Asia week ahead: Key growth data from Japan

China’s CPI inflation slowed in January amid Lunar New Year effect
The LDP’s landslide victory in Japan is positive for risk assets
Taiwan’s blistering export growth continues in 2026

We look for a modest rebound in GDP in the fourth quarter of 2025 (0.3% quarter-on-quarter, seasonally adjusted) after a -0.6% contraction in 3Q25. Construction activity is expected to recover as the temporary effects of safety regulation changes subside, while exports are expected to strengthen due to robust demand for semiconductors. The influence of supplementary budget expenditures should become more pronounced in the first quarter of 2026. No significant impact from the China-Japan disputes is expected in the fourth-quarter 2025 data.

January trade data reinforces our view that global chip demand remains robust, and Asian exporters would see the most benefits from it. The favourable calendar effects and low base last year should exaggerate the headline exports in January. With stable politics and strong chip demand, manufacturing and service PMI should rise.

Meanwhile, inflation is expected to cool quite sharply to 1.5% year-on-year compared to the previous months’ 2.1%, thanks to government energy subsidies and the stabilisation of food prices. We expect inflation to slow down further in the coming months.