East Asia Econ

East Asia Today

Japan's economy is looking different in 2026, with manufacturing sentiment improving, goods inflation easing, but service price and wage inflation holding up. Korea, meanwhile, faces some of the same issues as in 2025: while household debt is easing, property price inflation isn't.

Paul Cavey

Feb 20, 2026 • 2 min read

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Korea – household debt down, property prices up

The BOK's quarterly data show household credit eased under 75% of GDP at in 2025 for the first time since 2017. However, the BOK is concerned that the ongoing rise in house prices will undermine this progress. The bank's own loan officer survey suggests a bounceback in lending is indeed a real risk

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Japan – strong PMIs, weaker inflation

Manufacturing sentiment is up, and falling headline inflation should further boost the mood of households too. For the BOJ, the critical issue will be whether these improvements in soft data feed into real aggregate demand, in turn supporting its confidence about the trend in underlying inflation.

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East Asia Today

Highlights of a longer note looking at the impact of China "shocks" through the prism of the terms of trade. The conclusion is that for Asia, the second China shock is shaping up to be less damaging than the first. Also, summary charts of today's machine orders in Japan, which were strong.