UBS Economics-APAC Economic Perspectives _Asia by the Numbers (August 2025...-117517146

ab29 August 2025Global ResearchAPAC Economic PerspectivesAsia by the Numbers (August 2025)Weak China domestic activity in July China's domestic activity showed broad-based weakness in July, with slower retail sales growth, contracting FAI, and declining housing prices. However, export growth accelerated to 7.2% y/y, despite a significant fall in exports to the US. The property sector downturn may persist unless inventory levels significantly decrease. Consumption growth is likely to slow due to stagnant household income, low consumer confidence, and absence of large-scale stimulus and a high base last year from September. We anticipate the government may implement additional broad fiscal stimulus (exceeding 0.5% of GDP) around late Q3 or Q4 to stabilize growth. Elevated US tariffs on China and payback from previous rushed orders may further constrain export growth in H2.Regional exports to the US show signs of fadingOn aggregate, Asia's goods exports increased by 6.5% m/m sa in July, rebounding from a 1.6% decline in June. They are 0.4% below the Q2/Q1 2025 average. China's shipments to the US fell by 3% m/m sa in July, deepening the y/y contraction to -21.6% (vs -16.1% in June). Additionally, shipments to ASEAN decreased by 2.6% m/m sa in July, with cooling export momentum possibly suggesting waning demand for intermediate goods from China. Exports from Korea and Taiwan to the US also declined by 3.8% m/m sa, with y/y growth decelerating to 33% (vs. 41% in June). Meanwhile, their shipments to ASEAN rebounded to 16.1% m/m sa (45.6% y/y). Although ASEAN-4 (ID & PH not available) exports to the US rose by 4.0% m/m sa (16.4% y/y), it was slower than the growth of exports to the rest of the world (10.2% m/m sa, 21.3% y/y). More room to ease as inflation remains benignInflation risks in Asia remain subdued, declining to a weighted average of 0.6% y/y in July from 0.9% in Q2 and 1.2% in Q1, driven by lower global crude oil prices, strong food harvests, and below-trend demand. Singapore's headline/core CPI cooled to a four-year low at 0.6%/0.5% y/y. India's July CPI softened to an eight-year low of 1.6% y/y, below the RBI's 2-6% tolerance band. The RBI maintained the repo rate at 5.5% this month, but we believe the terminal repo rate could be in the 5-5.25% range, and we anticipate a 25bps cut in October. BoK kept its policy rate unchanged at 2.5% but we think the probability of easing in the next two meetings in 2025 materially increased. BI unexpectedly reduced the policy rate by 25bps to 5%, marking the fourth rate cut this year. We forecast two more cuts (Sep/Dec). The BoT also cut its policy rate by 25bps to 1.5%, citing persistent structural issues as factors in its decision to ease. We expect the BoT will skip the October meeting and implement one more cut in December 2025. BSP cut policy rate by 25bp to 5.0%, and we expect another two cuts in 2025 (Oct/Dec).ASEAN's fiscal budgets announced were not particularly expansionary Three ASEAN economie