Diverging trends in sectoral breakdown in Singapore

Special focus: Economic growth engines in Singapore are seeing different trends at this stage. An external weakness is driving a slowdown in GDP growth. Manufacturing and external-oriented services are experiencing a contraction in economic activity at this stage. In contrast, construction and domestic-oriented services are having continued recovery after the previous collapse.

FX views: EM Asian currencies traded mixed this week. KRW was the underperformer among regional peers on continued concerns over a slowdown in the semiconductor sector, followed by CNY, MYR and TWD. In contrast, IDR and PHP outperformed among Asian currencies. THB also strengthened 0.8%.

Week in review: Industrial production for Taiwan, Singapore and South Korea continued to contract on a year-on-year basis amid weakening global demand. In the first quarter of the year, South Korea’s GDP rose 0.8%yoy, while Taiwan’s GDP shrank 3.02%yoy.

Central bank monitor: Bank Negara Malaysia will release its monetary policy decision on 3 May. We expect the central bank to keep its OPR rate on hold.

Week ahead: The main focus of the week ahead is on central bank decisions from the US Fed and the ECB. Expectations for a final 25bps rate hike in the US has firmed up, although there are lingering concerns regarding the health of the banking sector. At the same time, the ECB is poised to hike by at least 25bps, with some chances of a 50bps rate hike. Recent euro gains have been supported by evidences of improving cyclical momentum in the eurozone. Indonesia’s key GDP and CPI numbers for Q1 and April will likely reinforce our view of its stable fundamentals.

FOR MANUFACTURING, THE SLIDE IN MANY CLUSTERS IS COUNTERBALANCED BY RESILIENCE IN OTHERS

Sources: Bloomberg, MUFG GMR