Asia week ahead: Japan and Australia inflation and GDP updates on Philippines and Taiwan

South Korean GDP shrank in fourth quarter as fiscal stimulus fades

Slower inflation means only gradual Bank of Japan rate hikes

Japan exports rose despite US tariffs and China tensions

We expect both headline Australian CPI and trimmed mean CPI to ease slightly on a year‑on‑year basis. However, recent labour market data indicates continued strength. Any upside surprise in the CPI print could raise the likelihood of a near‑term rate hike by the Reserve Bank of Australia.

Fourth-quarter GDP growth in the Philippines is expected to remain subdued at around 4.1%. This would reflect a deeper decline in government spending and further weakness in consumption, as indicated by softer retail sales and slowing credit growth during the quarter.

The Tokyo CPI will be a major data point. We expect prices to slow to 1.7% year-on-year, the first time below 2% since November 2024. This would mainly be due to last year's high base of rice and energy prices. Softer energy and food prices should keep headline inflation easing in the first half of the year, while core inflation excluding energy will likely slow more gradually. Industrial production and retail sales are expected to decline in December. Export data for December indicated a slowdown in car manufacturing, though strong chip production helped offset some of the weakness.

Weak fourth-quarter GDP growth in South Korea suggests manufacturing output in December likely contracted, mainly due to declining car production. Chip output, meanwhile, is expected to recover. Retail sales are expected to bounce back following a steep decline in November, driven by winter sales promotions and a rise in Chinese tourist arrivals.

Industrial profits data for December will be released on Tuesday. Profits in many industries have been under pressure. A slight improvement in momentum in the second half could turn overall profits growth slightly positive for the year.

Taiwan releases its 4Q and full 2025 GDP data on Friday. We currently have a 6.2% YoY forecast for the fourth quarter, which would mean full year growth of 6.8% YoY. Risks to the forecast are skewed toward the upside, given strong trade data to close out the year. Full-year growth of over 7% is certainly on the table.