East Asia Today
The big policy event today was the BOM meeting. The big data release was Taiwan's Q4 BOP data, showing a huge current account surplus. Also worth noting today are trade data for Japan for the first 10 days of February. And we also have a new video, discussing the cyclical outlook for China.
My latest video, discussing the cyclical outlook for China.
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Japan's export data for the first 10 days of February were quite strong. That wasn't apparent in YoY terms, which softened However, in level terms, exports rose again, continuing the uptrend of January. Health warnings, of course, apply: 10 days don't make a month, and all trade data across the region through January and February are distorted by Chinese New Year. But it is another hint that the manufacturing cycle in early 2026 has some tailwinds.
Cycle update – the BOK remains cautious. The tone from today's BOK meeting was cautious. The new rate dot plot suggests that at the margin risks for policy are still weighted towards loosening, the upgrade to the GDP growth forecast was only 0.2ppts, and having made that change, the bank thinks risks to the outlook are now balanced.
Cycle update – huge CA surplus to rise yet further. The surge in the current account surplus of January-September continued into the end of 2025. In Q4, the surplus reached almost 30% of GDP. The government's GDP forecast implies that will be roughly the size of the full-year surplus in 2026. Taiwan needs huge capital outflows to keep the TWD stable.
