06/05/2014 Asia Business Report

Economy versus politics, what role will the central bank play ahead of

Australia's Budget? The Filipine economy, we look at the

impact of rising prices on future growth.

Welcome to Asia Business Report. Australia's central bank is expected

to leave interest rates on hold when it meets today, as the economy shows

signs of returning to growth. But, a much anticipated economic audit

released last week warned of a looming fiscal crisis. The

government has hinted at a temporary income tax hike, a higher retirement

age, and cuts to spending on social services. Earlier, I spoke to our

Sydney reporter, Phil Mercer, asking him if the government's view of the

economy is at odds with that of the central bank. Interest`rates are at

2.5%, which is historically low. As far as the central bank is

concerned, the economy is in a reasonable state, considering the

fading of the mining boom. Conservatives believe that radical

spending cuts need to be addressed, that welfare rates are too high, and

that there may need to be a deficit tax, for example, in next week's

budget, to try to bring that back into surplus. There seems to be a

clear gulf between what the reserve bank of Australia thinks, and that

of the government. If there is a tough budget next week, it may be

the case that they have to try to counter some cuts. Could that be the

case, if growth looks like it is in danger? Next week's budget could

look like that. If they pursue a very aggressive and austere budget,

with cuts to spending on welfare, we could see the reserve bank having to

wade in to reach interest rates to pick up slack in the economy. Not

only is next week's budget crucial to the health of the Australian

economy, it is shaping up to be extremely important to Tony Abbott.

He did mention this temporary deficit levy, and all hell broke

loose, with some of his own party members saying it would be political

suicide to pursue that idea. In just over a week, we will blow which

direction Tony Abbott and his government will want to take the

budget. `` we will know which direction.

Inflation figures for the Philippines are out today, and it

seems the basics of life, like food and electricity, will be the biggest

drivers of consumer prices. The Supreme Court recently blocked a bid

by the country's largest energy supplier for a large hike, and they

are trying to import more rice to ease the cost. Figures this morning

are expected to see prices rising in the range of 4%. I was speaking to a

Filipino expert from Credit Suisse. He shared his outlook for the

south`east Asian country. I think inflation should calm down. We have

seen a sequential momentum of CPI coming down, so I think that should

be helpful in the second half of this year. When you have inflation

running at about 4%, is that a risk to growth? The Philippines has been

one of the fastest`growing regional economies. Yes, I think the issue

for the Philippines is not so much, but too much of it. It is growing

very fast, and the key sure the growth is sustainable in

the long run. I don't think inflation per se should impact

growth. Once the stimulus programme has ended in the US, will interest

rates have to rise? Absolutely. What will that mean for growth? I think

growth will continue, and if the government continues to implement

the structural reforms, if it continues its path of reform over

the rest of the next three years. A Macau casino operator has come up

with a winning hand, raking in $750 million in its first quarter. The

territory has hit the jackpot to become the world's gambling capital.

Casinos in Macau took in $45 billion last year, earning more in two

months than Las Vegas does in a year.

This is the newest casino resort from Sands China, in Macau. It is a

popular destination from tourists from mainland China. More of them

are coming, and on average staying for longer. That is translating into

profits for the company, which hosted more than 17 million visits

in the first three months of the year. Tourists like to state their

money on roulette or slot machines. It has become the jewel in the crown

for Las Vegas Sands. In the first three months of the year, profits at

Sands China jumped by almost 66%, compared to 2013. Ever since the

Chinese government launched a crackdown on corruption last year,

business from its expanding VIP customers has been under pressure.

That has so far been offset by a rise in holidaymakers. So, casino

operators are counting on them to drive revenue in the coming years.

AIG has reported a drop in quarterly profit, due to high losses in its

subsidiary businesses. The net income fell to $1.6 million. Last

year, it was more than $2 billion. Apple closed $6 billion up for the

first time in several years. Renewed growth for the iPhone. Last month,

they posted its quarterly earnings, which beat expectations. Target says

it is chief executive and chairman has resigned. His departure comes

after a difficult year for the retailer, which was a victim of a

data breach that shook customer confidence and hurt the company's

profits. Up to 70 million customers had their payment card and personal

information stolen from the company's database is in December.

The chief information officer, Beth Jacob, who oversaw the computer

systems, resigned in March. For more on that story and other headlines

around the world, please visit our website. What began as one woman's

desire to work for herself, has turned into a multi` million`dollar

business. An American retailer got its start by selling clothing on

eBay, and its owner is one of the people who will be speaking at a

conference for tech start`up people. This is Tech Crunch. It is the place

to be if you want advice from other success stories. It is events like

these that give many tech companies their first big break. Sophia

Amoruso has a different story. She is the founder of the already

successful online retailer, Nasty Gal, is now one of tech's biggest

retailers. I had no idea that when I chose the name Nasty Gal, would be

saying it over seven years later, but it. You were one of the

fastest`growing retailers in the US, to what you credit that success? We

have always carried unique pieces. It started with vintage, really

memorable vintage pieces, and that was my buying training. We went to

trade shows, and now we are designing. We are designing for a

girl with an appetite for something unique which you can't find at the

shopping mall. Arc do you consider yourself a tech company? I wouldn't

call us a tech company, but I wouldn't call us many e`commerce

sites are now opening bricks and mortar stores. Is that something you

are considering? And is that something that is necessary for

these kinds of companies? We will be opening stores within the next year,

which I'm excited about. We will start in LA. I think a brand is best

experienced in all channels. While some people have to go off`line to

continue going, perhaps their businesses more niche, it is a

choice. I want to let our customers touch and feel our clothes. I want

to see someone run out of stall happy a shopping bag, I have never

had that experience. It is people talking on social media, which is

great, but to meet a customer in the real world is an exciting thing. It

is that experience, physically finding something perfect, that time

for a quick check of the markets. The one market that is trading is up

a little, having taken its lead from Wall Street. The Australian market

is even, head of the interest rate decision due out in two hours. That

is it for this edition of Asia Business Report.

Our top stories: Nigeria's Boko Haram