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's Bad Inflation.
Today's inflation numbers out of Japan are being touted as a victory in Prime Minister Shinzo Abe's fight against deflation, when they're really a defeat. Prices excluding fresh food increased 1.3 percent from a year earlier, thanks largely to a weaker yen that is making energy imports more expensive. In other words, bad inflation. Companies, meanwhile aren't hiking wages as Abe hoped. In April, sales taxes are set to jump to 8 percent from 5 percent now, another drain on the ability and inclination of households to spend. Abenomics finally has some inflation at a time when consumers can't absorb it.
A sobering warning from India's Rajan.
Is international cooperation between rich and poor nations doomed as the Federal Reserve tapers? That's quite likely, says India central bank Governor Raghuram Rajan, and it bodes ill for Asia this year. “International monetary cooperation has broken down,” Rajan said. “Industrial countries have to play a part in restoring that, and they can’t at this point wash their hands off and say we’ll do what we need to and you do the adjustment.”
Korea's narrowing dating divide.
"Everything is so different here and it's difficult to adapt." In the annals of understatement, this comment by North Korean defector Na Soo-yeon about life in Seoul, where she has lived since 2008, deserves a mention. Defectors I've met over the years have described arriving in South Korea as if it's akin to landing on Mars. Here's a heartwarming Wall Street Journal piece about how more Koreans from North and South are marrying and how it is affecting perceptions of tensions on the peninsula. Definitely worth a read.
Thailand's game of chicken.
Fast forward 10 years. Is it possible that in 2024 Thailand's politics will be every bit as chaotic and dysfunctional as it is today? This will either prove to be a prescient question or a dumb one. But here, The Economist makes a sound argument for both sides of the anti-government divide to back down now and talk national reconciliation and strategy or risk their country’s disintegration.
Islamic finance's ongoing journey.
The world's roughly 1.6 billion Muslims need a way to bank and invest according to Islamic Sharia law, which bars receiving or paying interest on loans or deposits. A massive market infrastructure is increasingly being built to facilitate clients who include the wildly rich Persian Gulf oil tycoons. Of course, one can argue that this industry is being pirated by the Bank of Japan, Federal Reserve and other central banks offering interest-free loans, too. But here is a timely reality check on the industry from the Council of Foreign Relations.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)
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