17/02/2014 Asia Business Report

Heavy snow days have an impact on the Japanese economy. Challenging

times in Thailand, growth numbers could reveal the economic toll from

the political stand-off. Welcome to Asia Business Report. We

kick off in Japan, and it is latest growth numbers reveal the economy

expanded by 0.3% in the final three months of last year. That is the

fourth straight quarter of growth. The data shows a pickup in

spending, people making big spending in cars and luxury goods. For now,

the immediate worry is how to recover from the second heavy

snowfall in a week, which is injured hundreds over the weekend. The

snowstorm has paralysed traffic and let -- led to the grounding of

several flights. We are speaking to our reporter in Tokyo. We spoke with

one economist earlier, and he said that these problems in Japan,

particularly the snowfalls, could have an impact on the economy which

could hurt exports, and increase imports. Potentially, it could. We

have had very heavy snow over the weekend, even in Tokyo with more

than 20 centimetres of snow. That has now pretty much gone. In the

north of Japan, some people had over half a metre of snow in 24 hours.

Roads are still blocked, electricity is still out, so that is having an

effect locally. If the snow continues, if we get more heavy

falls ring the rest of the month, it will potentially have an impact on

the economy, and it could have an impact on heating bills, the need to

import more energy to supply electricity for heating. On the

other hand, it has been a very warm winter prior to this in Japan this

year, so overall it is hard to say what kind of impact it will have.

You have the Japanese economy expanding for four straight

quarters, but the last quarter was just 0.3%. What are analysts telling

you? Has Abenomics lost its momentum? That is the concern. What

we saw is that early last year, when Abenomics was launched, we saw a big

jump in economic growth in the first and second quarters. We have seen

that really taper off, suggest 0.3% in the September to December

quarter, which is much lower. That means that for the whole of last

year, Japan's economy grew by just 1.6%. The year before Shinzo Abe

came to power, it grew by 2.4%. It is not looking all that great.

Before we let you go, everyone is looking towards Shinzo Abe pursuing

the third Arrow. Going forward this year, we have a big tax hike coming

in, and he needs something more to help him get this economy working

again, and the big one is wage rises. Until people in Japan feel

that the money in their pocket is growing, they will not go out and

start spending. That is just not happening at the moment. Thank you

very much. In Thailand, we are expecting data

later today that will give us insight into the effect of the

political protest there. Thailand was already struggling with which

exports before the turmoil began in November. The outlook now is looking

much more uncertain. Natural disasters and protests have

affected Thailand's economic growth in the past, but in quiet years

Southeast Asia's second largest economy has proven to be resilient.

Even now, the World Bank forecasts for GDP growth in 2014 are still

fairly optimistic at 4%. Those numbers depend on exports picking

up, and protests coming to an end. It is still unclear how the current

political deadlock, now three months old, will be resolved. There was a

general election earlier this month, but in street is disrupted it, and

it is unclear when or even if the voting can be completed. That has a

direct effect on the economy, because the caretaker government has

limited powers to spend and borrow. So, planned spending on

infrastructure and transport, which would have helped jumpstart the

economy, are stalled until there is a Neuadd ministrations. At least ten

people have been killed and scores injured during the protests are in

many foreign governments have responded by issuing travel

warnings. As a result, the tourism industry has suffered. In recent

years, the sector has been one of the star performers of the Thai

economy. At the moment, tourists are taking their money elsewhere. The

tourism Minister says Thailand has lost about 100,000 visitors since

November, and he is concerned it could get worse. The latest numbers

were -- will likely put pressure on the economy.

The Finance Minister will present a mini to Parliament this year. -- a

mini budget. With concerns about inflation, it will be closely

watched. Will it help anything that will help the Indian economy?

For months now, many of India's factories have been in a spin. With

rising prices on one hand, and falling consumer demand on the

other, they have slowed down. The impact has been felt on the economy.

If the taxes on goods produced in India are reduced, would that get

consumers buying again? This is what some from the industry are hoping

the Finance Minister will announce in his interim budget. It is a

difficult situation, because that would bring down government

revenues, which would mean that the fiscal deficit gets affected. Over

the past year, India has been tried to get its finances in order. But it

is a tricky balancing act. Fuel subsidies are one of the

government's biggest expenses, because India imports most of the

oil it needs. Cutting subsidies, and in effect hiking the price of fuel,

a politically sensitive issue. That is just one measure the government

has had to take. This is the first time in 26 years that we have had

GDP growth below 5%. That constrains what you can do on the revenue and

tax front. The government has had to rely on is cutting off planned

expenditures towards the end of the year. Reducing subsidies, and also

generating nontax revenue. We have seen spectrum sales, dividends from

public sales. There is little room for the present leadership to make

any big promises in the last budget of their term. One silver lining is

that inflation has been showing signs of coming down. Vegetable

prices, which had skyrocketed late last year, have fallen

substantially. While this is arguably more down to market supply

and favourable weather and political interference, the government will be

hoping this is something people consider when they come out to cast

their vote. If there is one thing that Indians

love, it is gold. The precious metal was being bought in large volumes,

and the government has been cracking down on imports. It seems to be

having an impact. Demand has fallen by about a third in recent months.

We went to Bangalore to have a look at the Golden love affair of India.

Some call it a yellow metal, others see it as the only safe investment.

Whatever you might see it as, nowhere in the world does gold

glitter the way it does in India. Whether it is a wedding, festival,

or just a straightforward investment opportunity, it doesn't matter,

because Indians love buying gold. No wonder then that India is the

largest consumer of gold in the world. The craze for gold might be a

good thing, but for the government has been a big cause for concern

over the few years. High gold imports have strained government

finances, in fact, after oil, it is the second biggest item on the

import bill. That is why last year, the government decided to levy high

import duty on gold, to discourage people from buying it.

Interestingly, the finance minister of the country directly appealed to

the people to stop buying gold. It seems to be working, as gold imports

have gone down substantially for the last year. Many believe this is a

temporary blip. Given the track record of the Indian consumer, it is

unlikely that gold will lose its shine for long.

Before we go to the markets, news just in. We have the latest economic

growth numbers from Thailand from October to December. It came in at

0.6% quarter on quarter, in line with expectations. There is a quick

look at Asian stock markets, and all of them are now in positive

territory after US equities finished higher on Friday. Thank you for

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