Asia Pacific News
LAST UPDATE: June 25, 2025
IMF says high tariffs would see Vietnam’s growth slow to 5.4% this year
The IMF warned that if high U.S. tariffs are imposed (e.g., 46%), Vietnam’s GDP growth could decelerate to around 5.4% in 2025, from about 7% last year. The projection depends on the outcome of trade negotiations.
Insight
This highlights how Vietnam’s export-led economy is vulnerable to U.S. tariff policies; resolving trade tensions could help Vietnam regain robust growth.
China’s Lan Laments Decline of Aid in Speech to Development Bank
Chinese Finance Minister Lan Fo’an said global development aid is drying up, particularly for emerging markets, and urged the AIIB to step in with more funding and mobilize private capital for infrastructure.
Insight
China is positioning the AIIB as a development finance leader to fill gaps left by retreating Western donors, bolstering its global influence and economic outreach.
AIIB’s Outgoing President Stresses Openness to Global Partners
Outgoing AIIB President Jin Liqun emphasized the bank’s openness to global participation—highlighting collaboration with major donors like the U.S. and Japan—and called for increased private sector involvement.
Insight
AIIB is actively reshaping its image to become a more inclusive multilateral institution, signaling a shift beyond Chinese dominance and toward broader international engagement.
Japan’s corporate service inflation hits 3.3% in May
Japan’s services producer price index rose 3.3% year-on-year in May, signaling sustained pricing pressure in the service sector and reinforcing expectations of further BOJ rate hikes.
Insight
Persistent service inflation reflects firms passing on wage increases; this supports the BOJ’s tightening stance despite external risks.
Japan Policy Chief Hits Back at US Call for 5% Defense Spending
LDP policy chief Itsunori Onodera responded to U.S. pressure for Japan to raise defense spending to 5% of GDP, stating Japan should instead focus on capability enhancement over rigid targets.
Insight
Onodera’s remarks signal Japan’s intent to maintain sovereignty over defense decisions, resisting U.S. numerical benchmarks and focusing on strategic autonomy.
BOJ Record Signals Shared View Inflation Faster Than Expected
Recent BOJ board meeting minutes reveal a growing consensus that inflation is rising faster than previously anticipated, with likely upward revisions in July’s quarterly economic report.
Insight
The shift toward a more hawkish tone suggests BOJ is preparing markets for possible rate hikes, balancing inflationary pressures against economic uncertainties.
Most Hawkish BOJ Member Flags Rate Hike Risk as Inflation Gains
Board member Naoki Tamura stated that if inflation risks grow, the BOJ should act decisively with rate hikes—even amid global uncertainty from U.S. tariffs.
Insight
Tamura’s remarks signal a potential shift in BOJ policy, with hawkish voices gaining influence and increasing the probability of tightening in the coming year.
Bank of Korea board member expresses financial stability concerns
BOK board member Kim Jong‑hwa warned that rising household debt and housing market overheating, exacerbated by ongoing rate cuts, pose financial stability risks; also flagged risks from stablecoins.
Insight
This reflects a balancing act: while the central bank supports growth via rate cuts, it must also guard against debt-fueled bubbles and emerging crypto risks.
Thailand Holds Rate, Raises Growth Forecast Despite Risks
The Bank of Thailand kept its rate at 1.75%, raised its GDP growth forecast to 2.3%, but warned of risks from U.S. tariffs, political instability, weak consumption, and household debt.
Insight
The cautious tone shows BOT balancing short-term optimism on growth with medium-term vulnerabilities, hinting at possible future rate cuts if downside risks materialize.
Indonesia: Indrawati Signals Alignment with Prabowo, Says Budget on Target
Finance Minister Sri Mulyani Indrawati confirmed fiscal discipline under President Prabowo, stating the budget deficit remains on track (~2.5% of GDP) and that she has a strong working relationship with him.
Insight
This reassures investors that Indonesia’s new administration will maintain fiscal prudence while pursuing its policy agenda—balancing continuity with reform.
Australia’s core inflation hits 3‑1/2‑year low, greenlighting July rate cut
Australia’s core inflation (trimmed mean) slowed to 2.4% year‑on‑year in May—its lowest since late 2021. Headline CPI also eased to 2.1%, prompting markets to price in a ~92% probability of a rate cut by the RBA on July 8.
Insight
Slowing inflation and resilient labor markets give the RBA room to lower rates in July to support growth amid global trade uncertainties.
