a private lunch in Davos on Tuesday Li and People’s Bank of China Governor Pan Gongsheng later met business and finance leaders, including JP Morgan CEO Jamie Dimon, Bank of America CEO Brian Moynihan, and Blackstone CEO Steve Schwarzman.
Beijing may be on a charm offensive, but it will need the data to pay ball if it is to have any chance of succeeding.
Full-year growth is expected to slow to 4.6% in 2024 from 5.2% last year, with risks probably tilted to the downside – the property crisis is rumbling on, consumer and business confidence is weak, local government debt is high and rising, and deflation looms large over the economy.
Bank Indonesia, meanwhile, is expected to keep its key interest rate unchanged at 6.00% on Wednesday. With inflation within BI’s 2023 target range of 2.0% to 4.0% for seven months and falling, markets are pricing in the first rate cut in the third quarter.
