East Asia Econ

East Asia Today

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.

Paul Cavey

Nov 26, 2025 • 2 min read

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Japan – SPPI inflation soft in October

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.

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Korea – below potential, but are risks skewed to the upside?

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.

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East Asia Today

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.