The “Second quarter GDP reports for Asia Pacific continue to roll in and, for the most part, they show the region remains resilient to external weakness, says Moody’s in a preview of numbers to be released this week. According to it “Japan is expected to report another strong gain, benefitting from the cheaper yen and expansionary fiscal and monetary policies, while retail and tourism are supporting Hong Kong’s growth. Indian indicators are expected to show stable inflation but another wide trade deficit, which is placing downward pressure on the ailing rupee.“
Today India’s Foreign Trade figures for July and Industrial Production for June are likely to be released, while tomorrow the Wholesale Price Index (WPI) figures are expected. Given below are Moody’s forecasts for the same
Foreign Trade July Forecast: US$15 billion
India’s unimpressive trade account reflects the woes of the broader economy. Exports are contracting, imports are barely growing, and the headline balance is deep in deficit. India’s large external imbalance will put downward pressure on the rupee.
Industrial Production June Forecast: 1%
Production contracted in May and was virtually flat through the first half of 2013. Weak domestic demand is weighing on manufacturing production, while supply-side constraints cap growth in the electricity sector. None of these restrictions are likely to abate in the second half of the year.
Wholesale Price Index July Forecast: 4.7%
Wholesale price inflation has stabilized in the 4.5% to 5% y/y range in recent months and is likely to remain there as supply and demand are now evenly matched. The economy is still growing well below potential, but supply is limited, especially of food, which supports prices. Rising agricultural yields will cool food inflation towards the end of 2013.