Japan’s economy grows at annualized 2.1pc rate
Japan’s economy grew at an annualized 2.1 percent in the first quarter of 2026, surpassing analysts’ expectations, on the back of improved consumption and strong exports.
The growth was sharply higher compared with Reuters-polled analysts’ average estimate of 1.7 percent, and against the 1.3 percent in the previous quarter.
On a quarter-on-quarter basis, the economy expanded 0.5 percent, government data released Tuesday showed, compared with estimates of 0.4 percent, and improving from the 0.3 percent growth at the end of 2025. GDP expanded 0.6 percent, year on year.
These figures do not capture the full impact of the Iran war, which started at the end of February.
“Though Japan’s GDP grew healthily by 0.5 percent in Q1, we think the Q1 GDP is already in the rear-view mirror and expect the economy to feel the strains from high energy costs ahead,” Norihiro Yamaguchi, lead Japan economist at Oxford Economics, told CNBC.
Japan’s exports grew by a better-than-expected 11.5 percent year on year in March, partly powered by a 29.3 percent jump in shipments of semiconductor equipment.
China calls for integration of AI
Chinese Premier Li Qiang on Monday urged deeper integration between AI companies and advanced manufacturing, as China steps up efforts to develop new growth drivers amid slowing domestic demand and mounting external pressures.
During a tour of both Xiaomi’s electric vehicle factory and the Humanoid Robot Innovation Centre, home to more than a dozen embodied AI start-ups, industry partners and research institutions in Beijing yesterday, Li said faster development and wider application of intelligent robots and AI-powered manufacturing technologies was needed for the national economy.
He described them as key to fostering “new growth momentum and competitive advantages”, according to a Xinhua readout released late on Monday.
Li said China should accelerate the use of AI across manufacturing processes, including research and development, production, quality inspection and after-sales services, while supporting the development of industry-specific large language models and AI agents.
“Artificial intelligence is rapidly integrating with advanced manufacturing and is profoundly changing production models and industrial forms,” Li said, according to Xinhua.
Li also urged government departments and state-owned enterprises to increase the number of real-world scenarios for testing and deploying the new technologies, as Beijing seeks to accelerate widespread commercial adoption of AI-powered robotics. He also called for greater use of policy support measures, including equipment-upgrade programmes and incentives for first-of-their-kind technologies.
The comments come as Beijing increasingly views AI and advanced manufacturing as critical to offset broader economic headwinds, including a prolonged property downturn, weak confidence in the private sector and rising trade tensions with both the United States and Europe.
China’s core AI industry was valued at over 1.2 trillion yuan (US$174 billion) in 2025, while more than 30 percent of large manufacturers had adopted AI technologies by the end of last year, Industry and Information Technology Minister Li Lecheng said during China’s annual parliamentary meetings in March.
India’s low-import economic diet
Prime Minister Modi has put the Indian economy, weakened by the Iran war and continuing energy crisis, on a low-fat, low-carb diet. But it’s missing one vital element — protein.
It’s not enough for Indians to cut back on gold, silver and smartphone imports. Or consume less imported fuel. What the economy needs is higher foreign capital inflows. Without them, the rupee will continue to hit new lows, as it did again.
The pressure on the rupee and the country’s balance of payments is coming squarely from the capital account, JPMorgan India economists led by Sajjid Chinoy said in a recent report.
Capital flows have shrunk from an average 2.6 percent of GDP between 2015 and 2019 period to 1.4 percent in 2024 and virtually nothing in 2025, according to the report. Most of the deceleration is due to lower net foreign direct investments — from 1.5 percent of GDP pre-pandemic to 0.1 percent last year. Incessant selling by foreign portfolio investors is the other big reason.
Malaysia’s semiconductor industry can thrive in an era of strategic competition?
On May 7, the German technology firm Aixtron signed an agreement with the Malaysian Investment Development Authority to build a $47 million semiconductor manufacturing facility in Malaysia, with production projected to begin in the second half of 2027. This announcement, which follows the opening of a $200 million manufacturing facility in Malaysia by the Taiwanese semiconductor company Chipbond Technology in February, highlights Malaysia’s increasing importance as one of Southeast Asia’s most prominent technology hubs – and a potential semiconductor manufacturing powerhouse.
Long known for its outsourced semiconductor assembly and testing (OSAT) capabilities, Malaysia is now attempting a far more ambitious transition into activities that increase its value in the semiconductor value chain, to include integrated circuit design, advanced packaging, and front-end manufacturing. The government’s National Semiconductor Strategy, launched in 2024, aims at training 60,000 engineers by 2030 and attract billions in foreign direct investment, highlighting how Malaysia’s semiconductor sector has become central to its future economic plans.
This also reflects the reality that in an increasingly fragmented technological order, middle-power states with industrial depth, political neutrality, and strategic flexibility are becoming indispensable to both Washington and Beijing.
Malaysia occupies a uniquely strategic position in Asia because of its ability to balance competing geopolitical and economic pressures.
