The coming week will test Asia-Pacific economies as they grapple with slowing growth, political turbulence, and lingering deflationary risks. According to Moody’s Analytics, the region’s largest players are showing uneven momentum, underscoring how fragile the post-pandemic recovery remains.
Vietnam enters the spotlight first, with August data expected to confirm a cooling trend. “We expect growth to slow in year-on-year terms across industrial production and retail sales, while cooling food inflation will pull the CPI back a touch to 3.1%,” Moody’s Analytics said. Export figures will be particularly critical after the U.S. imposed new tariffs earlier this month, following a surge of orders earlier in the year designed to beat tariff hikes. For Vietnam, resilience will depend on whether global demand can offset tariff-related volatility.
Japan’s second estimate of June-quarter GDP, due Monday, is also poised for disappointment. Moody’s Analytics projects a downward revision to 0.2% quarter-on-quarter growth from 0.3%. “Business investment was very weak for the quarter,” the firm noted, adding that revisions will likely show net exports provided less support than initially assumed. For an economy seeking stable growth drivers, this suggests both domestic and external engines are sputtering.
China’s outlook remains weighed down by persistent deflationary pressures. August consumer prices are expected to stay unchanged year-on-year, repeating July’s stagnation, while producer prices likely fell 3.5%. “Soft income growth and uncertain job prospects are making households reticent to spend,” Moody’s Analytics said. Weak consumer confidence, combined with a prolonged industrial downturn, highlights how difficult it will be for Beijing to engineer a durable recovery without structural reforms.
Australia, in contrast, posted one of the region’s few bright spots in the June quarter, with GDP expanding 0.6%. The rebound, however, was less about genuine momentum than short-term quirks. “Consumers opened their wallets, mining exports normalised, and services demand perked up,” Moody’s Analytics explained, but the firm cautioned that much of this spending came from households dipping into savings rather than income gains. With cost-of-living pressures still high, sustaining consumption-led growth will be a challenge. Moody’s Analytics expects the Reserve Bank of Australia to deliver a modest 25-basis-point rate cut in late 2025, but only as a cautious measure amid subdued underlying growth.
Thailand’s risks are more political than cyclical. The dismissal of Prime Minister Paetongtarn Shinawatra has reignited instability, with fresh elections likely by January. At the same time, the economy is showing clear cracks: industrial production fell 4% in July, the steepest contraction since December 2023, while tourism numbers—a critical growth pillar—have been declining for seven consecutive months. Moody’s Analytics forecasts GDP growth slowing to 2.1% in 2025 from 2.5% in 2024. With the policy rate already at 1.5%, “there is less and less room to use interest rate cuts as a form of stimulus,” the firm warned.
Taken together, the preview paints a picture of an Asia-Pacific region caught between near-term headwinds and structural vulnerabilities. Vietnam and China are fighting demand-side weakness, Japan is struggling to unlock investment, Australia is leaning on fragile consumption, and Thailand faces the twin shocks of politics and economic slowdown. As Moody’s Analytics underscores, the challenge for policymakers is not just weathering the current turbulence but laying the groundwork for sustainable, income-driven growth.
