More signs of China’s slowing, but confirmation that the South Korean economy is doing better than previously thought.
But more worrying for Asia is that Japan now faces more political deadlock after the government lost control of the country’s upper house in elections on Sunday.
That could end any chance the country has to make inroads into reforming its finances and cutting its huge debts (mostly locally- owned).
First China and news of a second consecutive monthly slowing in the rate of growth in house prices.
The official figures aren’t due out until Thursday, but newsagencies reported that a report in the official newspaper of the country’s statistics bureau revealed that house prices rose 11.4% in the year to June, which was down from the 12.4% rate in May and the 12.8% peak in April.
The report said property prices in the 70 major cities of China fell 0.1% from May and in a further sign of moderating demand for property, the value of property sales rose 25.4% in the six months to June, slowing from the 38.4% jump in the five months to May.
Sales by floor area increased 15.4% in June, compared with a 22.5% in the five months to May.
That was after the central bank reported on Sunday that new Yuan loans in June fell to 603.4 billion ($US88.7 billion), down from just over 639 billion in May.
That took new loans in the six months to June to 4.63 trillion Yuan, down 2.74 trillion Yuan from the first half of last year.
The central bank said that total outstanding loans at the end of June stood at 44.61 trillion Yuan, up 187.2% on the first half of 2009, but down more than three percentage points from May.
Meanwhile the high growth in China has helped push South Korean economic growth forecasts higher, despite an expected second half slowdown.
The country’s central bank yesterday boosted its 2010 economic growth forecast to an eight-year high of 5.9%, citing robust industrial output, exports and business investment in the first half.
The forecast by the Bank of Korea compares to the 5.2% forecast made in April.
The central bank now believes that Asia’s fourth-largest economy will slow to an annual rate of 4.5% in the second half, compared to a year earlier after growing 7.4% year-on-year in the first six months.
This year’s revised growth forecast, if confirmed, would be the highest since the 7.2% rate achieved in 2002.
"The Korean economy is expected to maintain its upward trend into next year …consumer prices are expected to rise at a faster pace in the second half on demand-pull inflationary pressure," the central bank said in a statement.
In the second quarter the economy grew 1.2% quarter-on-quarter but this may fall to 0.7% in the third quarter, the bank said.
Last week the International Monetary Fund raised its full-year forecast to 5.75% from an earlier 4.5%.
The raised forecast help explain the higher inflation forecast from the central bank of 2.8% (2.6% in April) and a forecast of a 2011 inflation of 3.4% (3.3%).
Last Friday the bank unexpectedly raised the key rate for July to 2.25% from a record low of 2%.
The central bank also lifted its employment forecast as well.
And Japan is facing another debilitating bout of political uncertainty after the ruling coalition government lost control of the upper house in elections on Sunday.
The ruling Democratic Party of Japan and their small coalition partner, People’s New Party, won just 109 seats versus the 122 needed to secure a majority.
As a result, they will need to expand the coalition or otherwise cooperate with other parties (such as the former government (the Liberal Democratic Party) in order to maintain political control or to get measures passed.
The loss would seem to rule out any chance the government of Prime Minister Naoto Kan (which still controls the more powerful Diet, or lower house) to push through fiscal reform, such as tax increases and spending cuts.
He may still get some policies approved, but they will be watered down, especially the contentious idea floated last month to double the sales tax to 10%.
And Japan’s benchmark wholesale-price index fell 0.4% in June compared with May, the Bank of Japan said yesterday.
Compared with June of last year, wholesale prices were up 0.5%.
But the negative month-on-month reading was the first such decline since October of last year and followed a 0.2% rise from April to May.
