East Asia Econ

Last week, next week

Two of the cycle themes in the region are the strength of the AI trade, and macro stability in China. These in turn form the context for the third: the impact of the Iran war. If that conflict, finally, is near some kind of resolution, market confidence around rate hikes could actually increase.

Paul Cavey

May 25, 2026 • 6 min read

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East Asia Today

A few things on Japan today: CPI and export data in April, and Koeda's interesting speech yesterday. Consumer confidence in Korea rebounded in May, but property price expectations also firmed. Taiwan's labour market remains tight, with unemployment firmly pinned at the 20-year low of 3.3%.

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Japan – offsets to Iran

Tuition as well as energy subsidies make inflation look particularly low relative to the likely upside from the Iran war. The conflict will also slow growth. However, both export data for April and Koeda's speech yesterday indicate that growth downside will be limited if global tech demand sustains.

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East Asia Today

Machine orders in March and trade in April show Japan's cycle doing well before the war; the PMI for May points to deterioration since, and yet higher inflation. April PPI shows inflation going higher in Korea too, but strong exports so far through May show downside risks to overall growth are less.