Indonesia’s weakening currency has contributed both to July’s record trade deficit as well as to the further rise in inflation. The trade deficit in July was $2.3 billion, the biggest on record. Inflation, on the other hand, rose to 8.8% in August from a year earlier, the highest since January 2009. The increased consumption before the Eid Al-Fitr holiday also played a role in the rising deficit and inflation. Imports were higher due to a lack of sufficient production to meet the seasonal hike in demand. Therefore, the record trade deficit is not expected to continue, though the currency will remain a challenging issue in the coming months. The HSBC Indonesia manufacturing PMI exhibited deterioration in the country’s operating conditions in August. The gauge plunged below the 50.0 no-change-limit to register 48.5, down from the expansion of 50.7 in the previous month. It is worth noting that the August reading of the index is the lowest in 15 months. The survey showed that companies reduced their production levels in August for the first time since January on the back of contracted new export business together with domestic demand. This led employment to shrink at the fastest pace in survey history.
In Taiwan, the manufacturing sector stabilised in August as indicated by an increase in its PMI manufacturing to hit the no-change limit at 50.0, up from 48.6 in July. This improvement came after three months of deterioration. The economy of the Philippines grew at a remarkable rate for the fourth quarter running. The GDP recorded a 7.5% increase in 2Q13 compared with 7.7% in 1Q13. The slowdown in China’s economy and weak overseas demand have put Thailand’s economy into recession as 2Q13 GDP contracted by 0.3% q-o-q following a drop of 1.7% in 4Q12. The manufacturing sector in Vietnam moved towards stabilisation in August. PMI manufacturing improved to 49.4 in August from 48.5 a month earlier. This figure shows that output and new orders remain in the fall area though at marginal rates. The survey outcomes suggest that the tough export market is showing signs of stabilisation.