Japan’s economy grows 1.8pc in q1
Japan’s economy expanded at an annualized real rate of 1.8 percent in the January-March quarter, revised down from an initial estimate of 2.1 percent, as capital investment slowed.
The downward revision reflected weaker-than-expected business investment, with capital spending falling 0.7 percent in the quarter revised sharply from a preliminary 0.3 percent increase as outlays on software and production machinery disappointed.
Real GDP grew 0.45 percent from the October-December period, down from the preliminary reading of 0.51 percent.
Despite marking a second consecutive quarter of growth, momentum is expected to stall in the April-June period, with the prolonged Iran war seen fuelling inflation, dampening private spending and disrupting petroleum product supplies.
Growth in the current quarter is forecast to hover around zero, said Yoshiki Shinke, senior executive economist at Daiichi Life Research Institute, APP reported.
Private consumption, which accounts for more than half of GDP, was revised up to 0.35 percent growth from 0.27 percent, supported by stronger dining and gaming expenditure.
Housing investment was also upgraded to a 0.9 percent rise from an initial 0.5 percent.
Exports grew 1.8 percent on the back of a recovery in auto shipments to the US market, while public investment was revised up slightly to 1.5 percent.
Japan’s parliament on Friday enacted a 3.11 trillion yen ($19 billion) supplementary budget for the current fiscal year the government’s first fiscal package in response to the Middle East crisis to cushion the impact of rising energy costs.
Nominal GDP expanded at an annualized rate of 2.5 percent, revised down from an initial estimate of 3.4 percent.
Hong Kong’s role as Korea-China business bridge grows
Hong Kong has long served as a bridge between Korea and mainland China, and its role could become even more important as Seoul and Beijing seek to restore business momentum after years of political uncertainty, a senior Chinese business leader said.
Jonathan Choi, president of the Chinese General Chamber of Commerce in Hong Kong and chairman of Sunwah Group, said Korean companies should make greater use of the city as a “risk-management and financing hub” when expanding into mainland China.
“Direct entry into mainland China is often suitable for large conglomerates with dedicated China teams and substantial capital to independently navigate regulatory complexities,” Choi said in a recent written interview with The Korea Times.
“Partner with a trusted Hong Kong-based group to co-invest into the mainland, rather than venturing in alone. This strategy provides crucial local protection, invaluable market intelligence and a natural buffer against political shocks,” he added.
Choi is one of the few prominent Chinese business figures with long-standing ties to Korea. In 2015, he served as an honorary ambassador for foreign investment promotion for Korea, an experience that allowed him to “witness firsthand the immense potential for synergy,” he said.
In April, Choi also visited Korea to meet then-Prime Minister Kim Min-seok and discuss ways to deepen bilateral ties not only at the government level, but also through business and people-to-people exchanges.
As bilateral relations show signs of improvement following a series of summits between Korean President Lee Jae Myung and Chinese President Xi Jinping, Choi said economic opportunities between the two countries have become stronger.
He said market access and consumer confidence are no longer major bottlenecks. In the first quarter of this year, 1.45 million Chinese tourists visited Korea, while 2.66 million Korean tourists traveled to China. For businesses, the growing flow of people means deeper customer insights, stronger local networks and a broader talent pool, he added.
Malaysia at the edge of a distant war
Malaysia is far from the Middle East, but distance offers little insulation in today’s markets. When tensions rise between Iran, the US and Israel, the effects do not stay within the region. They move quickly through oil prices, trade routes, currencies and investor sentiment. For an open economy like Malaysia, these shifts are not abstract. They shape growth, inflation and market behaviour in real time.
Over the past year, the conflict has entered a more uncertain phase. Attacks on shipping routes, tighter sanctions and military exchanges have kept markets on edge. Oil prices now react less to fundamentals alone and more to headlines, often moving sharply on geopolitical signals before settling again.
This pattern matters for Malaysia because energy sits at the centre of the transmission mechanism. The country occupies a dual position. It exports crude oil and liquefied natural gas, yet it also depends on global markets for refined fuel. As a result, higher prices can support national income on one side while increasing costs on the other. The net effect is rarely straightforward.
When oil prices rise, government-linked energy revenues tend to improve. Contributions from Petronas provide an important, though declining, share of fiscal income. In periods of elevated prices, this creates a cushion for public finances. But at the same time, Malaysia continues to manage fuel subsidies, particularly for diesel and petrol. Unless retail prices are adjusted, higher global prices translate into higher subsidy costs.
This creates a familiar tension in policy. Fiscal space improves through revenue, but pressure builds through expenditure. Recent efforts to rationalise subsidies is a shift towards targeted support. In a prolonged high oil price environment, the balance between reform and political constraints becomes more difficult to manage.
For investors, this is not just a policy issue. It feeds directly into sovereign risk perception, bond yields and currency stability. A sustained oil price increase could widen the fiscal deficit if subsidies are maintained, even as energy revenues rise. Markets tend to focus on the net effect, and that depends heavily on execution.
