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News on South Korea’s industrial production, retail sales, and inflation are among the main events, along with key data on Japan and Taiwan. China is seen leaving its Loan Prime Rates unchanged over the weekend.
 

South Korea: Exports expected to grow while inflation slows

Strong external demand and the recent US trade deal are expected to sustain the momentum in manufacturing output and exports. Industrial production is likely to recover in November, as both semiconductors and automotives show significant improvement. Last month's decline in semiconductor output appears to be temporary, and inventory restocking is expected to drive higher chip production. After the US-Korea trade agreement, motor vehicle exports rose in November. This should positively impact overall IP. We expect December exports to rise by 9% year on year, as these two industries continue to improve. Meanwhile, retail sales growth should moderate as the effect of previous cash handouts gradually wanes. Still, events such as the November Sales Festa and an increase in foreign tourists are expected to support continued growth in retail sales.

Also, inflation is expected to decelerate in December despite the recent weakness in the KRW. Fresh food prices stabilized during the winter season while gasoline prices peaked in early December. We expect headline inflation to ease to 2.2% YoY in December from the previous month's 2.4%.
 

Japan: Industrial production seen declining, while retail sales rise

Industrial production in Japan is projected to decline. This should only partially offset the gains of the past two months. Meanwhile, retail sales continue to climb, supported by robust wage growth. We believe that November data won’t yet show significant negative effects from the decrease in Chinese tourists.
 

China: Loan Prime Rates expected to remain unchanged

With the last key data releases done for the year, Saturday’s Loan Prime Rates decision will dominate next week's economic discussions. We expect this to be a non-event, with 1 and 5 year LPRs held unchanged at 3.0% and 3.5%, respectively.
 

Taiwan: Export orders to remain robust, while IP slows slightly

We are looking for export orders to continue their solid run in November, rising to 30.3% YoY. This gain in the data, out Tuesday, will be driven by continued strength in electronic products and information and communication products. We expect industrial production data for November, out Wednesday, to slow slightly to a growth rate of 11.8% YoY.
 

Key events in Asia next week
 

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