A number of countries will release IP data, which should paint a rather weak production picture in early Q2 for the industrialized Asian economies. In Taiwan and Korea, April IP growth is likely to have slipped further, from 6.5% y/y to 4.3% y/y for the former, and from -0.1% y/y to -0.8% y/y for the latter. April IP growth in Thailand and Singapore are likely to improve modestly, but should remain negative on a y/y basis (-1% and -3.4%, respectively). Thanks to lower oil prices, which have led to wider current account surpluses in these industrialized Asian economies, their currencies have in recent months not underperformed other EM FX in this weak manufacturing and trade growth cycle. Meanwhile, two of the fastest growing economies, India and Philippines, will report their Q1 GDP numbers. In India, economic activity remains on a path of recovery, with GDP likely to remain stable at 7.4% y/y from 7.5% in the previous quarter. In Philippines, growth is expected to slow to 6.6% y/y from an exceptionally strong Q4 of 6.9%, but underlying trend to remain robust, supported by government spending. “We believe PHP and INR would likely be regional relative outperformers when the USD uptrend resumes, possibly in H2” says Barclays.
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