Second wave impacts to differ in Korea and Japan

Both Korea and Japan are experiencing second waves, but a stronger shift in consumer behaviour in Korea means the outbreak there is likely to have a larger impact on growth. As such, we’ve revised down our GDP forecast for Korea but kept it the same for Japan.
Tom Learmouth Japan Economist
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Emerging Asia Economics Weekly

GDP to rebound after gloomy Q3

The next few weeks will see the publication of a host of third quarter GDP figures from across the region. While the data are likely to paint a downbeat picture, output should rebound strongly in the final quarter of the year. That said, the recovery is coming from a low base – GDP in most countries is still well below pre-crisis levels – and the region will enter 2022 with lots of spare capacity. This will help keep a lid on underlying price pressures and is a key reason why we think central banks in the region will be in little hurry to tighten policy.

22 October 2021

Emerging Asia Data Response

Korea Trade (1st – 20th Oct.)

Korean export values continue to climb in October driven by both rising prices and growth in underlying volumes. The strength of the external sector adds weight to our view that the economy will expand faster, and the central bank will tighten more quickly, than most analysts expect.

21 October 2021

Emerging Asia Economic Outlook

Interest rates and inflation to remain low

Growth in China will weaken further over the coming year as a downturn deepens in industry and construction. The outlook for the rest of the region is improving. We expect many economies to rebound strongly as governments ease restrictions on the back of faster vaccine rollouts and success reining in COVID outbreaks. Central banks – unlike in much of the emerging world – are in little rush to tighten. Inflation hasn’t emerged as a concern and, with large output gaps set to keep a lid on price pressures, we expect policy rates in most countries to remain on hold over the coming year. In contrast, the consensus and financial markets are expecting central banks to begin tightening in 2022.

20 October 2021

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Japan Data Response

Japan Wages & Household Spending (May 2021)

While the further acceleration in wage growth in May was again largely down to favourable base effects, we think wage growth will stay elevated as the labour market tightens and vaccines fuel a further recovery in overtime pay. Meanwhile, the only modest drop in household spending in May suggests that consumer spending may have edged up last quarter.

6 July 2021

Japan Data Response

Bank of Japan Tankan (Q2 2021)

The further rebound in the Q2 Tankan supports our view that the economy’s disappointing start to the year won’t prevent vaccines driving a strong rebound in the second half of the year. And firms’ upbeat capital spending plans bolster our view that business investment will soon recover sharply.

1 July 2021

Japan Economics Focus

Transition to carbon neutral 2050 wouldn’t harm growth

Achieving net zero emissions in Japan in three decades is a difficult but achievable task. And while the most carbon-intensive sectors may face significant headwinds, overall we agree with PM Suga that economic growth wouldn’t have to be sacrificed to reach his goal of a carbon neutral 2050.

29 June 2021
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