Pesek on Asia: Japan's Bad Inflation
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
Before popping the champagne corks over the biggest increase in Japanese consumer prices since 1998, Prime Minister Shinzo Abe should remember that where rising costs come from is just as important as the rate of increase. In Japan's case, the 0.9 percent jump in prices excluding fresh food from a year earlier was largely an energy story. In other words, bad inflation. Prices aren't rising because of higher wages or improving household confidence, but rather a weak yen coupled with Japan's growing reliance on overseas energy. So Mr. Prime Minister, open that champagne if you must. But better to make it a domestic bottle. Prices of Made in Japan items aren't budging.
For Southeast Asia, a rough November
Typhoons, political unrest and stubborn worries about Federal Reserve tapering took their toll on three of Southeast Asia's most promising economies. In November alone, foreigners yanked nearly $2 billion out of Indonesian, Philippine and Thai markets. Indonesia was the hardest hit by Fed worries, while political unrest slammed Thailand and fears that Typhoon Haiyan will devastate gross domestic product in coming quarters are whacking the Philippines. All told, capital outflows this year are roughly $5.5 billion, the most on an annual basis since Bloomberg began compiling data in 1999. But I would be careful about giving up on any of these economies just yet, particularly Indonesia and the Philippines. Odds are, there's still lots of growth and opportunities to come in the region.
Australia is open for business? Hmmmm, not so much
When the Green Party and populist lawmakers like Clive Palmer praise one of its decisions, while the Business Council of Australia slams it, things have definitely turned upside down for Tony Abbott's supposedly pro-business government. Such is the case with Abbott's decision to block U.S.-based Archer-Daniels-Midland’s planned takeover of crop handler GrainCorp, citing national interest concerns. Perhaps, but as economist Saul Eslake of Bank of America Merrill Lynch in Melbourne says, this move “was a litmus test for the relative strengths of economic liberals and inward-looking protectionists." Add this one to the list of Abbott campaign pledges that aren't quite working out.
India's Modi fends off a mushrooming scandal
It's been a wild and crazy week for India’s opposition prime ministerial candidate Narendra Modi. One day, he was vying for Time magazine's person of the year. The next, the Gujarat state government chief was fending off allegations of illegal surveillance of a woman or, perhaps, even an affair. The Indian press can't get enough of a story that tossed an unexpected and tawdry grenade into what already promised to be an explosive national election next year.
In Hong Kong, the anti-Midas touch
Here's Tom Holland's punchy take on the latest failure of the hapless government of Chief Executive C.Y. Leung. The irony, as the South China Morning Post columnist details, is that the latest misstep involves property, something you'd think an economy that's basically one big housing market would get right. Not so, with plans to increase access to less overpriced apartments going awry. "Hong Kong officials invariably mean well," Holland writes. "But it is uncanny how often government policies end up achieving not their intended effect, but the exact opposite." Leung's team really does have the anti-Midas touch.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)