MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• Weekend news that Japan PM Ishiba will be stepping down injects fresh political uncertainty into Japan's broader economic outlook. Japan Q2 GDP revisions were stronger than expected. Headline Q2 GDP rose 0.5%q/q, against a 0.3% expectation (which was the initial print). Nominal GDP rose 1.6%q/q, against a 1.3% forecast.

AUSTRALIA 

• August NAB business confidence fell to +4 from +8 but conditions improved to +7 from +5. Both have improved in Q3 to date by around 3 points signalling that GDP growth should continue to recover.
• Westpac consumer sentiment fell 3.1% m/m to 95.4 in September after August’s robust +5.7% m/m to 98.5 but it is volatile. It remains in pessimistic territory but above the 2025 average. This month’s decline was driven by increased concerns about the economic outlook and fears of unemployment.

NEW ZEALAND

• Governor Hawkesby noted at the Financial Services Council conference that the economy has looked better in July and there are signs that growth will pick up in H2, as was expected. He also stuck with the August projection that the OCR will trough at 2.5%.

SHORT TERM RATES 

• Interest rate expectations across the $-bloc showed mixed performances over the past few weeks, with the US (-22bps) and Canada (-16bps) sharply lower, New Zealand slightly lower (-4bps) and Australia slightly firmer (+7bps).

CHINA 

• CPI in August declined -0.4%, ahead of estimates of -0.2% and the biggest drop since February. This adds to some key onshore news suggesting that further monetary policy intervention is getting closer.

SOUTH KOREA 

• South Korean President Lee stated fiscal spending can be used to boost growth, even if national debt rises. 

ASIA 

• India’s 2024 trade deficit with the US had almost doubled since 2020 and 2025 is on track to see it grow sharply but India frontloaded shipments. US President Trump said this week he had spoken with his “good friend” Indian PM Modi and that trade negotiations were ongoing between them and that he expects “a successful conclusion for both”.
• The cabinet choices of new Thai PM Anutin, the third since 2023, have been met by relief. He appears to have chosen experience and continuity which is particularly important given that he promised to hold elections within four months to win the support of the People’s Party.
• The news of that popular Finance Minister Sri Indrawati has been replaced with Purbaya has the potential to negatively impact risk appetite in Indonesia. Purbaya appears more aligned with President Prabowo's pro growth approach, as opposed to Indrawati's commitment to a 3% of GDP deficit. 

ASIA EQUITY FLOWS 

• Resurgent inflows into Taiwan, amid tech/AI optimism has been the dominant theme over the past week.