East Asia Today
Highlights of a longer note exploring why China's imports have suddenly picked up so sharply. Also, some analysis of trade price data for Korea and Japan: import prices in both are rising fast, but it is export prices increasing at record-breaking rates. Finally, yesterday's monetary data in China.
Cycle update – import prices up, export prices up more. Data today for Japan and Korea show the inflationary impact of the War, with import prices in both economies rising at double-digit rates. However, such rises have been seen before. By contrast, export price inflation is setting records, offsetting the hit from energy prices to domestic growth.
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Thematic – why are imports so strong? The big trade story this year is the sudden rise in imports. There are some signs of firmer domestic demand. But 80% of the increase is from two categories alone: precious metals and semiconductors. And most of the semi strength is volumes, which is puzzling when global IC prices are rising so much.
April monetary data, released yesterday, don't point to any big economic recovery. The credit impulse has clearly rolled over, and while that is largely because of lower CGB issuance, credit issuance to the corporate sector in April also dropped sharply. With that fall being such a big contrast with the 12M flow, it looks like noise, but it is something to be monitoring. Household credit growth continues to slow, but the weak-ish bottom in the M1:M2 ratio appears to be holding.
