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Data this week to show ‘patchy’ growth in Japan

What could rock markets this week

A string of data from Japan this week will likely provide further confirmation that the country is emerging from a tax-induced recession, albeit at a slow pace.

Earlier this month, revised gross domestic product (GDP) showed the world's third-largest economy expanded an annualized 1.5 percent in the October-December period, marking a recovery from a technical recession in the preceding quarter. But, the revised figures were below an initial reading of 2.2 percent released in February.

Japan's economy has been on the back foot, shrinking an annualized 7.1 percent in the second quarter of 2014 followed 1.9 percent in in the third, hit by a nation-wide consumption tax. The rise to 8 percent from 5 percent took effect last April and discouraged consumers from spending, forcing the government to postpone a second sales tax hike initially scheduled for this October.

This week's monthly indicators, which include inflation, household spending, jobs and retail sales for February, are expected to show "patchy improvement" in the country, according to Moody's Analytics.

Read MoreAre Japan wage hikes enough?

"The unemployment rate likely edged lower. Japan exited recession last quarter so the job market should pick up through the first half of 2015," analysts wrote in a note issued last week. "Household expenditures and retail sales likely rebounded in February. While real wages [may trend] lower in the near term, early signs point to positive outcomes in the wage negotiations and consumer sentiment could increase on the back of this."

Meanwhile, the closely-watched consumer inflation is seen unchanged from last month, rising 2.2 percent in February from the year-ago period, as the impact of declining oil prices persists. Core consumer inflation – excluding the effects of the consumer tax hike – likely hovered at 0.2 percent, analysts at Moody's Analytics said.

As such, analysts expect further action in the coming months after the Bank of Japan (BOJ) kept its massive monetary policy stimulus intact last Tuesday.

"It is a difficult task to achieve that 2 percent inflation target within the next few years... with oil prices adding to the downward pressure, more weakness in the yen is the way to go," Philip McNicholas, ASEAN economist at BNP Paribas, told CNBC.

Men pull their portable shrine through the town of Kishiwada in Kishiwada, Japan.
Buddhika Weerasinghe | Getty Images

Elsewhere in Asia

In other parts of Asia, Singapore's consumer prices are seen falling for the fourth consecutive month. Due on Monday, the all-items consumer price index (CPI) is likely to drop 0.2 percent in February from a year earlier, a Reuters poll showed.

Taiwan's central bank is likely to diverge from the global easing trend when policy makers meet on Thursday, according to Bank of America Merrill Lynch's economist Marcella Chow. The Central Bank of the Republic of China (CBC) may keep interest rates on hold at 1.875 percent on the back of a potential 0.37 percent appreciation in the real effective exchange rate (REER) and lower inflation for the rest of 2015.

Meanwhile, HSBC's preliminary reading of activity in China's mammoth factory sector is on tap at 0945 SIN/HK on Wednesday. The data could shed light on the state of the Asian economic giant after the People's Bank of China cut interest rates on February 28.

Last month, the final HSBC/Markit Purchasing Managers' Index (PMI) climbed to 50.7 - the strongest level since July – while the country's official survey remained a whisker below the 50-point level, which separates growth from contraction, at 49.9.

— CNBC's John Phillips contributed to this report