East Asia Econ

Formally launching my data API, which now allows access to almost 700,000 series covering China, Japan, Korea and Taiwan, with monthly, quarterly and annual data.

Korea's current account reached a record high in Q4. But equity outflows, remarkably, increased even more. The balance between the two should diverge through 2026. The CA surplus can be expected to grow on the back of the semi supercycle, while there are four reasons to think net outflow should peak

A chart pack summarising developments in China and Korea.

Regional themes: continuing (and under-appreciated) nominal improvement in China; election uncertainty in Japan; strengthening export momentum in Korea on the back of chips; which in turn looks significant given the huge outperformance of Taiwan through 2025, all because of AI and semiconductors.

Today's official PMIs were below 50. That shows the domestic economy is weak – though the data were likely pulled down by the coming holiday. More interesting was the further rise in prices in manufacturing. That change relates to USD/global prices, but does suggest an upturn in nominal momentum.

With policy efforts reducing headline inflation, the bullish case for Japan is once again a rise in real wages that pushes up consumer spending and aggregate demand. The consumer confidence survey points to just that scenario, but it isn't in the hard data yet, with December retail sales still soft.

Today's data releases show the domestic economy bottoming out, but not yet growing much. The upside risk rests on 1) exports, which the BOK in its last official forecast thought would only grow 1.4% in 2026 and 2) capex, with Samsung and SK Hynix this week pledging big increases.

My latest video, discussing the work I've been doing looking at Japan's fiscal position.

Some of the slowdown in services PPI inflation is due to lower goods price inflation, but the combined result points to softer downstream inflation. SPPI inflation in high labour-intensive sectors is still over 3% YoY, but the recent MoM run-rate of under 2% is too low for the BOJ's inflation target

Headline business sentiment has improved to take the BOK back towards neutral. But the details are mixed, with Korea's recovery more K-shaped than it has been before. With the semi cycle lifting exports, the BOK is now unlikely to ease further, but the bank still needs to see more domestic recovery.

The BOJ's full outlook report that was released today includes analysis arguing that the pass-through from JPY to CPI has risen, reflecting not only greater direct effects, "but also stronger secondary spillover effects, such as more active wage- and price-setting behavior of firms"

Like the actual monthly deposit data, Friday's PBC Q425 depositor survey shows a slowing of the flood of household savings into the safety of bank deposits. The structural deflation pressure caused by the collapse of real estate activity and the chaos of the covid lockdowns is beginning to ease.