In today’s briefing:
- India: Tailwinds from Reopening On Its Last Legs
- China: Do Not Get Your Hopes up for Stronger Growth Just Yet
- A Downturn in the Asian Technology Sector Is Imminent
- The Commodity Report #69
India: Tailwinds from Reopening On Its Last Legs
- The economic momentum is waning as tailwinds from the reopening fade.
- Inflationary pressures have trended up, primarily because of base effects. We envision inflation easing to 7.0% in 3Q22 and 6.4% in 4Q22.
- But, the RBI will not let up on tightening just yet, given that price pressures are stickier in India. We therefore pencil a 35bps rate hike on 30th September.
China: Do Not Get Your Hopes up for Stronger Growth Just Yet
- Stimulus is bearing fruit as economic activity picks up amid a continuing slump in the real estate sector and continued lockdowns.
- But stronger growth is not necessarily on the cards yet. The effectiveness of stimulus is diminished by weakened confidence in the economy and poor incentives to implement policy.
- The net result is a sluggish recovery in growth with continued large downside risks. The authorities will have little choice but to expand their support measures more aggressively.
A Downturn in the Asian Technology Sector Is Imminent
- Early signs of export declines: Export figures for Taiwan and South Korea, two powerhouse exporters of technology-related goods, are showing the beginnings of a slowdown
- Inventory accumulation has continued: A combination of a build-up in inventories and a downturn in Capex intentions are further risk factors for the sector’s performance
- But long-term structural factors such as changing consumer and business practices and government priorities may provide a medium-to-long term buffer against cyclical forces.
The Commodity Report #69
- Probably the best news of the week was that a rail strike in the US was averted after both parties agreed on a deal including higher wages and benefits for rail workers.
- The deal includes a 24% wage increase over five years, including 14,1 % effective immediately as well as five annual $1.000 payments, according to the National Carriers’ Conference Committee.
- According to the Bureau of Labor Statistics, there are currently 150.000 people working in the US railway sector.
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