- We expect PBOC to keep the 1-year Loan Prime Rate (LPR) unchanged at 3.00%.
- Singapore likely to report stable inflation and weakening industrial production.
- Hong Kong to report a tapering of external demand.
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Central bank meetings
The People's Bank of China (22 September): We expect PBOC to keep the 1-year Loan Prime Rate (LPR) unchanged at 3.00%, as policymakers assess the impact of recent stimulus measures and await progress in trade negotiations with the US. China’s 2H outlook is challenging. The central bank has already injected RMB1.7trn into the financial system via open market operations last quarter and is likely to continue easing through quantitative measures. Reportedly, Beijing is planning to inject another CNY1trillion for financing the local government backlog through state and policy banks. The PBoC will maintain an accommodative stance to reduce borrowing costs and support reinvestment. We anticipate another 10bps reduction in 1Y LPR in 4Q25.
Forthcoming data releases
Taiwan: August export orders and industrial production data are due this week. Export orders are expected to slow to 13.2% yoy, down from 15.2% in July, while industrial production is forecast to ease to 12.9% yoy, compared to 18.1% in the prior month. Earlier-released August exports maintained robust growth at 34.1% yoy, indicating that trade front-loading has yet to fully subside. As a leading indicator, export orders are likely to better reflect the post-tariff external demand outlook. A sharp slowdown remains unlikely, however, supported by resilient demand from ASEAN and other non-US markets.
Malaysia: We anticipate headline inflation at 1.2% yoy. There has been a slight uptick in services and headline inflation due to the expanded Sales and Services Tax, in effect from July 1. Inflation likely remained muted amid moderate commodity prices and an ongoing lack of domestic price impulses. The government is finalising the details for rationalising RON95 petrol subsidies (likely to be announced in late-September). This policy reform is expected to have a manageable upside impact on headline inflation.
Singapore: We foresee ongoing contained inflation and anticipate industrial production (IP) to correct in August 2025. Core inflation likely remained manageable at 0.5% yoy, following a slight easing in July. The sub-1% yoy rate for the eighth consecutive month was due to continued modest imported price pressures amid soft global commodity prices and ongoing Singapore dollar appreciation, as well as contained pass-through of business costs to consumer prices due to moderate domestic labour cost pressures amid restrained wage increments. While accommodation inflation likely remained low, a pick-up in private transport price increase – due to a faster rise in car prices - likely resulted in a slight increase in headline inflation to 0.7% yoy in August from 0.6% yoy in July.
We forecast an IP decline of 3.5% yoy in August 2025, marking the first contraction since June 2024. This followed robust expansion of 7.1% yoy in both of the previous two months. August’s yoy data was negatively impacted by adverse base effects, as overall IP and electronics output registered their highest readings of 2024 in August 2024, at 22.8% yoy and 52.2% yoy, respectively. This tumble would align with the fall in electronics domestic exports, despite some tailwinds from Artificial Intelligence. Amid ongoing US tariff headwinds and uncertainties, Singapore’s manufacturing sector will likely face challenges and volatility in the coming months.
Hong Kong SAR: Export growth is expected to slow from 14.3%yoy in July to 12.1% in August as China’s external demand weakens. China’s exports dropped from 7.7%yoy in July to 4.4% in August as front-loading eased. The 40% US transshipment tariffs will further hit Hong Kong’s re-exports of Chinese goods. Imports are projected to grow at a slower pace, easing from 16.5% YoY in July to 13.6% in August, largely due to base effect. Increase in tourist arrivals will support domestic demand. Mainland tourist arrivals jumped 19% YoY in August, averaging 141k per day. Consumer prices are expected to rise 1.2% YoY in August on stronger consumption sentiment and higher housing rental cost. Residential rental yields climbed to 2.94% in July from 2.82% a year earlier. The rental market will likely hit a record high by October, fuelled by the influx of Chinese students and professionals.
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