East Asia Econ
Welcome
Welcome to EAST ASIA ECON, a research service run from Taipei by Paul Cavey, and specializing in the markets and macro of China, Japan, Korea, and Taiwan.
We cover all the major data releases, as well as providing weekly and monthly summaries. We also devote a lot of time to thematic work, aiming to understand development patterns across the region, and to find common investment themes.
The analysis is founded on an on-the-ground knowledge gained from thirty years experience living, travelling and working in the region. We also have a very strong data infrastructure, built by directly accessing official sources, and made available to subscribers via a comprehensive range of interactive charts and a data app.
We don't think you'll find coverage that is as comprehensive and rounded anywhere else. The articles and charts below give a flavor of the work we are doing. There is a lot more on the home pages of the individual economies.
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China – deflation in November
There continues to be no inflation in China. At a headline level, that will change when food prices rebound. But the decline in inflation isn't just seen in headline. The run-rate of core has slowed from 1.8% annualised before covid to 0.6% since.
China – trade not up, but not weak
As a general trend, both exports and imports remain range-bound. That's interesting, because exports haven't fallen so far from the peak, and imports look much stronger than the collapse in property. Exports have probably bottomed, but there's likely downside risk for imports.
Japan – ageing hits
One reason for the sluggish recovery out of covid is Japan entering a new stage of ageing, which is resulting in a faster rate of population decline. That is because of a fall in the number of adults, which cuts aggregate consumption, but should mean per capita wage growth starts to accelerate.
Taiwan – inflation down, not yet out
Sequential inflation dropped back to zero in November, but average core over the last three months remains elevated. With the domestic economy holding up, and exports starting to rebound, there isn't a strong case for rate cuts. That will matter for the TWD if exports really do rebound from here.
Japan – tightening to loosen
Fiscal and monetary policy have been negative for household incomes, which are now the weak link in the economy. That context helps explain deputy governor Himino's speech today, which seems to mark an effort by the BOJ to argue that higher rates might not be so bad for the economy after all.
Japan – past the inflation peak
Tokyo CPI for November reinforces the message of national CPI for October that inflation has peaked. With $JPY turning too, that makes the macro outlook for Japan more positive. That's because it removes a factor that has been weighing on real incomes, clearing the way for a consumption recovery.
Korea – CPI slowing again
As expected, inflation eased in November. There are still some upside risks, given the rebound in import prices and the continued strength in personal services inflation. For those to become interesting, export growth needs to pick-up powerfully, but the leading indicators don't look so strong yet.
Last week, next week
A summary of what happened on East Asia Econ last week, and what to look for in the next seven days.
Region – manufacturing cycle
Korea's PMI is now back at 50, but while Taiwan's remains below that level, the upside potential looks bigger. Taiwan domestic momentum also looks stronger. Inflation is higher in Korea, but the risk that the central bank has to raise rates again next year is probably a bit higher in Taiwan.
Japan – deficient labour demand
Japan's labour market continues to go sideways. We think that is unlikely to change without an acceleration in economic growth and thus labour demand. But if that does happen, there are reasons to think the upturn in per capita wage growth could be significant.
China – soft floor, hard ceiling
We think the main themes for China remain weak aggregate demand and pricing, and strong external surpluses. That indicates lower rates and a stronger CNY. To think that is too pessimistic, we look for signs of better property activity and a reversal of the flow of savings into time deposits.
Korea – actually, a bit doveish
The BOK was more doveish today than we'd expected, removing one of the two previous references in the statement about whether to raise rates further.