Asia Pacific News
LAST UPDATE: May 28, 2025
Japan’s government to pledge ‘nimble’ fiscal action in policy guidelines
Japan’s government plans to commit to “nimble policy action” in its annual economic and fiscal policy guidelines for 2025, to address the negative effects of U.S. tariffs and rising inflation on household finances.
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The Japanese government’s emphasis on “nimble” fiscal action reflects a strategic shift towards flexibility in economic policymaking. By considering supplementary budgets and focusing on wage growth, Japan aims to stimulate domestic demand amidst external pressures like U.S. tariffs and global inflation. This approach indicates a balancing act between fiscal discipline and the need for economic stimulus, highlighting the challenges faced by economies heavily reliant on exports in a volatile global trade environment.
India offers US ‘deep’ tariff cuts, but shields grain and dairy markets
India is offering significant tariff cuts on a range of imports in trade negotiations with the US, while insisting on maintaining high duties on sensitive agricultural products like grains and dairy.
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India’s negotiation strategy showcases a pragmatic approach to trade liberalization, offering concessions on industrial goods while protecting vital agricultural sectors. This reflects the government’s attempt to balance international trade relations with domestic political considerations, especially in sectors employing large populations. The move also underscores India’s intent to strengthen economic ties with the US, aiming to boost bilateral trade while safeguarding its own economic interests.
Southeast Asia Voices ‘Urgency’ to Diversify Due to US Tariffs
Southeast Asian leaders expressed deep concern over the US’s tariff plans, citing uncertainties in commerce and the need to diversify trade.
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The expressed urgency by Southeast Asian nations to diversify trade partners highlights the region’s vulnerability to unilateral trade policies from major economies like the US. This situation may accelerate ASEAN’s efforts to strengthen intra-regional trade and explore new markets, reducing over-reliance on traditional partners. It also emphasizes the importance of multilateral trade agreements and regional cooperation in ensuring economic resilience against external shocks.
Macron in Indonesia to deepen trade, defence ties
French President Emmanuel Macron has embarked on a six-day tour of Vietnam, Indonesia, and Singapore to present France and the European Union as reliable partners in trade and security amid US-China tensions.
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Macron’s visit to Indonesia signifies France’s strategic intent to bolster its presence in the Indo-Pacific region. By deepening trade and defense ties, France aims to position itself as a counterbalance to US and Chinese influence, promoting a multipolar approach to regional stability. This move also reflects the EU’s broader strategy to engage more actively in Southeast Asia, recognizing the region’s growing economic and geopolitical significance.
Malaysia Economy Minister to Quit After Defeat in Party Poll
Malaysia’s Economy Minister Rafizi Ramli and Natural Resources and Environmental Sustainability Minister Nik Nazmi Nik Ahmad are leaving the cabinet following defeats in party leadership elections.
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The resignation of key ministers following internal party election defeats underscores the dynamic nature of Malaysia’s political landscape. Such changes can lead to shifts in policy direction, particularly in economic and environmental sectors. It also reflects the challenges political leaders face in balancing party politics with governance, and the potential impact of internal party dynamics on national policy continuity and investor confidence.
Thai PM to propose $115 billion budget to parliament to support lacklustre economy
Prime Minister Paetongtarn Shinawatra is set to propose a 3.78 trillion baht ($115.5 billion) budget for the 2026 fiscal year to parliament, aimed at bolstering a sluggish economy impacted by looming U.S. tariffs.
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The proposed budget reflects Thailand’s proactive approach to counteract economic headwinds, including potential U.S. tariffs and internal political tensions. By forecasting modest economic growth and inflation rates, the government aims to stabilize the economy. However, the budget’s success hinges on parliamentary approval amidst coalition disputes over issues like casino legalization and cannabis regulation. Failure to pass the budget could lead to political instability, including possible resignation or new elections.
Thaksin-Backed Coalition Risks Fracturing in Thai Budget Vote
Thailand’s ruling coalition, led by the Pheu Thai Party and backed by former Prime Minister Thaksin Shinawatra, faces internal divisions over key policy issues, threatening the passage of the proposed budget.
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The coalition’s fragility underscores the challenges of maintaining political unity in a diverse alliance. Disagreements over constitutional reforms, cannabis regulation, and casino legalization have strained relationships among coalition partners. These internal conflicts not only jeopardize the budget’s approval but also raise concerns about the government’s ability to implement its policy agenda effectively. The situation highlights the delicate balance required to govern amidst differing political ideologies and priorities.
Australia’s consumer inflation holds steady in April, rate cuts still in view
In April 2025, Australia’s consumer inflation held steady at an annual rate of 2.4%, maintaining the same level as March and slightly above expectations of 2.3%.
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The stable inflation rate suggests that the Reserve Bank of Australia (RBA) has room to maneuver with potential interest rate cuts to stimulate the economy. Despite cost increases in health and holiday travel, declines in fuel and electricity prices have balanced inflationary pressures. The market anticipates a 65% chance of a rate cut in July, with additional cuts likely in August, indicating a cautious approach by the RBA to support economic growth while keeping inflation within target ranges.
Australia’s opposition coalition reunites a week after split
Australia’s conservative opposition coalition, comprising the Liberal and National parties, has reunited just a week after splitting due to policy disagreements following a major defeat in the May federal election.
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The quick reunification indicates a strategic move to consolidate opposition strength against the ruling Labor Party. The brief split highlighted underlying tensions over policy directions, particularly concerning nuclear energy and market regulation. By reconciling differences and appointing new leadership roles, the coalition aims to present a united front. However, the recent discord may have lasting effects on voter confidence and the coalition’s ability to effectively challenge government policies.
New Zealand Delivers Sixth Rate Cut to Fan Economic Recovery
The Reserve Bank of New Zealand (RBNZ) cut its benchmark interest rate by 25 basis points to 3.25%, signaling a slightly deeper easing cycle due to growing global economic uncertainties.
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This marks the sixth consecutive rate cut by the RBNZ, reflecting concerns over global demand and trade tensions, particularly from U.S. tariff policies. While inflation remains within the target range, the central bank anticipates further easing to support fragile economic growth. The decision underscores the RBNZ’s proactive stance in mitigating external risks and stimulating domestic investment, although it also highlights the challenges of balancing monetary policy amidst global economic volatility.
China-Led Development Lender Plans to Open Singapore, HK Offices
The Asian Infrastructure Investment Bank (AIIB), led by China, plans to establish offices in Singapore and Hong Kong to expand its presence in Asia and enhance its financing capabilities.
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The AIIB’s decision to open offices in Singapore and Hong Kong signifies a strategic move to strengthen its foothold in Asia’s financial hubs. This expansion aims to facilitate infrastructure financing and project development across the region. By positioning itself closer to key markets, the AIIB can better engage with stakeholders, streamline operations, and potentially attract more member countries and private sector partners. This move also reflects China’s broader strategy to increase its influence in global financial institutions.
