AsiaIn this week's letter, we review some recent developments in Asia. Starting with Japan, we examine the implications of its underwhelming Q4 GDP result while noting the recent further weakening of the yen. Shifting next to China, we discuss its strong domestic tourism numbers during the Chinese New Year holidays and examine recent equity market movements. Next, we turn our attention to Indonesia’s recent general elections, noting the generally positive reactions observed in domestic markets so far. Lastly, we look at the Philippines, giving a nod to its latest interest rate decision and acknowledging the latest progress on disinflation.
Japan and the yen Japan encountered an unforeseen dip in its real GDP, with a decline of 0.1% q/q in Q4 2023. This marked the second consecutive quarter of contraction, signifying a technical recession. The downturn can be partially attributed to ongoing weaknesses in private consumption, though the negative impact was somewhat mitigated by net exports. Despite this, the economy still achieved an annual growth of 1%, although this was lower than the 1.7% growth observed in Q3. Japan’s disappointing Q4 performance, coupled with a much weaker yen, led to the economy’s displacement by Germany as the world’s third largest (chart 1). Previously, Japan’s economy was second only to the United States, until it was overtaken by China’s in 2010.