At the same time, energy prices do not stay confined to fiscal accounts. They pass through to inflation, often with a lag but with clear impact. Higher fuel costs raise transport expenses, which then filter into food prices and services. Malaysia has kept inflation relatively stable in recent years. That stability, however, assumes moderate energy prices.
Indonesia raises rates in surprise move
Indonesia’ central bank hiked its policy rate by 25 basis rates as it seeks to strengthen the local currency that has plummeted to record lows.
The surprise increase brought the 7-day reverse repo rate to 5.5 percent from 5.25 percent. Economists polled by Reuters had estimated the country to hold rates.
Besides mitigating the impact of Middle East conflict, the central bank said the move was also a “pre-emptive measure” to maintain inflation within the government’s target range of 1.5 percent to 3.5 percent in 2026 and 2027.
“The measure also aims to enhance yields to attract foreign portfolio investment inflows to Indonesia,” the statement added.
Bank Indonesia highlighted that the depreciation of the rupiah was also driven by foreign portfolio investment outflows. Investors have fled Jakarta’s equity markets since the start of the year, with the Jakarta Composite tumbling over 35 percent year to date.
In its bid to shore up the currency, the central bank delivered a larger-than-expected 50 basis points hike in its meeting in May, and has intervened in the forex markets.
None of those appear to have helped, with the rupiah weakening against the dollar to a record 18,190 on June 8, despite Jakarta draining its forex reserves to prop up the rupiah. On a year-to-date basis, the currency has deprecated over 8 percent against the greenback.
The surprise hike on Tuesday also comes as inflation in Indonesia sees is creeping up. The latest reading from May showed inflation at 3.08 percent, up from 2.42 percent and also higher than Reuters estimates of 2.97 percent.
Last week, the central bank received a new mandate from Indonesia’s parliament to create “an economic environment conducive to real sector growth and job creation,” according to Reuters.
DBS Group Research said in a note last Friday that despite new mandate, “we expect monetary policy to prioritize financial market stability in the near-term and tighten rates further to defend the currency.”
Indian economy, government finances, see mounting costs from Iran war
A few months ago, India’s economy was humming along nicely. Inflation was benign and growth was steady – the strongest among the world’s leading economies.
Now, India is increasingly counting the cost of the Iran war, which economists say will keep mounting if the deadlock between the U.S. and Iran remains unresolved and the blockage of oil supplies continues.
As the world’s third-largest oil importer and consumer, India in about 90 percent of its oil, making its economy one of the most-exposed to the war and the prolonged war-related disruptions, which include the effective blockade of the Strait of Hormuz through which a fifth of global oil and gas transit.
While India has announced a flurry of measures to contain the impact on the rupee and foreign exchange reserves, the latest of which were from the Reserve Bank of India on Friday, analysts say the broader drag on economic growth, inflation and government finances is set to increase so long as oil prices remain elevated.
“India is set for a series of supply shocks,” Michael Langham, emerging markets economist at Aberdeen Investments, said.
Sri Lanka: central bank briefs mps on monetary policy and economic developments
The Central Bank of Sri Lanka on Wednesday (10) conducted a briefing for Members of Parliament on the current monetary policy, exchange rate policy, economic stability, and recent economic developments.
According to the CBSL, the session was led by Governor Dr. Nandalal Weerasinghe and senior Central Bank officials.
The briefing provided insights on current policy measures and responded to questions and comments raised by Members of Parliament.
Held under the patronage of the Speaker, the programme provided an opportunity for Members of Parliament to engage directly with Central Bank officials and seek clarifications on the topics presented. Key facts on the current state of the Sri Lankan economy:
Economic growth: Positive growth momentum has been sustained since Q3 2023, with the economy recording growth of around 5 percent in both 2024 and 2025.
Inflation: Inflation accelerated in recent months, reflecting the impact of upward adjustments to domestic energy and fuel prices amid the ongoing conflict in the Middle East.
Monetary Policy Stance: The Overnight Policy Rate (OPR) was increased by 100 bps in May 2026, after around 800 bps reduction since June 2023. Latest monetary policy tightening is expected to arrest demand-driven inflationary pressures, thus also supporting to anchoring inflation expectations of the economy.
Reasons for recent depreciation pressure on Rupee: Higher import expenditure, particularly fuel and vehicles. Lower foreign exchange inflows, particularly from tourism. Possible delay in the conversion of export earnings in anticipation of a depreciation of the rupee. Importers increasing orders and foreign exchange purchases to hedge against the expected depreciation.
Market Interest rates: In line with policy tightening, overall market interest rates continued to adjust upward.
Domestic Credit: Growth in domestic credit has been primarily driven by the continued expansion in private sector credit, while Net Credit to Government and Credit to Public Corporations have recorded net repayments in recent periods amid improvements in fiscal discipline.