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U.S. President Donald Trump has issued a "total endorsement" for Japanese Prime Minister Sanae Takaichi just days before Japan's national election on Sunday. In a post on his Truth Social platform, Trump also announced he would host Takaichi at the White House on March 19.

Takaichi, Japan's first female prime minister, is seeking a clear mandate from voters for her economic and defense policies. While her coalition is projected to win, her plans have already created jitters among investors and increased diplomatic friction with China.

According to recent opinion polls, Takaichi's Liberal Democratic Party (LDP) and its coalition partner, the Japan Innovation Party (Ishin), are on track to secure around 300 seats in the 465-seat lower house of parliament. This would represent a significant expansion of the slim majority they currently hold.

Trump's Endorsement Amid Market Jitters

In his statement, Trump praised Takaichi's leadership, saying she and her coalition deserve "powerful recognition" for their work.

"Therefore, as President of the United States of America, it is my Honor to give a Complete and Total Endorsement of her, and what her highly respected Coalition is representing," Trump wrote.

Despite the high-level backing, Takaichi’s core economic pledge has shaken financial markets. Her proposal to suspend the 8% sales tax on food to help households with rising costs has raised serious questions about fiscal stability in a nation with the world's largest public debt.

The plan is estimated to cost 5 trillion yen ($30 billion) in annual revenue. In response, investors have been selling off Japanese government bonds, sending the yen into a crisis. However, some analysts believe a decisive victory for the LDP, which has dominated post-war Japanese politics, might be the "least-worst option" for markets, given that other parties are proposing even larger tax cuts and spending programs.

Navigating Tense Relations with China

The relationship between Takaichi and Trump has been a focal point since she became prime minister in October. One of her first acts was to host Trump in Tokyo, where she presented him with a putter that belonged to his late friend and former Prime Minister Shinzo Abe. The meeting, where Takaichi pledged billions in investments, was seen as a reaffirmation of the strong U.S.-Japan alliance.

However, her tenure has also been marked by a significant diplomatic dispute with China. Weeks after taking office, the 64-year-old prime minister publicly detailed how Japan might react to a Chinese attack on Taiwan, triggering the most significant row with Beijing in over a decade.

Sources revealed that Trump, who is working to preserve a trade truce with China, privately asked Takaichi in a November phone call to avoid further antagonizing Beijing. A strong election victory could give Takaichi more leverage in this dispute, though her plans to bolster Japan's military will likely draw further criticism from China, which views the move as a return to past militarism.

Domestic Popularity and Election Variables

While the friction with China is beginning to impact Japan's economy, it has had little effect on Takaichi's high approval ratings at home. She has gained an almost iconic status among some supporters, who have rushed to buy the same handbag she carries and the pink pen she uses in parliament.

The final margin of victory could be influenced by several factors. Turnout among younger voters, who are historically less likely to vote, could play a key role. Record snowfall in parts of the country might also suppress turnout. Takaichi has stated that if she fails to maintain her coalition's majority, she will resign.

A Pattern of Foreign Endorsements

Trump's intervention in the Japanese election is part of a broader trend of his administration seeking to influence foreign political outcomes. He previously backed Argentine President Javier Milei, citing U.S. financial support as a key to Milei's legislative success in 2025. He also recently endorsed Hungarian Prime Minister Viktor Orban ahead of an April vote.

Analysts suggest these endorsements signal a growing pattern of aligning with and supporting right-wing leaders across the globe. In his final praise for Takaichi, Trump described her as "a strong, powerful and wise Leader, and one that truly loves her country."

Singapore is set to announce a fiscally conservative budget, signaling a strategic shift from the substantial household support seen in 2025 towards long-term financial stability and targeted growth initiatives.

Economists from leading banks, including Bank of America, Maybank, and DBS, are forecasting an overall fiscal surplus for Singapore, ranging from 0.3% to 1% of GDP. This cautious approach comes amid a positive economic outlook, where demand is expected to outpace supply in the coming quarters.

The upcoming budget will be delivered by Prime Minister and Finance Minister Lawrence Wong on February 12 at 3:30 p.m. (0730 GMT).

From Household Handouts to Prudent Planning

The 2026 budget is expected to stand in sharp contrast to the previous year's "household friendly" measures, which were rolled out when growth concerns were more prominent. Analysts at BMI anticipate a reduction in cash transfers to households following the elevated support provided in 2025.

This pivot towards fiscal prudence is also a matter of policy. The Singaporean government is required to balance its budget over each parliamentary term. By adopting a cautious stance early in the term that began after the 2025 general election, it preserves the flexibility to implement support measures if economic conditions worsen later.

Navigating a Mixed Economic Picture

The budget announcement comes as Singapore navigates a complex global environment marked by tariffs and supply chain disruptions. The nation's economic performance serves as a key indicator of how these international pressures are impacting business activity in the trade-reliant hub.

According to advance estimates, Singapore's economy grew by a robust 4.8% in 2025. However, Wong has already highlighted challenges to maintaining that momentum. The Trade Ministry's official forecast projects more moderate growth of 1.0% to 3.0% for 2026.

Meanwhile, inflationary pressures are building. In January, the Monetary Authority of Singapore (MAS) revised its core and headline inflation forecasts upward to a range of 1.0% to 2.0%.

