Hong Kong, China’s gross domestic product (GDP) growth rate slowed to 1.8% year-on-year (y-o-y) in 2Q14 from 2.6% in 1Q14 due to weaker growth in consumption stemming from lower tourism receipts and reduced domestic demand. Singapore’s final GDP estimates showed the economy grew 2.4% y-o-y in 2Q14. Real GDP growth in Japan contracted 1.7% quarter-on-quarter (q-o-q) in 2Q14, following growth of 1.5% in the previous quarter, due to a q-o-q decline in private demand. On an annualized basis, the contraction in Japan’s real GDP stood at 6.8%. Meanwhile, Malaysia’s real GDP growth accelerated to 6.4% y-o-y in 2Q14, the fastest pace in 6 quarters, from 6.2% in 1Q14 on higher exports and sustained private consumption.
In a meeting held on 14 August, the Board of Governors of Bank Indonesia decided to keep its benchmark rate steady at 7.5%. Meanwhile, the Bank of Korea's Monetary Policy Committee decided on 14 August to reduce the base rate by 25 basis points to 2.25% from 2.50%. The committee deemed improvements in the Republic of Korea's domestic demand to be “insufficient,” and forecast that consumer price inflation will gradually increase as inflationary pressures remain low in the domestic economy.
The People’s Republic of China’s (PRC) industrial production grew 9.0% y-o-y in July after rising 9.2% in June. By sector, the largest growth came from the manufacturing industry, which grew 10.0% y-o-y in July. In Malaysia, industrial production surged to 7.0% y-o-y in June from revised growth of 5.9% in May, driven by expansion in all three sectors.
In the PRC, retail sales rose 12.2% y-o-y in July to CNY2.08 trillion. Retail sales in Singapore rose 0.4% y-o-y in June after a revised 5.9% drop a month earlier. However, excluding motor vehicle sales, retail sales declined 2.1% y-o-y.
In the Philippines, merchandise exports increased 21.3% y-o-y to US$5.4 billion in June. Electronic exports, which accounted for the largest share of the total, increased 10.7% y-o-y. Personal remittances from overseas Filipinos rose 7.0% y-o-y in June to reach US$2.3 billion, the highest rate of growth posted in 6 months. For the first half of the year, personal remittances totaled US$12.7 billion.
Foreign net investment in local currency bonds in the Republic of Korea rose to KRW0.5 trillion in July from KRW0.4 trillion in June, based on data from the Financial Supervisory Service. The total capital ratio of domestic banks under Basel III in the Republic of Korea stood at 14.12% at the end of 2Q14, up slightly from 14.07% in the previous quarter.
In the PRC, new loans granted by banks and financial institutions fell to CNY385.2 billion in July from CNY1.08 trillion in June, and from CNY699.7 billion a year earlier. The PRC’s fixed-asset investment rose 17.0% y-o-y to CNY25.9 trillion in January–July, lower than the 17.3% y-o-y growth in January–June. The slower investment rate resulted from concerns over the property sector and excess supply in some sectors.
Local currency government bond yields rose for all tenors in Malaysia, Singapore, and Thailand; and for most tenors in the PRC, Japan, the Republic of Korea, and Viet Nam. Yields fell for all tenors in Hong Kong, China; and for most tenors in Indonesia. Yields were mixed in the Philippines. The spread between the 2- and 10-year maturities fell for most markets except for the Hong Kong, China, Malaysia, and Thailand.