This article first appeared in The Edge Malaysia Weekly on December 20, 2021 - December 26, 2021
The focus at home will be on the November inflation rate, out midweek, but there will also be keen interest in the final iteration of the US’ and the UK’s third-quarter economic growth, which will be out on Tuesday.
Given that Christmas Day falls on Saturday, financial markets in most countries will stay open this week except for those in the US, which close on Friday for the eve of the celebration.
At home, given current concerns about the rising prices of goods, the November inflation rate — as measured by the Consumer Price Index (CPI) — will be closely watched.
A Bloomberg poll of economists’ forecast sees inflation coming in at 3.2% year on year for November.
In October, the CPI rose 2.9% y-o-y, largely because of an increase in transport costs as well as prices in other segments, including housing, water, electricity, gas and other fuels.
There had been a double-digit increase of 11.3% in the transport group in October due to higher global oil prices, while the electricity, gas and other fuels subgroup had shot up 27.6% following the discontinuation of the electricity discount in September, according to the Department of Statistics.
Month on month, the CPI had increased 0.7% in October. For the January to October period, it grew 2.3% y-o-y.
Over in the courts, Datin Seri Rosmah Mansor’s corruption trial in relation to the solar energy project for 369 rural schools in Sarawak will continue on Thursday and Friday. Last week, the High Court said it would consider hybrid proceedings for the trial after Rosmah’s MySejahtera status, which was orange, obstructed trial dates for the third time.
The court’s standard operating procedure is that it only allows individuals with blue MySejahtera status — signifying low risk — to enter its premises.
Apart from that, there will be the continuation of the 1Malaysia Development Bhd audit tampering trial of former premier Datuk Seri Najib Razak and former 1MDB CEO Arul Kanda Kandasamy on Wednesday.
Thailand will have a monetary policy decision on Wednesday. The Bank of Thailand is widely expected to keep the key interest rate at 0.5%.
“[Given] the relatively positive economic outlook, benign inflation rates and Covid-19-related risks, we think the Bank of Thailand is likely to keep its accommodative monetary policy stance for the time being. Barring the exacerbation of Covid-19 risks, the improvement in economic outlook and higher inflation into 2022 could also support the start of rate normalisation in 4Q2022,” UOB Economics & Markets Research said in an outlook report last Friday.
Over in the US, it is widely expected that the third and final reading of 3Q GDP will show that the economy slowed to a modest annual rate of 2.1%, the same as the second reading last month. This compares to the solid growth of 6.3% in 1Q and 6.7% in 2Q. Nevertheless, economists expect the world’s largest economy to see a stronger rebound in 4Q, provided that rising inflation and a recent increase in Covid-19 cases do not derail activity.
As for the UK, two weeks ago, the British Chambers of Commerce had forecast that GDP growth would slow to 0.5% in 4Q after 1.3% growth in 3Q.
It will be a busy week for macroeconomic data releases in the US. The key one to look out for is the November reading of the personal consumption expenditures price index on Dec 23, one of the main measures of inflation and consumer spending trends in the economy.
There is also data on Mortgage Bankers Association (MBA) mortgage applications, 3Q real consumer spending and November existing home sales on Dec 22, as well as November personal income and spending data, initial jobless claims and new home sales data on Dec 23.
China, in contrast, will have a quiet week. On Monday, it will announce its latest loan prime rate (LPR) data. A Bloomberg poll expects that the one-year and five-year LPR will stay unchanged at 3.85% and 4.65% respectively. The LPR is a lending reference rate set monthly by 18 banks. Most new and outstanding loans in China are based on the one-year LPR, whereas the five-year rate influences the pricing of mortgages.
The Reserve Bank of Australia will release its December meeting minutes on Tuesday.
Japan will put out the November inflation rate on Thursday. On Friday, there is data on housing starts and construction, while on Sunday there will be retail sales numbers.
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