Friday, October 14, 2011

20111014 1040 Local & Global Economic Related News.

The  Domestic Trade, Cooperatives and Consumerism Ministry will  propose to the Cabinet, to open the running of  Kedai Rakyat 1Malaysia (KR1M) to the public. Its minister Datuk Seri Ismail Sabri Yaakob said the  proposal was to provide an opportunity to the public, including sundry-shop  operators, to run these shops themselves without the involvement of Mydin as  the management.  "The committee has so far agreed with the idea but we will discuss the  matter at the Cabinet meeting today for approval," he said.  The ministry was studying the terms and conditions to ensure the  KR1M policy would not be affected, he added. (Bernama)

Asean is on track to realise the Asean Economic Community (AEC) by 2015  despite the many challenges, Minister of International Trade and Industry,  Datuk Seri Mustapa Mohamed said. The 10-nation grouping has to-date met its  commitments in goods, services and investment, and has implemented 83.8% of  the measures under phase I of the AEC Blueprint for the period of 2008-09 and  64.1% of the measures under phase II (2010-11). Malaysia implemented 103 out  of 110 measures with an implementation rate of 93.6%, he noted. (Bernama)

Asia: South Korea holds rates, BOJ talks stimulus on world risks
The Bank of Korea kept interest rates on hold and the Bank of Japan said its board had discussed more monetary easing, in further signs policy makers are moving to protect growth as the global economy weakens. Governor Kim Choong Soo and his board held the benchmark seven-day repurchase rate at 3.25% for the fourth straight month, the central bank said yesterday. In Japan, records of a BOJ meeting last month said “a few” members discussed extra stimulus. Asian policy makers are bolstering efforts to defend their economies from weakening growth in the US and Europe, with Indonesia’s central bank unexpectedly cutting borrowing costs and the Philippines unveiling a stimulus plan this week. (Bloomberg)

Some 10 Malaysian companies have been found affected by severe flooding  in Thailand. International Trade and Industry Minister Datuk Seri Mustapa  Mohamed said most of them were involved in the automotive and electrical and  electronic sectors. "Those who are affected operate in the flooded Ban Wa,  Rojana and Navanakorn industrial parks," he said. (Bernama)

Real estate sector is expected to expand by 6.8% this year and 5.7% next year,  despite a challenging external economic environment.  Second Finance  Minister Datuk Seri Ahmad Husni Hanadzlah said the domestic property  sector is expected to maintain its growth momentum as the 2012 Budget is  sufficiently accommodative to mitigate any systematic disruption to the  economy.  He also said that the business services sector will experience similar  growth of 6.8% this year and 5.7% next year.  The future of real estate development in the country is bright as the  government plans to build a public transportation system and establish  feeder services in the next 10 years, he added. (Bernama)

The  Malaysian Institute of Economic Research (MIER) has revised its  GDP growth forecast for 2011 to 4.6% from 5.2% previously. Its executive  director, Dr Zakariah Abdul Rashid, attributed the downward revision to weaker  export growth due to increasing regional and global economic uncertainties. However, the implementation of Economic Transformation Programme  (ETP) projects and handouts from the 2012 Budget, designed to cushion  the higher cost of living, will boost domestic demand, he said. The MIER also cut its 2012 GDP growth forecast to 5.0% from 5.5%.  Inflation is likely to moderate to 3.1% this year before trending lower  to 2.7% in 2012. Monetary policy will remain fairly accommodative to support growth  and the overnight policy rate is anticipated to stay at 3.0% in 2011 to  2012. The MIER expects the ringgit to hover around the 3.20 level per  US$ this year before appreciating to 3.10 in 2012. (Bernama)

The US$8bn (RM25.04bn)  Kuala Lumpur International Financial  District (KLIFD), to be jointly developed by 1Malaysia Development Bhd  (1MDB) and Abu Dhabi’s Mubadala Development Corp, will get off the ground  early next year. “The master plan is close to completion. We are working closely  with City Hall to get the details ironed out,” said its CEO Shahrol Azral Ibrahim  Halmi. Over the next six months, 1MDB will intensify talks with prospective  investors and developers, he said without revealing details. (Financial Daily)

The Malaysian Franchise Association (MFA) expects to see 25-30% growth in  the franchise industry next year onwards, helped by the tax rebate incentive  for franchise fee announced during 2012 Budget. Over the last decade, the local  franchise industry has been growing at a pace of 10-15% a year, said MFA  chairman Abdul Malik Abdullah. (BT)

The US trade deficit was little changed at a four-month low of US$45.6bn in  Aug (-US$44.8bn in Jul) as near- record exports helped keep the economy  expanding. Economists projected a US$45.8bn deficit.  (Bloomberg)

US initial jobless applications decreased by 1,000 to 404,000 in the week  ended 8 Oct (401,000 in the prior week), Labor Department figures showed.  Economists forecast 405,000 claims. The number of  people continuing to  collect jobless benefits dropped by 55,000 to 3.67m in the week ended 1 Oct,  the fewest since mid Apr. (Bloomberg)

