Asia week ahead: Australian rate decision and key data from Philippines, South Korea and Taiwan

The Reserve Bank of Australia (RBA) is expected to hike interest rates by 25 basis points (bps) at its 5 May policy meeting. The broader inflation risk backdrop has shifted to the upside, with higher oil prices likely generating second-round effects on services inflation. This will place renewed pressure on transportation, electricity, and utility costs, elevating CPI inflation in the second quarter and strengthening the case for policy action by the RBA. In the Philippines, GDP growth is expected to recover to 4.3% year-on-year, driven by favorable base effects and increased government spending. However, consumption growth remains subdued due to rising unemployment. Weak construction activity and relatively resilient services activity are expected to weigh on growth. CPI inflation is projected to rise above 5% in April, influenced by the pass-through of higher global oil prices and emerging second-round effects. Rice price increases are also contributing to food inflation. South Korea’s consumer prices are anticipated to accelerate due to rising oil prices impacting other goods and services. While government actions will limit increases in gasoline and electricity prices, costs for air travel, logistics, and petrochemicals are expected to rise sharply. The recent weakness of the South Korean won (KRW) and semiconductor price surges are beginning to affect other goods. March saw import prices rise 18.4% year-on-year, and prices excluding food and energy rose 10.2%. China’s economic activity is expected to be quiet this week due to Labour Day holidays (1–5 May). Markets will monitor holiday consumption and travel data, as well as services and composite PMI data. Taiwan’s April inflation data is set to show signs of energy price passthrough, following limited effects in March. The country will release CPI and PPI inflation data on Thursday. Trade data for April is expected on Friday, with a projected 59.3% year-on-year export growth and 35.5% import growth, resulting in a trade surplus of $21.6 billion.