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Economic week ahead: Policy and growth clues revealed

Central bank decisions in Japan, Australia and Uganda and a series of closely monitored economic reports from China and Europe will keep economists and investors on their toes over the coming days.

Closer to home, South Africa will update on mining and manufacturing and Nigeria will report second-quarter growth figures. Here is your guide to the meetings, data releases and other events likely to move markets in the week ahead.

Africa
Nigeria – the continent's number two economy – will release second-quarter gross domestic product (GDP) figures and the Bank of Uganda will announce its latest rates decision on Monday.

Nigeria's economy continues to demonstrate strong and diversified growth despite security problems. Already Africa's most populous nation, Nigeria is on track to become the continent's largest economy by 2020 as a result of strong GDP growth and a rebasing of its national accounts to 2010.

The Bank of Uganda's monetary policy committee (MPC) kept the bank's policy rate unchanged at 11.0% at its July meeting and is expected to do so again this month. Officials cited renewed upward pressure on inflation, largely as a result of adverse weather conditions, as the reason for their decision.

Ugandan consumer price inflation continued its upward trend last month, with the July figure reaching the highest year-on-year level seen so far in 2013. Price inflation increased from a revised 3.6% a year earlier in June to 5.1% in July. And government encouraged farmers near the end of July to reduce food exports amid fears that a worsening drought could prompt possible food shortages.

Attention will turn to South Africa – Africa's largest economy – later in the week. Statistics South Africa will release June's mining and manufacturing data on Thursday.

Elsewhere on the continent this week, Kenya will release June's overseas remittance figures. Ghana will report last month's gross reserves data and April's M2 money supply. Last month's money supply and foreign reserves are expected from Namibia and Mauritius respectively.

United States
The two big items on an otherwise light US economic calendar this week will be Tuesday's June trade figures and Wednesday's June consumer credit numbers.

Consensus is that the country's international trade gap narrowed to $43-billion in June from $45-billion in May. Consumer credit outstanding is likely to have declined to $15-billion in June from $19.6-billion in May.

In addition to these two monthly releases, markets are likely to pay extra attention to this week's jobless claims report for insights into labour market conditions following Friday's mixed monthly jobs report.

Friday's report showed that non-farm payrolls rose by 162 000 in July, below market expectations for an increase of 185 000 positions. Economists expect the number of new claims for jobless benefits to have risen to 336 000 in the week to August 3 from 326 000 in the previous week.

Beyond these indicators, economists and investors will be scrutinising remarks by Federal Reserve policymakers this week for additional clues on the central bank's plans to reduce its bond-buying stimulus programme. Three regional bank presidents will be speaking on the economy over the coming days.

Richard Fisher – president of the Federal Reserve Bank of Dallas – will deliver remarks on Monday. Charles Evans – head of the Federal Reserve Bank of Chicago and a voting member of the central bank's policy arm, the Federal Open Market Committee (FOMC) – will talk to reporters from the Associated Press, Bloomberg, Dow Jones, Market News International, Market Watch and Reuters on Tuesday. Cleveland's Sandra Pianalto will speak on Wednesday.

Europe
Germany – Europe's largest economy – will release factory orders data on Tuesday and industrial output figures on Wednesday, giving some hint of what to expect from next week's second-quarter GDP report.

Consensus is that factory orders, adjusted for seasonal swings and inflation, rose by 0.9% from May to June, an improvement on May's surprise 1.3% decrease. Analysts polled by Reuters expect output to be up by 0.3% on the month in June compared with a 1.0% decline in May.

France – Europe's number two economy – will release industrial production figures this week. Friday's figures are expected to show that output rose by 0.1% on the month in June, an improvement on May's 0.4% decrease.

In between the two industrial reports, Italy will report GDP figures on Tuesday and the Bank of England's new governor, Mark Carney, will communicate officially with markets for the first time on Wednesday.

Italy's GDP release is expected to show that the pace of the country's recession eased in the second quarter. GDP is forecast to show a 2.2% decrease on the year in the three months to June, down from a 2.4% contraction in the previous quarter.

In England, Carney is widely expected to tie future rates decisions to a specific economic indicator. He is expected to use the Bank of England's August inflation report as a means for discussing which indicator policymakers will consider.

Banks will take centre stage on the corporate earnings calendar. HSBC will report first-half earnings on Monday followed by Standard Chartered and UniCredit on Tuesday and ING on Wednesday.

Asia
China will release several key pieces of economic data this week. Officials will report trade data on Thursday. Inflation, industrial production, retail sales and fixed income investment data follow on Friday.

Analysts at 4CAST expect exports from the world's second-largest economy to have fallen by 1.1% from a year earlier in July and imports to have decreased by 0.1% in the same period, lowering the country's trade surplus to $24-billion last month from $27.1-billion in June.

Friday's inflation data is forecast to show that China's consumer price index rose by 2.7% in July from a year earlier, the same rate observed in June. Producer prices are likely to have fallen by 1.7% over the same period following a 2.7% decrease in June.

Industrial production data are forecast to show growth of 8.6% on the year. Retail sales likely rose by 13.5% from a year earlier, up slightly from 13.3% growth in the previous month. Urban fixed income investment growth is likely to have fallen to 18.5% on the year in July from 20.1% in June.

Beyond China's reports, economists and investors will be watching for monetary policy announcements from the central banks of Australia and Japan this week.

With economic growth likely to remain below trend and inflation comfortably low, the Reserve Bank of Australia is expected to cut its benchmark rate by 25-basis points to 2.5% – a record low – at its meeting on Tuesday.

The Bank of Japan will announce its monetary policy decisions on Thursday. With inflation picking up, markets widely expect officials to leave policy unchanged, allowing time for the central bank's previously announced massive stimulus measures to spread through the world's number three economy.

Matt Quigley writes the Mail & Guardian's weekly economic preview. You can follow him on Twitter at @mattquigley.

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Matt Quigley
Matt Quigley writes the weekly economic preview for the Mail & Guardian. His blog on the South African economy can be found at www.thoughtleader.co.za/mattquigley

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