Taiwan’s economy expands
Taiwan’s economy came out of the recessionary phase. The GDP for 2Q16 grew by 0.69%—compared to a contraction of 0.68% in the previous quarter and above expectations of an expansion of 0.56%. Taiwan’s economy contracted in the previous nine quarters due to decreased demand for the country’s exports overseas. Although there was a recovery in the export segment in the second quarter, private consumption and government spending slowed while investment growth declined—this offset the increase.
The iShares MSCI Taiwan (EWT) fell by 0.13% at the end of the day on July 29. In the meeting at the end of June, Taiwan’s central bank cut the interest rates from 1.5% to 1.4% citing sluggish economic growth. To learn more, read Central Bank of Taiwan Cuts Rates to Boost Economy.
Russia keeps rates unchanged at 10.5%
The Central Bank of Russia kept interest rates constant at 10.5% in the monetary policy meeting on Friday. However, the tone remained dovish for more interest rate cuts in the future as inflationary pressures continue to ease. Currently, inflation rates in Russia stand at 7.5%. They have been stabilizing in the past few month and moving towards the central bank’s target level of 4%. The contraction in the economy came in at 0.5% for June due to sluggish crude prices globally. To learn about the GDP release and market expectations before the interest rate decision, read Russian GDP Falls before the Central Bank’s Policy Meeting.
Industrial production slows in South Korea
Industrial production in South Korea rose by 0.8% on an annual basis in June—lower compared to 4.7% growth in the previous month and above estimated forecasts of an increase by 0.5%. The fall was driven by easing in manufacturing production in June. It showed an increase of 1.1%—lower than the 4.8% rise in May. In mid-July, the Bank of Korea kept interest rates unchanged at 1.3%—in line with expectations. However, the Bank of Korea cut its growth forecast to 2.7% for 2016.
Consumption growth was solid as retail sales grew by 8.9% on an annual basis in June—higher than 5.3% growth in May. On a monthly basis, retail sales grew by 1.0% in June—compared to a rise of 0.8% in the previous month. The iShares MSCI South Korea Capped (EWY) and the iShares MSCI All Country Asia ex Japan (AAXJ) rose by 1.6% and 0.14% at the end of the day on July 29.