Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the economic outlook for the Asia-Pacific region, focusing on the recovery of both tech and non-tech exports, and their implications for GDP growth and inflation trends in 2026 [2][3][4]. Core Insights and Arguments 1. **Broadening Recovery**: The recovery in Asia is expected to broaden as non-tech exports, which account for 75% of overall exports, begin to recover due to easing trade tensions. This is anticipated to positively impact capital expenditure (capex), job creation, and wage growth, leading to increased discretionary consumption [3][19][29]. 2. **GDP Growth Projections**: Asia's real GDP growth is projected to rise from 4.3% in 4Q25 to 4.7% in 4Q26. For Asia excluding China, nominal GDP growth is expected to rebound from 5.5% in 4Q25 to 7.2% in 4Q26 [3][41]. 3. **Inflation Trends**: Disinflationary pressures are expected to ease in 2026, with underlying inflation rising modestly across the region. Asia excluding Japan's headline inflation is projected to remain within central banks' comfort zones, while China's exit from deflation is not expected until 2027 [4][55][58]. 4. **Central Bank Policies**: Central banks in Asia are nearing the end of the rate cut cycle, with most expected to hold rates steady in 2026. Japan is anticipated to implement one more rate hike in December 2025 before pausing [5][6][38]. 5. **Risks to Growth**: Upside risks include stronger private sector spending in the US and accelerated AI adoption, while downside risks involve a potential mild recession in the US affecting Asia's non-tech exports and possible larger stimulus measures from China [7][38]. Additional Important Insights 1. **Tech vs. Non-Tech Exports**: While tech exports have been strong, they are capital-intensive and have limited spillover effects on the broader economy. Non-tech exports are crucial for driving overall economic growth and consumption [15][16]. 2. **Capex Momentum**: The expected recovery in non-tech exports is likely to lead to an acceleration in capex momentum, with fixed capex growth projected to recover to 3.7% in 1H26 and further to 4.4% in 2H26 [29][30]. 3. **Consumption Recovery**: A turnaround in exports and capex is expected to improve labor market conditions, leading to a recovery in discretionary consumption segments. The slowdown in consumption has been attributed to cyclical factors rather than household balance sheet dynamics [32][36]. 4. **Country-Specific Outlooks**: - **China**: Real GDP growth is expected to improve but nominal GDP growth will remain subdued due to ongoing property sector weakness [48]. - **India**: Anticipated to have the strongest nominal GDP growth in Asia at 10.7% by 4Q26, driven by tax cuts and regulatory easing [49]. - **Japan**: Expected to maintain strong nominal GDP growth supported by expansionary fiscal policies [50]. - **Korea**: Consumption is projected to recover due to improved domestic demand and fiscal easing [51]. - **ASEAN**: Economic performance is expected to be bifurcated, with Malaysia and Singapore growing robustly while Indonesia, the Philippines, and Thailand face challenges [52]. Conclusion The Asia-Pacific economic outlook for 2026 indicates a broadening recovery driven by non-tech exports, with positive implications for GDP growth and inflation. Central banks are expected to maintain a cautious approach to monetary policy, while country-specific dynamics will influence individual economic performances across the region [3][4][5][6][7].

Core Insights - China's tech exports to the US have decreased significantly, with a 70% drop compared to the fourth quarter of 2024, primarily due to new tariffs imposed by the US government [1][8] - In contrast, tech exports from other Asian countries such as South Korea, Vietnam, and India to the US have increased by 80% during the same period [2] - Despite the decline in exports to the US, China's tech exports to other regions, including Europe and emerging markets, have continued to grow, reflecting strong global demand [2][3] Trade Dynamics - The tariffs imposed by the US are reshaping global supply chains and contributing to a decoupling of high-tech industries from China [4] - The share of critical tech imports to the US from China is projected to fall from nearly 50% in 2017 to below 20% by 2025 [4] - Countries like Taiwan, Mexico, Japan, India, and Vietnam are gaining market share in the tech export landscape as a result of these shifts [5] Regional Performance - Overall exports from Asia have increased by 7% in dollar terms through August compared to the previous year, with technology products accounting for over 60% of this growth [6] - Taiwan has emerged as a significant player, with over 70% of its exports being tech-related, the highest proportion in Asia [6] - In August, Taiwan's exports surged by 30% from the fourth quarter of 2024, driven by demand for advanced chips and servers essential for AI data centers [7]