East Asia Econ

Region – the other terms of trade shock

The Iran War will push up inflation. But for growth, transmission is via the terms of trade, and higher import prices are being offset by historical rises in export prices, increases that are unlikely to be just cyclical. That supports growth in Asia, at the expense of even more inflation for ROW.

Paul Cavey

May 13, 2026 • 8 min read

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East Asia Today

Signs of less loosening in China, in both the PBC monetary policy report for Q126, and the April release of the central bank's liquidity operations. In Japan, the summary of the April MPC show more pressure to tighten. Consumption data for March and trade data for early April were stable.

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East Asia Today

China CPI and PPI data for April showed a further strengthening of inflation. Korea's trade data for the first 10 days of May indicate no slowdown in semi exports (or rise in energy imports). Data for Taiwan through March point to a slowdown in wage growth in recent months.

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China – inflation up again

PPI inflation accelerated again in April, and with CPI inflation firm, the GDP deflator is on track to rise in Q2 for the first time in 2022. The turn is being led by energy and commodity prices. There are some signs of a stabilisation in underlying prices too, but so far, they are tentative.