Asia week ahead: Japan GDP and China inflation data

Japan’s economy is expected to contract in the first quarter by 0.1% quarter on quarter, seasonally adjusted, following a 0.6% gain in the last three months of 2024. Private consumption should grow thanks to solid household spending and the inflow of foreign tourists. Yet external demand could be the main drag. We already know that front-loading activity to beat tariffs was quite limited compared to other major exporters. Imports, meanwhile, rebounded. Weak growth is likely to keep the Bank of Japan -- and its rate-hike cycle -- on hold for now.

China’s April inflation data is set for release over the weekend. We’re looking for consumer price inflation to stay in deflationary territory at -0.1% year-on-year, unchanged from March. Producer price inflation will likely remain in negative territory for a 31st consecutive month in April. Deflationary pressures will likely worsen thanks to tariffs, as exporters will have to sell products elsewhere. China’s credit data for April will also be published sometime in the week ahead. We’re expecting the credit growth recovery so far this year to continue. Still, the April data will not yet reflect the People’s Bank of China's most recent easing measures.