Global Data Watch: Asia: China’s 2H recovery contingent on fiscal

Research evidence excerpt

Global Data Watch: Asia: China’s 2H recovery contingent on fiscal

J P M O R G A N Asia Pacific Economic Research

18 July 2026

Global Data Watch: Asia

China’s 2H recovery contingent on fiscal

Emerging Markets Asia, Economic

and Policy Research

Sajjid Z Chinoy

(91-22) 6157-3386

sajjid.z.chinoy@jpmorgan.com

JPMorgan Chase Bank, N.A., Mumbai Branch

China: 2H Growth Recovery Hinges on Fiscal Anusha Mital

2Q GDP came in weaker than expected slowing to 4.3%oya (2.4%q/q saar), as (91-22) 6157-4113

delayed fiscal execution coincided with soft household demand, persistent housing anusha.mital@jpmchase.com

J.P. Morgan India Private Limited

pressure and subdued credit growth. One redeeming feature was June IP bounced

back more than expected (1% m/m, sa) but still revealed the same fault lines

between external and domestic demand and the old and new economies. While Research Notes

high-tech manufacturing, electronics and exports remained resilient on the global

Korea: Long-term growth implications of the tech

IP/AI cycle, domestic retail sales rose only 1.0%oya and FAI contracted 5.4%oya boom

ytd, with weakness in real estate, infrastructure and non-high-tech manufacturing.

Indonesia: Navigating tighter fiscal space

The 2Q downside surprise was primarily a domestic absorption problem,

compounded by sizeable fiscal under-delivery.

Data Watches

We therefore lowered our 2026 GDP forecast to 4.6% from 4.7%, but raised 3Q/4Q

Japan

sequential growth to 4.3%/4.9%q/q saar from 3.5%/3.7% on back-loaded fiscal

execution, an improved global backdrop in the second half and the prospect of Japan Focus

additional fiscal support later in the year if growth threatens to miss authorities’ full Australia and New Zealand

year GDP target. Greater China

Korea