Investing in Technology and Future Growth

A central theme of the budget will likely be long-term investment in innovation to address domestic constraints like an aging workforce and limited land. The global AI-led investment boom that benefited Singapore last year is expected to continue in 2026.

DBS economist Chua Han Teng expects the government to channel funds into technology and innovation. This aligns with a recent update to the country's Economic Strategy Review, which emphasized:

• Directing R&D resources to high-value industries.

• Pursuing emerging technologies like quantum, decarbonization, and space tech.

• Aggressively supporting local firms in their international expansion.

Singapore has already committed over S$1 billion ($779 million) to public AI research through 2030. Maybank economist Chua Hak Bin anticipates further support for AI adoption and upgrades to national tech infrastructure through existing funds.

Focus on Jobs and Corporate Tax Revenue

While future-proofing the economy is a priority, the budget will also be watched for its approach to the labor market and its management of corporate tax revenues.

Tackling a Weaker Job Market

Concerns are growing over youth structural unemployment, which has hit a four-year high. According to preliminary data from the Manpower Ministry, the citizen unemployment rate also rose slightly to 3.0% in 2025 from 2.9% the previous year. In response, analysts believe the government may introduce new incentives to encourage hiring.

Surging Corporate Tax Collections

A bright spot for Singapore's finances has been the performance of corporate income tax collections, which have climbed by 1 to 4 percentage points of GDP since 2023. This increase has occurred despite uncertainty around global tax reforms.

The technology sector is a major contributor. Bank of America analysts noted that Nvidia's annual revenue booked in Singapore soared tenfold to $23.7 billion in the year ending January 2025. At the same time, both Google and Amazon have made significant investments to expand their cloud services in the nation, further boosting the tax base.

Bank of Japan (BOJ) board member Kazuyuki Masu has advocated for timely interest rate hikes, warning that the central bank must act to prevent underlying inflation from surpassing its 2% target.

Speaking to business leaders in Matsuyama, Masu noted that while Japan's underlying inflation remains below 2%, it is now "drawing very close" to that level. This shift comes as both companies and households begin to move away from the nation's long-entrenched deflationary behavior.

Normalizing Policy to Contain Price Pressures

Masu expressed his conviction that continued policy rate hikes are essential to "complete the normalization of monetary policy in Japan."

As the country clearly enters an inflationary phase, he argued that the BOJ must deploy "timely and appropriate rate hikes" to ensure underlying inflation does not overshoot its target.

A Cautious Approach to Protect Economic Momentum

At the same time, Masu cautioned against moving too aggressively. He stressed that it is critical to avoid "excessive rate hikes" that could disrupt the positive cycle of rising prices and wages that has started to gain momentum.

This balancing act means the Bank of Japan will proceed cautiously with future rate adjustments to support the economy while keeping inflation under control.

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Source: Yahoo Finance

China has issued a stark warning to Panama, threatening severe political and economic consequences after the Central American nation’s Supreme Court voided a key port operations contract linked to a Hong Kong-based firm. The move escalates a geopolitical clash over control of one of the world's most critical maritime chokepoints.

Court Voids Contract at Key Canal Ports

The controversy centers on a decision by Panama's Supreme Court to nullify the operating license of CK Hutchison, a Hong Kong conglomerate. The ruling affects its subsidiary, Panama Ports Company, which managed strategic ports at both ends of the Panama Canal: Balboa on the Pacific and Cristóbal on the Atlantic.

This decision is widely seen as a victory for Washington, following sustained pressure from the Trump administration to curb Chinese influence in the region. President Trump had previously stated that the canal was "vital to our country" and expressed concern that "it's being operated by China."

Beijing Delivers a Vehement Rebuke

Beijing's response was swift and uncompromising. China's State Council Hong Kong and Macao Affairs Office condemned the court's decision as "logically flawed" and "utterly ridiculous." The office made it clear that both the central Chinese government and the Hong Kong Special Administrative Region government vehemently oppose the ruling.

"The Panamanian authorities should recognize the situation and correct their course," the office stated. In a direct threat, the statement added: "If they persist in their own way and remain obstinate, they will inevitably pay a heavy price in terms of politics and economics!"

Economic Retaliation Measures Begin

As it prepares a legal challenge, Beijing is already taking concrete steps to apply economic pressure on Panama. According to reports, China has initiated several retaliatory actions that could impact billions of dollars in investment and trade.

• Project Suspension: Chinese state-owned enterprises have reportedly been instructed to halt all discussions on new projects in Panama.

• Shipping Diversions: Beijing is advising shipping companies to explore alternative cargo routes that bypass Panama, as long as they do not create significant extra costs.

• Increased Inspections: Chinese customs authorities are intensifying inspections on key imports from Panama, including products like bananas and coffee, potentially disrupting trade flows.

Panama Caught Between Global Powers

The dispute places Panama in a difficult position, caught between the United States and China. Panamanian President Jose Raul Mulino has stated that he "strongly" rejects the Chinese government's threats.

He emphasized his respect for the country's rule of law and the independence of its judiciary. Despite this stance, Panama now faces the challenge of navigating intense economic pressure from Beijing while asserting its national sovereignty.

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Source: Bloomberg