Newsletter N°85 - January 2026 

South Korea caught attention this month with the announcement of unexpectedly weak growth in the fourth quarter of 2025. In fact, the economy even slipped into contraction, marking its sharpest downturn in years. And yet, pessimism remains limited. The country’s outlook continues to be buoyed by the strength of its industrial champions in semiconductors, with SK Hynix and Samsung Electronics firmly positioning themselves at the heart of global demand for AI-related technologies. Japan, meanwhile, made headlines abroad for very different reasons.

 

The sudden drop in prices of long-term government bonds (30- and 40-year maturities), and the corresponding spike in yields at the end of the month triggered alarmist commentaries in several foreign economic outlets. Some framed the episode as a sign of a broader loss of confidence in the country’s long-term prospects. Others voiced concern that higher domestic yields could encourage Japanese investors to repatriate part of the vast capital invested overseas. Inside Japan, the episode barely registered.

 

When it did, it was largely interpreted as a technical market reaction to the Prime Minister’s announcement of a possible suspension of VAT on some goods, in the context of a snap election call.As for the Davos economic meeting, it has generated no shortage of commentaries this month. We will not dwell on it here. It is nonetheless worth noting that, while covered in East Asian media, be it China, Japan, or South Korea, it was sometimes portrayed less as a global moment than as a distant chronicle of Western political and economic theatrics.Against this backdrop of contrasting signals and interpretations, one country increasingly stands out in the regional narrative. China is coming to be seen as a tough yet predictable and comparatively stable economic partner.