Monday, September 26, 2011

20110926 1139 Local & Global Economic Related News.

Mindful of the fear of a global recession, the government is keeping a close watch on the  global situation although the local economy continues to grow, said PM Datuk Seri Najib  Tun Razak. “We need to watch it very carefully. In the pursuit of a long-term agenda  towards 2020, we need a benign external environment for us to thrive and succeed,” he  said.  
• "While many western nations struggled to drag themselves out of recession and global  experts continue to predict "gloom and doom" over the past two years, our economy has  grown almost beyond recognition," he said. (The Star)    

Malaysia has made several preparations to face the world economic downturn following  the European debt crisis and the falling U.S. economy, said Minister in the  Prime  Minister's Department Tan Sri Nor Mohamed Yakcop. Malaysia would not be affected if  the world's economic recession is for a short period but if the downturn continues, there is  possibility that Malaysia would be affected as well, he said.  
• However did not disclose the strategies and plans taken by the government to face a  global economic recession.
• Malaysia should also be able to still defend its economic position being more reliant on  Asian economies such as China and India, he added. (Bernama)  

The country is on track to achieve 5% growth following positive growth in 2H11, Minister  in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop said. The volatile  nature of economies in the U.S. and Europe was not likely to seriously jeopardise the  country's growth in the short term.  
• “The economy in 2H11 looks to achieve a good rate as there are a lot of Economic  Transformation Programme projects and 10th Malaysia Plan projects expected to take  off in these six months,” he noted.
• “We previously forecast that we will be able to reach a growth rate of 5-6% this year.  Looking at the serious situation in other parts of the world, we still believe that we can  reach 5%, which is a good rate,” Nor Mohamed said. (The Star)

PM Datuk Seri Najib Tun Razak on last Saturday gave a broad smile when asked about  the possibility that the government would announce  a bonus as well as a  pay hike for  civil servants in the  2012 Budget. "I maintain the stand that anything that is to be announced in the budget should not be leaked out earlier," he said.  
• "It must stimulate investment and boost confidence  among the consumers to continue  spending prudently so that the internal economy would continue to be based on strong  demand whether in terms of investment or consumption,” Najib noted. (Bernama)

The government has allocated RM30m for the Retail Shop Transformation Programme this year in a bid to improve the competitiveness of small time retailers in facing today's  highly competitive retail environment. Domestic Trade, Cooperatives and Consumerism  Minister Datuk Seri Ismail Sabri Yaakob said in the first eight months this year, 300 old  retail shops nationwide had been given a facelift and equipped with various facilities to  attract more customers.  
• The cost to give the new facelift to each shop was around RM60,000.  
• Among the shops involved in the programme are private-owned retail shops, cooperative  shops and car workshops," he said, adding that another 200 retail shops were expected  to get the new facelift by end of this year. (Bernama)  

The Ministry of Domestic Trade, Cooperatives and Consumerism has implemented the  Basket of Brands (BOB) scheme to protect companies against copyright infringement  and sale of counterfeit goods. Its enforcement division director-general, Mohd Roslan  Mahayudin, said so far 20 owners of 40 brands took part in the scheme and they would be  given priority to follow-up and verify the seizures of counterfeit goods.  
• They included global clothing, sportswear, liquor, car parts and pharmaceutical brands.  
• Other items that do not come under BOB will not be assumed as counterfeit goods.  
• Mohd Roslan said BOB would be launched at an intellectual property right enforcement  convention in Kuala Lumpur on 20 Oct. (Bernama)

U.S. President Barack Obama said improving the nation’s  public schools is crucial to  the U.S.’s economic recovery as he highlighted his decision to let states sidestep the No  Child Left Behind law by raising education standards. “It is an undeniable fact that  countries who out-educate us today will out-compete us tomorrow. Businesses will hire  wherever the highly skilled, highly trained workers are located.” (Bloomberg)  

Dow Falls Most Since October 2008 on Economic Growth Concerns
U.S. stocks fell last week, sending the Dow Jones Industrial Average to the biggest loss since 2008, as the  Federal Reserve said risks to the economy have increased and concern grew that policy makers will fail to spur  growth. (Bloomberg)

Institute of International Finance chairman Josef Ackermann said it was “crucially  important” for  eurozone governments to implement a  21 Jul agreement to beef up the  rescue fund for their common currency. He called upon eurozone governments to quickly  approve the  €440bn (US$593bn) European Financial Stability Facility and measures to  enhance greater economic policies discipline. (Bloomberg)

The International Monetary Fund said it is ready to “strongly support” European nations in their efforts to resolve the region’s sovereign  debt crisis. Eurozone countries will do  whatever is necessary to end the crisis and ensure the financial stability of the entire euro  area and its members, the fund said. Advanced nations are at the “core” of a resolution to  the current global uncertainty and should adopt policies to improve their finances, it said.  (Bloomberg)

Asian Currencies Have Worst Week Since 1998 on Concern Over Global Economy
Asian currencies had their biggest weekly drop since 1998 as concern the global economy is headed for a  recession dimmed the outlook for exports and prompted investors to favor safer bets than emerging-market  assets.  South Korea’s won and  India’s rupee rose yesterday after policy makers in the two nations said they  were prepared to intervene, while dollar sales by  Bank Indonesia helped strengthen the rupiah. All 10 mosttraded Asian currencies weakened last week as the  Federal Reserve warned of “significant downside risks” to  the U.S. economy and a Chinese purchasing managers’ index showed export orders and production declined.  (Bloomberg)

