30/05/2014

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:00:00. > :00:00.not be made public. A long`awaited Chilcot Inquiry released only what

:00:00. > :00:15.has been described as quotes and gists.

:00:16. > :00:22.We look at how higher prices have affected spending habits in Japan.

:00:23. > :00:32.India and the economy, how soon can the new government help shore up

:00:33. > :00:38.growth? Thank you for joining us, I Rico Hizon. The figures have indeed

:00:39. > :00:41.confirmed it. Japanese consumers held off on purchases after the

:00:42. > :00:47.country raised its sales tax in April from five to 8%. Household

:00:48. > :00:51.spending fell by more than 4%, when compared to the same period last

:00:52. > :00:58.year. Meanwhile, inflation or prices in Japan edged up one more than 3%

:00:59. > :01:01.to a 23 year high. That is something the government would be pleased

:01:02. > :01:08.about. Rupert Wingfield`Hayes ex`players from Tokyo.

:01:09. > :01:13.Sales tax went up for the first time in 17 years, and today for the first

:01:14. > :01:18.time we get to see the result. Has inflation here in Japan gone up? The

:01:19. > :01:24.answer is an emphatic yes. In fact, it has left to well over 3%. For the

:01:25. > :01:30.Japanese government that is good news, because it is intent on ending

:01:31. > :01:35.20 years of falling prices and getting inflation back into the

:01:36. > :01:39.Japanese economy, and it appears to be succeeding. It also means that

:01:40. > :01:43.shops and businesses are willing for the first time in many years to put

:01:44. > :01:48.their prices up. In fact, some are doing it by quite a lot. I had my

:01:49. > :01:52.hair cut earlier this week on the price had gone up by 8%. So the

:01:53. > :01:58.Japanese government is happy, businesses are happy, but how do

:01:59. > :02:03.consumers feel? TRANSLATION: Before the tax rise I was worried, and I

:02:04. > :02:07.stocked up on lots of household stuff. But after the tax rise, I

:02:08. > :02:15.forgot pretty quickly, so now I am back to buying stuff just the same.

:02:16. > :02:20.Before the tax rise, if my family and I went out to eat sushi, it

:02:21. > :02:24.would cost about 10,000 yen. But now we end up spending a lot more, so

:02:25. > :02:30.why have decided to stop going out for sushi. How consumers here in

:02:31. > :02:35.Japan respond to these higher prices in the next few months is absolutely

:02:36. > :02:38.key. If they look at the higher prices and say, there is nothing I

:02:39. > :02:43.can do, and carry on spending, then it can create a positive cycle.

:02:44. > :02:47.Higher prices should mean higher profits, higher profits should in

:02:48. > :02:51.the end mean higher wages, and so want it goes. But if on the other

:02:52. > :02:55.hand Japanese consumers look at these higher prices and say, hey,

:02:56. > :02:59.these prices are going up at my salary hasn't, I have to stop

:03:00. > :03:06.spending, then it could have the opposite effect, and could push

:03:07. > :03:10.Japan back into deflation. It is a high`risk plan. We spoke to their

:03:11. > :03:18.drudges in Tokyo, who offered his analysis. `` Ed Rogers. You have to

:03:19. > :03:24.consider that April numbers will be an aberration because of the effect

:03:25. > :03:32.of the buying before the implementation of the sales tax

:03:33. > :03:37.increase. If we have numbers of `4.4% going forward over the next

:03:38. > :03:40.couple of quarters, that would be cause for concern, but we don't

:03:41. > :03:46.think that will happen. Of course anyone right now is pinning their

:03:47. > :03:53.hopes on Shinzo Abe's next move, in terms of restructuring the economy.

:03:54. > :03:58.The so called third arrow? Right, the so`called third arrow that we

:03:59. > :04:03.have been calling a thousand darts for over a year now. We think there

:04:04. > :04:08.will be a number of positive data point for investors to look at, and

:04:09. > :04:13.say yes, change has come to Japan. We don't know exactly which of these

:04:14. > :04:19.reforms will be enacted, many or all of them. But between PPP, the labour

:04:20. > :04:27.reform, immigration reform, change of corporate taxes, there will be

:04:28. > :04:29.multiple positive outcomes we believe that the plans that will be

:04:30. > :04:34.put forward publicly, literally within a matter of weeks by the LDP

:04:35. > :04:44.and by the government for structural change `` TPP. Growth has been below

:04:45. > :04:49.5% for the past 12 months, which is slower than in previous years. But

:04:50. > :04:57.with the new government in power, could India's economy soon turn a

:04:58. > :05:02.corner? We have more from Calcutta. He is working on the only order that

