Malaysia's September trade and inflation data, regional central banks' policies in focus

KUALA LUMPUR: Malaysia's September trade and inflation data, alongside a series of regional central bank decisions, will be in focus this week.

UOB Global Economics & Market Research, in its weekly outlook for Oct 19 to 23, said Malaysia's September external trade data and consumer price index (CPI) figures would be among the key regional releases.

Exports are expected to grow 36 per cent year-on-year (YoY), according to UOB, below the 45.5 per cent growth recorded in August.

Imports are forecast to rise 35 per cent YoY, compared with 41.1 per cent previously, while the trade surplus is expected to widen to RM29 billion from RM28.1 billion in August.

UOB also expects Malaysia's headline inflation to edge up to two per cent in September from 1.9 per cent in August.

Across the region, Bank Indonesia's (BI) monetary policy decision on Wednesday will be closely watched amid continued pressure on the rupiah and uncertainty over energy prices.

UOB economist Enrico Tanuwidjaja expects BI to raise its policy rate by 25 basis points (bps) to six per cent, against the majority view among analysts surveyed by Bloomberg that the central bank would keep rates unchanged at 5.75 per cent.

"Given risks on rupiah's trajectory amid still-rising external uncertainty and volatility and meaningful risks from higher energy prices, we still hold to our view for now that it is still a rate pause rather than the end of the current hiking cycle.

"However, given the relative stability of the rupiah in recent weeks, we scale back our forecast to just two additional 25 bps rate hikes in the fourth quarter 2026 to anchor rupiah's stability and inflation expectations. This will bring the policy rate to a terminal level of 6.25 per cent by end-2026," it said.

In the Philippines, nine analysts surveyed by Bloomberg expect the central bank to raise its overnight borrowing rate by 25 bps to 5.25 per cent on Thursday, with persistent inflationary pressures underpinning expectations for further tightening.

China's third-quarter gross domestic product (GDP) and September economic data, will also be closely monitored for signs of momentum in the world's second-largest economy.

UOB forecasts third-quarter GDP growth of 4.3 per cent YoY, unchanged from the second quarter, while Bloomberg's consensus estimate is slightly higher at 4.4 per cent.

In the US, corporate earnings will be another major focus, with 491 companies scheduled to report third-quarter results this week, including 74 constituents of the S&P 500.