Pesek's View From Asia
Good morning. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today:
Japan gets some inflation, but the bad kind.
The fastest rise in consumer prices since 2008 isn't the cause for celebration Prime Minister Shinzo Abe might have hoped. The 0.7 percent jump in July prices excluding fresh food had more to do with rising energy costs than the Bank of Japan's ultra-easy policies. Stripping away energy as well as fresh food, prices still fell in July. There is good inflation (brought on by faster growth and improving business confidence, matched by productivity growth) and the bad kind that's imported by a weaker exchange rate and surging energy costs. Japan's is of the latter variety and this report is nothing to cheer about.
Air India may be regretting all those Boeing 787s.
Gripes about Boeing's troubled Dreamliner aircraft typically veer toward faulty batteries and delivery delays. Yet the problem for India's national carrier isn’t just the seven it already has, but paying for the 20 remaining on-order Dreamliners (and another three Boeing 777s) as the rupee dips to record lows and fuel costs skyrocket. If a flag carrier sometimes presents a microcosm of the pros and cons of its national economy (here, think Japan and Singapore) then India's once high-flying economy is in for more turbulence.
Big test awaits Indonesia's Susilo Bambang Yudhoyono.
As much of the world cuts interests rates to support growth, Indonesia is moving in the opposite direction. On Aug. 29, the central bank hiked rates to 7 percent from 6.5 percent in a bid to halt the rupiah's 14 percent plunge this year. But the real test is for Yudhoyono, who since 2004 has done an impressive job restoring political stability and growth in a country that was in financial ruins 15 years ago. It's time for him to step up and reassure investors with forward-looking policies to reduce Indonesia's current-account deficit and corruption. Indonesia has come way too far to stop moving ahead now.
China's bankers get antsy about bad loans.
As the dust settles from the massive stimulus China engineered to withstand the 2008 crisis, the nation's top bankers are preparing for the worst. The heads of giants like Industrial & Commercial Bank of China and Agricultural Bank of China are voicing concerns about a coming storm of loans going sour. Wang Hongzhang, chairman of China Construction Bank, for example, said this week that "though our nonperforming loan ratio has been held below 1 percent, we still face big pressure from rising bad loans." Let's just say the next 12 months are going to be very busy for Chinese bankers and regulators alike.
Thai leader finds globetrotting has its costs.
As economic woes mount in Bangkok, Prime Minister Yingluck Shinawatra is getting grief for being out of town. Earlier this month, she was in Tajikistan and Pakistan. Next month, China. Yingluck claims her travels will drum up foreign-direct investment; the political opposition says the captain of a sinking ship needs to be on the bridge. While the truth lies somewhere in between, there's no doubting Thailand's economic troubles. They include slowing growth, a baht set for its worst losing streak in five years and a current-account deficit that's spooking markets. Bad news travels fast, too.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)