Good morning, everyone. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today:
Singapore raised its growth forecast , offering a ray of hope for Asia.
Wine grapes don't grow very well in tropical Singapore. Yet the Southeast Asian city-state has one thing in common with the world's oldest vineyards. Not the grapes -- the rosebushes. Vintners surround their precious vines with more fragile vegetation as a kind of alarm system. If a pest or disease emerges, the problem will show up on the periphery first before spreading widely. Singapore's highly open economy often plays that role for Asia. So it comes as great news that Prime Minister Lee Hsien Loong raised his growth forecast to a range of 2.5 percent to 3.5 percent this year, a sign the region is benefiting from recoveries in the advanced economies. Think of this as Lee's toast to Asia's near-term outlook.
China's inflation rose less than expected, raising speculation that prices will begin falling.
All that Federal Reserve liquidity isn't having the expected effect on China. Consumer prices rose just 2.7 percent in July and economists at Australia & New Zealand Bank think inflation has peaked. Yet what if China is now shifting toward deflation as growth heads toward 5 percent? That would be dreadful news for Australia, arguably the biggest leveraged bet on Chinese growth. It could slam exporters in Japan, Singapore, South Korea or Taiwan. Traders won't be happy to see prices of oil, gold and steel plunge as demand from the mainland shrinks. Europe might have to find a new benefactor for its debt markets. This one number could mean a lot for the global outlook.
Japan's public debt surpasses the 1 quadrillion yen mark, narrowing Shinzo Abe's options in taxes.
As banks busily tweak computer programs to accommodate all those zeros (that's $10.46 trillion, by the way), the prime minister has two options -- neither very appealing. The first is going ahead with a two-step doubling of the consumption tax to 10 percent, a move economists say will dampen spending. The second is scrapping the tax hikes, a step that might invite credit downgrades for the most indebted nation. While only time will tell, Japan's increasing debt may lock Abe into raising taxes on households. That may lead to another kind of zero -- in gross domestic product growth.
The ripple effects of Japan's radiation crisis are reaching South Korea, where the anti-nuclear lobby is gaining force.
President Park Geun Hye could be about to deal a big blow to the global nuclear-power industry. The nation had planned to build more reactors to cope with electricity demand it forecasts to surge almost 60 percent by 2027. Yet public opinion is souring toward nuclear power following the 2011 meltdown of three reactors in neighboring Japan's Fukushima. The anti-nuclear movement gained even more support when an investigation found nuclear plants in Korea using components with faked safety certificates. Park now faces an uphill task of convincing Koreans to add to the nation's 23 reactors. It would be but the latest setback for an industry with a growing reputation problem.
Thailand's economy hit a major speed bump, putting pressure on Yingluck Shinawatra to devise new growth policies.
That dire warning comes from Moody's Analytics economist Fred Gibson as the effects of an array of government handouts and flood-related reconstruction that lifted the economy in 2012 fade. Weak demand from the China, Europe and the U.S. also is closing in on Asia's eighth-biggest economy. I strongly concur with Gibson's advice that the "government must get it right." That means the right mix of fiscal spending, infrastructure projects and political stability to make overseas investors feel comfortable staying in Thailand. Recent political tensions in Bangkok and related protests put economic planning at risk. Thailand's otherwise bright future, too.
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Willie Pesek at email@example.com