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Macro and market analysis of the world's largest economic region
These are the most recent posts. Please sign up and get in contact for access to all the comments and interactive charts on the site
A summary of what happened on East Asia Econ last week, and what to look for in the next seven days.
Regional data show three themes: 1) Differentiation: Japan strongest, Taiwan weakest; 3) Diversification in export markets: autos and DM holding up while tech and China remain weak; and 3) Desynchronisation: despite the weakness in exports and industry, services and retail sales are holding up.
Headline CPI inflation is now coming down quickly, and could drop below the BOK's 2% target by the end of Q3. But core inflation continues to hold up, and the BOK is unlikely to shift policy before that changes.
Consumer confidence improved again in May. That offsets the significance of the fall in April retail sales. But while employment sentiment in the consumer confidence survey also improved, it is still noteworthy that official labour market data through April continues to feel soft.
The optimistic interpretation for the weak May PMIs is this is a soft patch that was inevitable after the strong Q1 bounce. But for manufacturing at least, that isn't especially persuasive, and the broad-based weakness of output prices is a warning of more more fundamental challenges.
If Japan's economic problems were about debt and deflation, then China is facing similar challenges. The one difference is the competitiveness of China's exporters. As a result, China is likely to see falling rates, but currency strength could be more of an issue for China than it was for Japan.
A summary of what happened on East Asia Econ last week, and what to look for in the next seven days.
It has been a quiet few days for China data. What has emerged continues to look bearish, with the move of money into time deposits continuing, industrial prices falling more quickly, and corporate profits weakening.
It was no surprise to anyone that the BOK didn't change rates today. As things currently stand, we doubt it moves soon. It downgraded GDP forecasts today, but also revised up the outlook for core CPI. The combination obviously makes it difficult to hike, and hard to cut.
A slidepack summarising our cyclical and market views