East Asia Econ

East Asia Today

December services activity in Japan dipped. But that is likely temporary: service sector sentiment remains strong, and falling China tourism has been offset by more visitors from Korea. Details of Taiwan's Q4 GDP release shows the terms of trade boosting real national income per capita by 15% in Q4.

Paul Cavey

Feb 17, 2026 • 2 min read

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East Asia Today

Today's headline Q4 GDP data for Japan were weak, but the details were better, and the 2026 outlook remains better. The weekend's high-frequency price data for China – the last release before the holiday – indicates the lessening of PPI deflation continued through the first 10 days of February.

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Japan – GDP details better than headlines

Growth in Q4 was only +0.1% QoQ, but that was partly because of a running down of inventories. Underlying demand was better, and given the strength of business and consumer confidence, the outlook for growth in 2026 is more positive.

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Last week, next week

Three themes from last week: improving terms of trade, led by rising export prices; expanding current account surpluses; and growing optimism about the sustainability of AI-related hardware demand that is critical for cycles in Taiwan and Korea. Also, happy year of the (fire) horse.