UBS Economics-APAC Economic Perspectives _Asia by the Numbers (July 2025)_...-116877899

ab30 July 2025Global ResearchAPAC Economic PerspectivesAsia by the Numbers (July 2025)Trade deals trickling in before the 1 August deadlineThis month, four trade deals were announced in Asia (Vietnam, Indonesia, Japan, Philippines). The negotiated tariff rates were lower than previously announced (on 2 April and 7 July). The step-up in deal-making and face-to-face talks amongst negotiating parties is also a welcome development. A common feature of the deals was zero tariffs on almost all imports from the US. There were minor exceptions such as alcohol and pork for Indonesia; Philippines said not all goods would see a zero tariff, without mentioning specifics. Most countries committed to purchasing agriculture (soy, wheat), and energy products from the USA. For the remainder of the trade deals, we expect India to open its market to the US, implying zero tariffs on US goods, and commit to increasing purchases of energy and defence equipment from the US. Meanwhile, our latest UBS Evidence Lab China C-Suite survey showed that more than 70% of respondents expect the current additional tariffs (UBSe: weighted average of 32%) to decrease in the next 12 months, although most (75%) expect a prolonged negotiation beyond the upcoming truce deadline of 12 August. Better than expected growth in Q2 for some economiesQ2 GDP growth came in stronger than expected for several Asian economies. China's GDP growth remained robust at 5.2% YoY in Q2 (vs. 5.4% in Q1). We raised China's 2025 GDP growth forecast to 4.7% (Prev: 4.0%), mainly reflecting stronger-than-expected GDP growth in H1 due to exports resilience, the boost from trade-in subsidies, earlier issuance of government bonds, and implementation of planned policy support. Meanwhile, growth in Korea, Malaysia, Singapore, and Vietnam also beat consensus expectations. Malaysia's GDP growth accelerated to 4.5% y/y in Q2 (Q1: 4.4% y/y), supported by resilient domestic demand, particularly in construction and services. Singapore's growth accelerated to 4.3% y/y in Q2 (Q1: 4.1% y/y), with limited signs of below trend growth in most sectors, apart from manufacturing. The modern services cluster (finance & insurance, professional services, and ICT) continued to clock solid growth of around 5% annualized. For India, our newly launched indicators for rural and urban India show accelerating rural activity in the June quarter, while the urban activity tracker softened in the same period. On exports, Asia's goods exports rose 0.1% m/m sa in June, with Q2 export levels about 3.2% higher than the Q1 level. China's export shipment level picked up modestly in June, possibly supported by tariff de-escalation after the US-China Geneva talks, and possible front-loading. While China's shipments to the US rebounded 10% m/m in June, average exports in Q2 were still 25% lower than in Q1. (See note)BNM and BI eased in July, while MAS remained on hold BI resumed policy easing with another 25bp rate cut to 5.25%, marking its t