Asian Data Point That Economic Crisis Will Determine A Further Decline In Inflation

Daily Forex Fundamentals | Written by ecPulse.com | Jun 01 09 08:08 GMT |

Today a new week and new month starts in the global markets with optimism returning among investors as they had more prove that the worst of this economic crisis might have gone, therefore we could be upon a stage defined as stable then afterward recovery will most probably find its way into the economy, as today's economic data released from the Asian continent although point to the fact that various sectors still suffer from this vicious economic crisis signs show that its not getting deeper. We'll start with China the third largest economy in the world which today released their PMI manufacturing for the month of May which rose to 53.1 however less than the previous reading of 53.5, as any reading above 50 indicates growth and any reading below 50 indicated contraction therefore the manufacturing sector remain firm during the second quarter in the face of this crisis that determined worldwide demand and consumption to decline considerably. The 585 billion dollars stimulus plan which the Chinese government adopted in order to prevent the economy from a further weakening in its activities contributed positively in supporting the economy as loans and fixed investments increased, while local demand remained firm compensating the decline in exports. Expectations regarding the economic growth of China differ from one side to another, as the government expects indicate that the economy will grow 8% while other economists see that the economy will grow far less as its hard for the domestic consumption to compensate the decline in exports, however since the economy grew by 6.1% during the first quarter which is seen as the worst so far while during the second quarter stability started to find its way into the economy, it is more likely that China might achieve an economic growth which could be close to its governments expectations. Moving to Thailand which today released the CPI for the month of ay, recording a decline to -0.3% in comparison to the previous 1.0% while on the year it fell to -3.3% compared to the previous -0.9%, and finally the core CPI fell to -0.3% compared to the previous 1.0%. Its clear that prices in the country are directly affected by the decline not only in the commodities prices but also in local consumption, since citizens expect more decline in prices and in order to benefit from low costs they delay parching pushing prices to a further drop increasing fears of deflation while the economy still faces a deep recession as the GDP contracted by 7.1% during the first quarter. South Korea today released their yearly exports index that fell by 28.3% in May to 28225 million dollars, the sharpest fall in 4 months as worldwide demand remain weak, while the previous reading was -19.6% or 30418 million dollars. Imports also fell in May by 40.4% to 23075 million dollars from the previous -35.6% as local consumption fell since the economy faced a sharp slowdown in its activities however succeeded to avoid recession since the government adopted some stimulating plans. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk