On Monday (Feb 16), the statistical bureau schedules to report the 4Q08 GDP growth figure. We expect economic growth to have slowed to 5.5% yoy in the 4Q08 vs. 6.1% in the previous quarters as impacts of global economic downturn started to take its tolls on domestic economy. In 2008 the economy likely grew by 6.1%.
Private consumption and investment eased on the back of weaker economic activities and tight liquidity triggered by risk aversion around the globe. We expect a sharp deceleration in export and import growth in 4Q08.
In light of waning global trade demand, tradable sector (i.e. manufacturing, agriculture, and mining) is likely to have slowed considerably in the 4Q08. Meanwhile, non-tradable sector, such as communications, trade, and construction may held up relatively well, backed by modest domestic demand.
We believe the 4Q08 would give confirmation on weaken domestic activities, which would provide more reason for the government to push forward fiscal stimulus and accelerate monetary policy loosening.
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