Sri Lanka’s economy rebounds in 2025
The Sri Lankan economy experienced significant strain in the years following the COVID-19 outbreak in 2020. The situation has been improving in recent years with the South Asian nation reporting economic recovery in 2025, supported by broad-based growth, benign inflation and robust financial situation, despite disruptions from Cyclone Ditwah late in the year, according to a recent report by the IMF.
The real GDP growth was 5 percent in 2025, underpinned by broad-based growth. The country’s agriculture grew by 1.4 percent and industry witnessed robust expansion of 7.8 percent, albeit slower than the year before, reflecting normalisation from the crisis-era lows, the IMF said. Construction expanded 9.2 percent, mirroring a 19.8 percent increase in domestic cement production. The services sector reported growth of 3.3 percent, with financial services growing at 10.6 percent and accommodation and food services expanding at 12.4 percent, reflecting strong tourism momentum. The cyclone hit Sri Lanka in November 2025, resulting in floods and landslides across 22 districts and causing major damage to the country’s supply chain. This dampened activity in the fourth quarter, with GDP growth slowing to 4.8 percent, from 5.5 percent in the same quarter of 2024, and causing $1.4bn of losses, as estimated by the Post Disaster Needs Assessment.
Consumption meanwhile saw strong expansion, growing by 7.7 percent in the first nine months of 2025 compared with just 0.7 percent in the same period in the previous year. Private consumption drove gains as it expanded by 8.6 percent versus 1.3 percent the year before. The growth was buoyed by benign inflation, softening interest rates and the normalisation of retail and trade activity. Investment growth saw a sharp deceleration though, with gross capital formation growing by 2.2 percent compared with 29.3 percent in 2024, as the post-crisis rebound in private investments tapered off and public investment remained weak. Net exports were broadly neutral for growth, with import growth slightly offsetting export growth, the IMF added.
Indonesian minister highlights museums’ role
Indonesia’s Culture Minister Fadli Zon said museums should become spaces for developing cultural capital that can generate benefits for the public.
Speaking during the commemoration of International Museum Day 2026 at the National Museum of Indonesia in Jakarta on Monday, Zon said museums play a strategic role as centers of knowledge, reinforcers of national identity, and the foundation of the cultural economy.
“Museums must become places where cultural capital is developed into public value and economic value in a sustainable manner,” he said.
Zon added that museums can help rebuild trust and strengthen social cohesion amid an increasingly fragmented world.
He also highlighted the government’s success in repatriating 28,131 fossils and collection records of Eugene Dubois from the Netherlands in 2025.
$100 Maldives flights on sale
One hundred return Economy fares to the Maldives are on sale for $100 tonight, marking the launch of Australia’s first ever non-stop Melbourne-Malé service.
The fares, inclusive of taxes, go live at 7pm AEST at luxuryescapes.com and must be paired with a Luxury Escapes accommodation package. Departure dates run June through September 2026.
The promotion coincides with the inaugural departure itself, which takes off from Melbourne Airport at 11.20pm. Operated by Maldivian Airlines in partnership with Luxury Escapes, the A330-200 carries 264 passengers on an 11-hour journey to Velana International Airport in Malé – cutting nine to ten hours from itineraries previously routed through Singapore or the Middle East.
Combined flight and resort packages start from $2,399 per person for five nights, with standalone return Economy fares from $1,379. The aircraft operates Business and Economy cabins, with an Economy Plus extra-legroom option available through Luxury Escapes.
One hundred return Economy fares to the Maldives are on sale for $100 tonight, marking the launch of Australia’s first ever non-stop Melbourne-Malé service.
The fares, inclusive of taxes, go live at 7pm AEST at luxuryescapes.com and must be paired with a Luxury Escapes accommodation package. Departure dates run June through September 2026.
The promotion coincides with the inaugural departure itself, which takes off from Melbourne Airport at 11.20pm. Operated by Maldivian Airlines in partnership with Luxury Escapes, the A330-200 carries 264 passengers on an 11-hour journey to Velana International Airport in Malé – cutting nine to ten hours from itineraries previously routed through Singapore or the Middle East.
Combined flight and resort packages start from $2,399 per person for five nights, with standalone return Economy fares from $1,379. The aircraft operates Business and Economy cabins, with an Economy Plus extra-legroom option available through Luxury Escapes.
Luxury Escapes CEO and co-founder Adam Schwab said the route removes a long-standing barrier for Australian travellers.
“The Maldives has long been a bucket-list destination, but the time and complexity of transiting through Singapore or the Middle East had been a major deterrent,” he said.
Snapshot of Nepal’s business news
Economic Digest presents a brief yet comprehensive roundup of major business developments in Nepal, delivered in clear and accessible summaries.
Nepal’s economy presents a mixed and fragile outlook, with moderate improvements in revenue collection, land transactions, infrastructure spending, and economic data gathering contrasting sharply against weak foreign investment realization, rising fiscal irregularities, stressed microfinance institutions, and a severe downturn in the tourism sector.
While NEPSE remained relatively stable and gold prices continued to rise amid regional tariff concerns, investor confidence appears cautious due to liquidity pressures and limited dividend payouts in the financial sector. The widening gap between approved and actual FDI inflows, coupled with growing loan defaults and provincial arrears, highlights persistent structural and governance weaknesses in the economy.