Global economic roundup - Capital Economics | Outlook data
(The Insider Stories) - The following is an economic roundup by London-based independent research provider Capital Economics.
Capital Economics
Global
Industrial output in the emerging world has increased by a remarkable 30% in the past five years. Yet impressive growth at an aggregate level masks a wide variation in the performance of individual regions. Almost all of the increase in output since 2008 has been in Asia. In contrast, industry in Latin America and parts of Emerging Europe has experienced a lost half-decade of growth.
US
The slowdown in global economic growth appears to have hit American manufacturers in April. The ISM manufacturing index dropped to 50.7 in April, from 51.3 in March, erasing almost all of the gain seen over the first quarter and left the index dangerously close to the expansion-contraction level of 50.
This coincides with the latest weakness in international surveys. While activity in the euro-zone has continued to contract, it is hardly expanding in China either.
The new export orders index slumped from 56.2 in March to 50.3 in April. The bulk of decline in the headline ISM index was accounted for by the drop in the employment index to 50.2, from 54.2.
At face value, this is consistent with another monthly drop in manufacturing jobs in the official payrolls figures due on Friday. Meanwhile, it appears that the domestic market was less of a drag in April.
Industrial output in the emerging world has increased by a remarkable 30% in the past five years. Yet impressive growth at an aggregate level masks a wide variation in the performance of individual regions. Almost all of the increase in output since 2008 has been in Asia. In contrast, industry in Latin America and parts of Emerging Europe has experienced a lost half-decade of growth.
China’s Republic
A wider trading band for the renminbi is a likely next step in currency policy reform. But it may not happen as soon as many think and, in any case, would probably make little difference to the renminbi’s path. In this month’s
China Watch we take a closer look at currency policy and also look ahead to forthcoming data releases, which are likely to be flattered by calendar effects.
Indonesia
This month’s deflation was a factor of harvesting season and improving supply of garlic and onion after a short supply disruption in April due to the tightened regulation on horticulture imports. Food prices declined significantly, particularly rice that contributed around -0.06% mom out of -0.2% mom of the total food price.
Garlic price has also come down by around 95% on average (contributing around -0.18% mom to inflation), following a sharp rise by 105% in the previous month. On the other hand, onion price is still rising, though in a smaller magnitude of 25% from previously 150% increase (with inflation contribution around 0.07%mom).∙
The 4.3% electricity tariff rate hike in jan-13 apparently has not caused a significant rise in the price of processed food, clothing and health. It looks like producers still have not passed through the higher costs to the consumers. Thus, we still expect a higher impact of the second rise of electricity tariff in April to the upcoming inflation, particularly on food prices (i.e. biscuits and instant noodles).
