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Central bank meetings

US FOMC (January 29): The Federal Open Market Committee meets for its first policy deliberation of the year next week while facing unprecedented political intervention. Headlines have been dominated by court proceedings against Lisa Cook and Jerome Powell, as opposed to inflation (momentum is easing), growth (very strong), or the labour market (somewhat weak).

We expect the Fed to pause this month not to signal its intransigence against President Trump, rather to take stock of the series of cuts made already and various upside risks to inflation ahead. Jobs growth may have softened, but the unemployment rate is low and wages are growing in positive real terms. Between tax cuts, deficit spending, AI infrastructure investment boom, immigration tightness, and tariff passthrough, the current lull in inflation momentum could mark a trough. Considerable upside lies ahead.

Forthcoming data releases

Taiwan: The 4Q GDP estimate (preliminary) is due this week. Headline growth is expected to remain strong at around 9% y/y, up from 8.2% in 3Q. Exports accelerated further to 47.5% y/y in 4Q from 36.5% in 3Q, driven by AI-related demand for semiconductors and information and communication products. Machinery investment also stayed robust, as reflected in a 41% expansion in capital goods imports. Construction investment appears to have bottomed, supported by tentative stabilization in the domestic property market. Consumption likewise showed signs of bottoming, as evidenced by the narrowing contraction in retail sales. Full-year GDP growth for 2025 is likely to reach around 7.5%, ranking Taiwan among the top three performers in Asia.

Our 2026 GDP growth forecast of 4.8% remains firmly on track, with risks tilted to the upside. The recently concluded Taiwan–US trade deal helps ease tariff pressures, reduces business uncertainty, and—critically—avoids disruption to the AI supply chain. With growth continuing to beat expectations while inflation pressures remain contained, the central bank is expected to maintain a neutral monetary policy stance.

Singapore: We expect Singapore’s industrial production (IP) to conclude 2025 robustly, with growth of 11.0% yoy in December, albeit easing from 14.3% yoy in November. This marked the fourth consecutive month of expansion, primarily driven by accelerated electronics output, and sustained strong momentum in transport engineering.

A pullback in pharmaceutical output, mirroring a similar trend in exports, likely explained the overall moderation in factory growth.

Hong Kong SAR: GDP growth would likely decelerate from 3.8%yoy in 3Q to 3.0% to in 4Q, largely due to base effect. The economy continues to show improvement amid lowered HKD interest rates. Retail sales growth has turned positive for the first time in the first 11 months of 2025, supported by increased visitor arrivals and positive wealth effects from equity market gains.

On the external front, despite a year-on-year moderation, exports are expected to grow by 16.7% yoy in December 2025, bringing full-year export growth to 14.5% for 2025. This performance is driven by deepening trade links between China and non-U.S. markets, while U.S. re-exports to China via Hong Kong have surged amid trade tensions. Imports growth is also expected to stay resilient at 17.3% in December, underpinned by improving domestic demand.

On the investment side, lowered HKD interest rates have improved risk appetite, with overall loan growth accelerating to 1.2% in November. Investment demand in the residential property market has picked up, as evidenced by a higher proportion of Mainland buyers and rising housing prices. Looking ahead, the Fed’s rate-cut cycle should bolster consumption and investment sentiment, supported by a softer HKD and lower borrowing costs.

Philippines: We expect 4Q growth to gain slightly to 4.2% yoy from 4% quarter before, with the impact of climate shocks and corruption allegations to spillover on to the domestic drivers. Capex spending likely slowed down in the second half of last year, also reflected in weak imports. Goods exports meanwhile recovered ground, up 21.6% yoy in 4Q, lifted by sharp 46% increase in the key electronics sector owing to still strong demand for semiconductor-led shipments. Annual growth is likely to average 4.8%, based on our quarterly assumption. IMF also trimmed its forecasts for Philippines in 2026 and 2027, citing softness in the domestic engines.

Economics Team

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