A widening  gap between rich and poor is reshaping the  US economy,  leaving it more vulnerable to recurring  financial crises and less likely to  generate enduring expansions. Left unchecked, the decades-long trend toward  increasing inequality may condemn Wall Street to a generation of unimpressive  returns and even shake social stability, economists and financial-industry  executives say. (Bloomberg)

The  US Congress approved  free- trade agreements with  South Korea,  Colombia and  Panama, bringing an end to years of stalemate and offering  what supporters said was the biggest opportunity for  exporters in decades.  The South Korea deal removes duties on almost two-thirds of American farm  exports, and phases out tariffs on more than 95% of industrial and consumer  exports within five years. (Bloomberg)

US: Four-month low trade gap may help growth
The US trade deficit was little changed at a four-month low of USD45.6bn in August as near- record exports helped keep the economy expanding. Shipments abroad valued at USD177.6bn were the second-highest ever, the Commerce Department said in Washington. Growing sales overseas, particularly to economies in Asia and Latin America, are underpinning manufacturers like Alcoa Inc. Those gains may assist in sustaining the expansion by counterbalancing the slowdown in US demand that was reflected in a third consecutive drop in imports. (Bloomberg)

EU: Slovaks ratify Euro bailout fund, finish approval process
Slovakia approved Europe’s enhanced bailout fund, completing ratification across the 17 euro countries as the region’s leaders prepare for a summit. Lawmakers voted 114 to 30 with three abstentions to support the European Financial Stability Facility in the second attempt this week after parliament failed to approve the measures on 11 Oct. Enhancing the powers of the EFSF, the temporary bailout fund, is crucial for adopting the key element in the strategy to prevent contagion from the debt crisis that has spread from Greece to other countries. (Bloomberg)

UK: Trade deficit narrows as exports increase to record
The UK trade deficit on goods narrowed in August as exports rose to a record and imports declined. The goods-trade gap shrank to GBP7.77bn (USD12.2bn) from GBP8.15bn in July, the Office for National Statistics said yesterday. Exports rose 0.6% to GBP25.5bn, the highest since current records began in 1998. The Bank of England restarted asset purchases last week amid threats to the economy and the financial system from the debt turmoil in Europe, Britain’s biggest trading partner.(Bloomberg)

The  European Central Bank said in its monthly report that while the  economy is facing “intensified downside risks,” inflation may remain above its  2% ceiling for the rest of 2011. (Bloomberg)

Risks to Europe’s  bank industry are “rapidly” mounting as the fallout of  Greece’s  debt crisis engulfs the whole region, said Martin Andersson,  director- general of Sweden’s Financial Supervisory Authority. (Bloomberg)

Bank of Korea kept its benchmark interest rate unchanged at 3.25%,  marking the fourth month that rates have been on hold. The decision was in line  with market expectations. (Bloomberg)

The damage estimate from Thailand’s floods was revised up from THB130bn  or 1-1.3% pt, to THB156.7bn or 1.3-1.5% of GDP according to the University of  Thai Chamber of Commerce. (The Nation)

Severe floods as well as global economic uncertainties pressured the  Thai  consumer confidence index in Sept. The index dropped for two consecutive  month from 83.4 pt in Aug to 81.8 in Sep. The University of Thai Chamber of  Commerce which conducted the confidence poll attributed the lower confidence  to many negative factors from lower economic growth forecast, a sharp plunge  in the Stock Exchange of Thailand Index, a higher cost of living, and prolonged  floods. (The Nation)

Eight industrial estates and parks in  Thailand  are in danger of being  flooded, warns Industry Minister Wannarat Channukul. They include Bang  Chan and Lad Krabang in Bangkok, Bang Phli and Bang Poo in Samut Prakan, Kaeng Khoi in Saraburi, Hi-Tech in Ayutthaya, and Navanakorn and  Bangkradee in Pathum Thani. (Bangkok Post)

China’s Business Climate Index fell to 133.4 in 3Q11 (135.6 in 2Q11), while  the  Entrepreneur Confidence Index  decreased to 129.4 in 3Q11 (132.4 in  2Q11). (Bloomberg)

China exports rose 17.1% yoy in Sep (24.5% in Aug), while imports expanded  20.9% yoy (30.2% in Aug). The  trade surplus was US$14.51bn, the  smallest  since May. Economists expected exports to grow 20.5% yoy and imports to  increase 24.2% yoy. (Bloomberg)

China’s passenger-car sales rose 8.8% yoy to 1.32m units in Sep (+7.3% in  Aug). Total sales of vehicles including buses and trucks rose 5.5% yoy to 1.65m  units in Sep. (Bloomberg)

India’s wholesale prices of agricultural products gained 9.32% yoy in  the week ended 1 Oct (9.41% the previous week). (Bloomberg)

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