Last week, next week

The sustainability of the AI cycle is critical for the region. If it ends, rates will likely be lower, but currencies not necessarily weaker. Otherwise, my themes are: China – tougher 2027; Japan – flatter curve; Korea – macro spillover; Taiwan – market spillover.

Paul Cavey

Oct 26, 2026 • 7 min read

Public Post

East Asia in Four Charts

Highlights of last week's indicators: the fall in the consumption share of GDP in China; why JPY depreciation hasn't boosted Japan's export volumes; the prospects for another double-digit rise in nominal GDP in Korea in 2027; and how wage growth in Taiwan is leading the region.

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East Asia Today

As expected CPI inflation in Japan picked up in September, and leading indicators point to further upside ahead. Taiwan softened last month, but that is at odds with strong exports. Retail sales, by contrast, were strong, consistent with labour market dynamics explored in a longer note on wages.

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Taiwan – wage dynamics

Like so much else in Taiwan, labour market dynamics will be determined by the fortunes of the AI cycle. If that turns down, it will be hugely important. A sharp downturn hasn't, however, been the CBC's expectation, but existing wage trends seem inconsistent with the bank's view that inflation slows.