East Asia Econ

Last week, next week

Regional themes: lessening deflation in China, but no sign of real recovery; the BOJ is likely to hike this month, but the JPY needs a hawkish hike; outflows into overseas equities in Korea change usual exchange rate relationships; inflation risks in Korea and Taiwan if AI chip demand is sustained

Paul Cavey

Dec 8, 2025 • 7 min read

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East Asia Today

Today's data show another surge in overseas equity buying in Korea, consumption in Japan that is quite strong considering the headwinds of population decline and real income squeeze, and inflation in Taiwan which has now fallen to 1.2%, but I don't expect will drop much further.

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Korea – more huge overseas equity buying

The big shift in Korea's BOP since 2020 has been the rise in overseas buying of equities. That outflow surged anew in October to a record high, and by offsetting the large current account surplus, has helped keep $KRW near record highs.

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East Asia Today

In advance of next week's release of CPI and PPI data in China, some thoughts on the outlook, which I think shows a lessening deflation. Also, an update on visitor arrivals in the region (strong in Japan, weak in Taiwan), and weekly flow data in Japan.