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East Asia Econ

The platform for tracking and understanding East Asia macro

Latest analysis

Last week, next week

Last week, next week

The major themes: the ending of the first stage of China's post-2020 forced structural adjustment; in Japan, peaking of inflation but BOJ still to hike; BOK cuts but inflation higher than I would have expected; expecting renewed TWD strength. I am now away for a few days, back on September 16th.

5 min read

Taiwan – import prices up, core CPI up more

Taiwan – import prices up, core CPI up more

August data today show the impact of the weaker TWD since July: fx reserves fell, import prices ticked up MoM, and CPI inflation rose. The lesson is that without currency strength, the step-change in economic growth since 2020 is more likely to show up in domestic prices.

2 min read

Japan – softening in July wage release

Japan – softening in July wage release

Headline full-timer wages data were strong in July. But the details of the overall wage release were softer, and warn of some lessening of labour market tightness. In other data today, consumption was soft in July, and exports in the first 20 days of August also weakened.

2 min read

Korea – NPS still a big overseas buyer

Korea – NPS still a big overseas buyer

July BOP data show that KRW appreciation continues to be restrained by substantial buying of overseas assets by the NPS. But the tone of capital flows has started to change as foreigners buy onshore equities, and should shift more later this year with Korea's entry into the FTSE Russell's WGBI.

2 min read

Korea – wage growth still slowing, floor should be close

Korea – wage growth still slowing, floor should be close

The breakdown of income in the detailed Q2 GDP data shows the labour share falling, but remaining well above the pre-covid level. That implies wage growth has slowed to a bit over 2%. Bottom-up wage data for June look similar. A floor is probably close, but there's no sign of a re-acceleration yet.

2 min read

Korea – no change in underlying CPI

Korea – no change in underlying CPI

Two shocks affected CPI in August: bad weather that pushed food prices up, and big cuts in mobile phone bills. The latter impact was bigger. Excluding all that and core remains around 2%, and the BOK expects that to continue. I would have expected more downside risk, but there's no sign of that yet.

2 min read

China – will deflation end?

China – will deflation end?

My latest video discussing the inflation outlook. Apart from the anti-involution drive, the stabilisation of demand deposits and property do ease the downwards pressure on prices. But the weakness of aggregate demand remains, and as yesterday's PMI suggested, the outlook for prices remains subdued.

1 min read

Korea – exports ok, PMI weak

Korea – exports ok, PMI weak

Full-month exports in August were firm, but that still leaves growth in single digits, and neither data nor commentary from the business sentiment surveys suggest that is about to change. Indeed, today's August PMI remained well below 50, and reported a "sharp decrease in incoming business inflows".

2 min read

Japan – labour share rebounds

Japan – labour share rebounds

The Q2 rise in the labour share promises support for consumption, but without yet depressing profits. Manufacturing earnings did drop in Q2, and that questions the sustainability of capex. But IT investment was also strong, and the PMI suggests that overall, manufacturing is coping with tariffs.

3 min read

Last week, next week

Last week, next week

China's structural downturn since 2021 has likely bottomed. But I think real recovery is needed for a further rally in equities. Japan's growth and inflation have survived the tariff hit, putting the BOJ back in play. For Korea, I am questioning the BOK's outlook for inflation and thus rates.

5 min read

Summary charts