:05:03. > :05:09.they have here at the moment. This factory makes ovens and mixes used

:05:10. > :05:12.to produce biscuits. There is not much bright news. With no demand

:05:13. > :05:18.from inside India, they are just about getting by on some small

:05:19. > :05:26.orders from abroad. With 10% profit it is difficult to earn, because

:05:27. > :05:35.prices have increased, my costs have doubled. The salary of my people

:05:36. > :05:45.that I was giving, it has doubled. In that case, the cost also

:05:46. > :05:53.increased power, has increased. Transport has increased. But if we

:05:54. > :05:59.raise the prices we will not get the job. It has been the same story for

:06:00. > :06:03.many big or small, they are all going through a slump that has been

:06:04. > :06:07.particularly bad over the past year. In the months running up to the

:06:08. > :06:15.election here, things have virtually come to a standstill around the

:06:16. > :06:18.country. Businesses have stopped expanding, everyone was waiting and

:06:19. > :06:29.watching to see what the results would be. Now, India has a new

:06:30. > :06:38.government. Led by Narendra Modi, whose party swept elections with a

:06:39. > :06:44.strong majority. Their promise of speeding up growth makes many

:06:45. > :06:47.hopeful that things will be better. Things are positive on the sentiment

:06:48. > :06:52.site, but the real challenge starts now. The first priority from the

:06:53. > :06:56.government and the expectation is that the growth side starts to see

:06:57. > :07:00.some revival. The investment products which are being stopped

:07:01. > :07:05.because of lack of clearance will start to see a revival, so

:07:06. > :07:10.essentially the ease of doing business will start to pick up. But

:07:11. > :07:14.they can't afford to neglect inflation either. Especially over

:07:15. > :07:21.food prices. One of the main reasons the last government was voted out.

:07:22. > :07:24.Rains this year are expected to be below normal, said the new

:07:25. > :07:27.government will need to strike the right balance between keeping the

:07:28. > :07:33.cost of living down and getting growth to pick up.

:07:34. > :07:39.Staying with India, the country's largest car maker is hopeful the new

:07:40. > :07:44.government will help put economic reforms on track to boost growth.

:07:45. > :07:54.That may then translate into higher sales in vehicles at home. They

:07:55. > :07:58.earned close to what they earned in the previous quarter in the last

:07:59. > :08:02.month. They say flat performances are due to a big drop in sales in

:08:03. > :08:09.the home market. US car manufacturer, Ford, is recorded 1.4

:08:10. > :08:14.million cars in North America due to potential power steering problems.

:08:15. > :08:19.Manufacturing between 2008 and 2013... They will be recalling a

:08:20. > :08:21.number of sedans with floor mats number of sedans with floor mats

:08:22. > :08:27.that could interfere with accelerator pedals. There have been

:08:28. > :08:32.crashes related to this format malfunction. Other business news

:08:33. > :08:41.headlines from around the world. Please visit our website.

:08:42. > :08:52.Outside Sweden, Saab is a brand that is perhaps best known for cars, but

:08:53. > :08:56.there is one part of Saab. It also builds fighter jets and weapon

:08:57. > :09:02.systems. It is now looking towards Asia. Earlier, I spoke to the head

:09:03. > :09:08.of Saab in Singapore, asking if tensions in the region have lead to

:09:09. > :09:19.higher defence spending. Globally it has been decreasing. In this part of

:09:20. > :09:26.the world it has increased to 3.6%. We think that we will see a slight

:09:27. > :09:31.increase globally. We will you see the spending taking place? Countries

:09:32. > :09:35.buying more civil defence products, weapon systems or fighter jets? The

:09:36. > :09:41.spending depends on what country you look at. Large programmes like

:09:42. > :09:44.fighter jet programmes and big naval programmes are expanding, and that

:09:45. > :09:57.is why it is important for us in the industry to come up with more cost

:09:58. > :10:01.efficient solutions. Sport Today is coming up next on BBC World News,

:10:02. > :10:06.tune in for the latest on the fate of the NBA basketball team, the Los

:10:07. > :10:13.Angeles Clippers. According to the LA Times, Steve Ballmer has emerged

:10:14. > :10:19.as the highest ever for the Clippers. He apparently beat two

:10:20. > :10:23.other groups, including one led by David Geffen, the media mogul, who

:10:24. > :10:31.made an offer of $1.6 billion. Details of the deal are yet to

:10:32. > :10:32.materialise. Thank you for investing your time

:10:33. > :10:44.with us. Our top stories: The African Union

:10:45. > :10:45.has begun a major campaign to end child marriage in Africa. Activists

:10:46. > :10:47.say