Today's charts cover October services trade and the implications for China's GDP growth in Q4; Tokyo inflation (showing stronger rents), and retail sales in Japan; weak October activity in Korea; and yet another round of strong GDP data in Taiwan.
In today's GDP release, the government raised estimated growth for Q1, Q2, and Q3. The FY forecast was raised by almost 3ppts to 7.4%. But because of AI, officials remain bullish about the outlook, and so raised the forecast for 2026 as well, And yet, none of this is expected to impact inflation.
The BOK's revisions to the GDP outlook yesterday were modest. But in today's October output data, there's little sign of any improvement at all. The data are affected by the long Chuseok holiday, and will likely look better through year-end. Still, it is clear the economy still faces headwinds.
The big event today was the BOK meeting. The bank was a bit more constructive on the outlook, but data that was separately released show labour market conditions remaining weak. Elsewhere, profits in China are flat-lining, exports in Japan aren't dropping, and macro data in Taiwan remain strong.
The BOK didn't raise growth forecasts above potential, but still signalled some concern about the resilience of inflation. That sounds a touch stagflationary, and was used to justify a step back from its loosening stance. Growth only gets above potential in its chip-driven upside scenario.
Some thoughts on Korea in light of today's business sentiment survey, and before tomorrow's BOK meeting. Also, today's services PPI inflation for Japan. The details were mixed, but the BOJ anyway seems to be sending the message (again) that while the JPY is so weak, it is headline CPI that matters.
Headline SPPI inflation was stable in October, but weak for high labour-intensive sectors, while part-time wages were strong, likely on the back of the minimum wage hike. That's an unclear picture. But right now, with the JPY so weak, the BOJ will focus more on headline CPI than these messy details.
I doubt the BOK can raise '26 growth forecasts above its estimate of potential and so shift its loosening stance. What's the wriggle room around that? 1) It says the memory cycle means risks are skewed to the upside 2) Citing financial stability risks, more members suggest rates won't change.
Both consumer sentiment and house price expectations in Korea were firm in November. That's significant, when consumer fiscal handouts are winding down, while macro-pru measures on housing have been stepped up. In Taiwan, the consumer mood is also improving, with retail sales rising in October.
That high-frequency upstream prices in China through mid-November are stable offers an important contrast with the weakness of FAI. In Taiwan, the labour market remains tight, with the unemployment rate staying at the lowest levels in over 20 years.
The FAI data point to the economy hitting a wall. But price data don't bear that out. Indeed, upstream prices show the recent stability of PPI is likely persisting. That is also true for the demand:time deposit ratio. The cycle as a whole remains both weak and messy, but there are some green shoots.
Japan is doing macro stimulus when the cycle really doesn't need it. China isn't doing any when the cycle still does. The first keeps the JPY weak. The second prevents the CNY from appreciating. Both in turn weigh on the KRW and TWD, despite substantial current account surpluses across the region.
The big releases today were Japan CPI and trade for October and November PMIs, and Korean October PPI and exports for the first 20 days of November. Also, a longer note on Korean capital flows, and an update of the detailed trade data for China shown in our interactive dashboard.
The BOJ's base case has been that tariffs would slow inflation and growth. Today's data – November flash PMIs, and October trade and CPI data – give no indication that such slowdowns are occurring.
Global factors like US rates and JPY weakness are dragging down the KRW. But there are also local drivers, particularly Korea's big buying of overseas equities. For both the NPS and households, I would expect that to slow, with the reversal likely to be sharp if global markets really sell off.
I've been busy today, so just a couple of quick comments, covering BOJ board member Koeda Junko's speech, and the further rise in Taiwan's current account surplus.
A quiet day for data today, with only machine orders in Japan and Korean IIP data for Q3. The IIP data are interesting, showing Korea's structural emergence as an international creditor. I would have expected that to put a ceiling on $KRW, but that impact really hasn't been obvious in recent months.
A longer piece looking at whether the rise in DRAM prices means Korea macro in 2026 will look like Taiwan macro in 2026. Also, household credit data in Korea (a bit slower), and more detailed October trade data for China, showing that while exports overall were weak, shipments of cars weren't.
I don't know nearly enough about tech to decide whether this is a memory supercycle. But it certainly looks like it might be, which raises the possibility that macro in Korea in 2026 could have shades of Taiwan macro in 2025.
The major releases today were Q3 GDP in Japan (weaker headline, but details ok) and fx settlement data in China (pointing to another month of capital inflows). Elsewhere, the big trend in Taiwan's FDI data remains the shift away from investing in China.
A recap of themes for the region: China's messy cycle; nominal re-acceleration in Japan; the semi cycle as upside risk in Korea; and Taiwan's growing external excesses.
China's IP and services activity were stable in October, but were over-shadowed by another big drop in FAI. That can't be entirely dismissed, even though the data aren't so reliable. In Japan, services activity continues to trend up. In Korea, import prices are rising, but so are semi export prices.
The October data are soft, but mixed: on the one hand investment terrible and property weak, on the other, output and services more stable. That probably doesn't add up to a change in policy. My idea of stabilisation does look a bit more tenuous, and would be over if upstream prices give way again.
Import prices are rising, but not by enough to think upstream inflation is about to explode. More interesting are export prices. Auto export prices aren't rebounding. By contrast, semiconductor export prices seem to be gaining upwards momentum – which is important given the rise in spot DRAM prices.
Today's releases show Japan PPI turning up, and China credit growth slowing down. Also today, my latest data visualisation tool, mapping China's provincial data. The first data covered is FAI, showing the weakest province in September to be Guangdong, which would usually be regarded as a powerhouse.