European banks need to move quickly to shore up their  capital, Bank of Canada
Governor Mark Carney said. “Their banking system, it’s undercapitalized,” Carney said. “That may require some injections, direct injections of capital to those banks in the coming weeks.” Carney also reiterated that Europe’s monetary union has “flaws” that need to be fixed, and said  €1tr (US$1.35tr) may be needed to stem investor concerns about the sovereign-debt crisis. (Bloomberg)

Europe Faces Geithner, Soros Pressure to Defuse Debt Turmoil
European policy makers faced mounting pressure from foreign counterparts and investors to step up efforts to  prevent their sovereign debt crisis from further roiling the world’s financial markets and economy. U.S. Treasury  Secretary Timothy F. Geithner set the tone for last week’s annual meeting of the International Monetary Fund in  Washington by warning that failure to combat the Greek- led turmoil threatened “cascading default, bank runs  and catastrophic risk.” Billionaire investor  George Soros said “something needs to be done” to safeguard  Europe’s banks because Greece may be unable to avoid default.  (Bloomberg)

European governments are exploring speeding the start of a permanent rescue fund for  their cash- strapped economies amid fresh signs they may bolster efforts to halt the  worsening sovereign debt crisis. Senior finance officials will examine next week the cost  advantages of setting up the fund, known as the European Stability Mechanism, a year  earlier than its currently planned Jul 2013 start, according to a document prepared for the  meetings. (Bloomberg)

Indonesia’s Growth Is Solid as Lending Exceeds Target, Central Bank Says
Indonesia’s central bank expects economic growth to remain solid even amid a global slowdown as lending this  year may exceed commercial bank expectations, Deputy Governor Muliaman Hadad said. Loan growth at  Indonesian banks will probably rise as much as 25 percent, beating the industry’s 24 percent target, as demand  for working capital and investment credit increases, Hadad said. (Bloomberg)

Officials from  China and  Japan, the world’s second- and third-biggest economies,  indicated that their support for Europe will have limits and the region needs to solve its own debt crisis.  
• Japanese Finance Minister Jun Azumi said that while his nation can buy European  Financial Stability Facility bonds if needed, there is no blank check.  
• “At the margin we can do quite a bit to help,” Chinese central bank Deputy Governor Yi  Gang said. At the same time, “the real solution of the European sovereign debt crisis has  to be done by Europeans themselves.” (Bloomberg)  

Singapore’s CPI rose 5.7% yoy in Aug (5.4% in Jul), the fastest pace since  2008 as  housing and food costs climbed. The CPI for August rose 0.7% mom, reflecting mainly  higher costs of private road transport, accommodation, clothing & footwear as well as  "recreation & others". Meanwhile core inflation, which excludes the costs of  accommodation and private road transport, climbed 0.4% mom and 2.2% yoy. Economists  were expecting a headline CPI growth rate of 5.2%. (Channel News Asia)  

The Reserve Bank of  India is close to the end of its record series of  interest-rate increases as inflation will probably slow next year, Deputy Governor Subir Gokarn said,  as:
• Oil prices do not appear to be going higher
• Demand is being moderated    

The Bank of  Thailand  may lower its economic  growth  projections when it unveils new  forecasts next month as a weakening global recovery weighs on the nation’s expansion,  Governor Prasarn Trairatvorakul said. Inflation expectations aren’t likely to rise and the  central bank has “closed the gap somewhat” on normalizing interest rates. It had raised its  key interest rate for a seventh straight meeting last month to 3.5%, citing inflation  risks  posed by the new government’s plan to raise wages and support rice prices. The central  bank currently expects GDP to increase 4.1% in 2011 and 4.2% next year. (Bloomberg)

Vietnam's CPI in Sep was up 0.82% mom, easing from its 0.93% rise in Aug. The rise  mainly stemmed from higher prices for education services, food and foodstuff, the office  said in a statement. The index for Jan through Sept was up 22.42% yoy, compared with  23.02% rise for Jan-Aug. From the end of 2010, the index is up 16.63%. The government  targets a full-year inflation forecast at 18%. (Wall Street Journal)

Southeast Asian nations launched a nearly US$500m  fund to build  infrastructure,  pooling resources in hopes of closing the gap between the  dynamic region and major  wealthy economies. The fund would offer loans to build roads, railways and other projects  without direct foreign assistance. The ASEAN Infrastructure Fund will start with  US$485.2m and aims to finance six projects a year.
• By 2020, ASEAN hopes the fund will offer US$4bn in loans and that its total leverage will  be worth more than US$13bn. The fund will be based in Malaysia, the biggest  contributor with a US$150m initial investment.  
• Indonesia is the second-largest contributor with US$120m. The Asian Development  Bank will provide US$150m and eventually offer 70% of financing. (AFP)  

The Philippines’ budget surplus isn’t ideal if the government won’t be spending enough  on roads, schools and health care, President Benigno Aquino said. The government had a  surplus of PP9.22bn in Aug while state spending fell 8.1% in the first eight months,  according to a 22 Sep report. Still, it’s better to have excess than worry about lack of funds,  Aquino said. (Bloomberg)

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