Strong activity for APAC in Q1, but trade risks loom: S&P

SINGAPORE - Trade risks could cast a shadow on strong economic activity in Asia-Pacific in the first quarter of 2018, S&P Global Ratings says in a new report.

Economic activity remains strong on the consumption and investment fronts in China following the Chinese New Year, it says, with credit expansion easing sharply in February, following the normal seasonal pattern.
 
“Consumer price inflation rose on food and base effects, and the producer price index-consumer price index wedge has almost disappeared.”
 
The report says China's trade surplus increased in February, reflecting an across-the-board surge in exports. “The authorities are closely watching trade policy developments in the U.S., although the impact of the announced steel and aluminum tariffs should be modest.”
 
In Japan, growth improved in the fourth quarter of 2017 to an annualised rate of 1.6%, from 0.5% in the Government's initial release.
 
“This reflected stronger domestic demand despite a drop in real wage growth,” the report says.
 
“The high-frequency indicators look mixed, with retail sales momentum picking up but industrial production growth softening. Core inflation has been flat and the Bank of Japan has doused recent rate-hike rumours.”
 
GDP growth in India rebounded in the final quarter of 2017, reaching 7.2%, the highest in over a year, suggesting that the negative effects of the GST launch have passed.
 
“Activity was driven by a welcome pick-up in investment, which appears to have continued into early 2018. Growth in trade flows is slowing. Inflation pressures have moderated and the Reserve Bank of India appears to be on hold for now.”
 
S&P says Prime Minister Narendra Modi's Bharatiya Janata Party continues to do well in State elections, even where the Party has been historically weak. www.standardandpoors.com (ATI).