While most economies across the board will experience growth moderation due to the prevailing uncertain global financial landscape, their strong domestic economies are expected to mitigate the drop, said Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz. Domestic economic activities have remained strong in emerging economies, including Malaysia which is buoyed by the restructuring and economic transformation as well as the strengthening of its regional trade and investment activities, she said.
"We have a resilient financial sector that is still providing credit. Other macro economy fundamentals are low unemployment and we are not over leveraged," she added. Meanwhile, on the new blueprint for the financial sector, Zeti said it would be unveiled next month by PM Datuk Seri Najib Tun Razak. The blueprint will set the course for the development of the Malaysian financial sector from 2011 to 2020. (Bernama)
Inflation in Malaysia has peaked and stabilised although there is still food inflation which has to be addressed by other measures besides interest rates, Bank Negara Malaysia Governor Tan Sri Zeti Akhtar Aziz said Tuesday. She said there would always be risks on the horizon for both inflation and growth as Malaysia was such an open economy. “If there is a sudden shortage of commodities or energy as we saw earlier, this causes energy and commodity prices to rise sharply and if they do, it will affect our rate of inflation. Or if there are disruptions in supply of food, it will cause food prices to rise. So there is always a risk of higher inflation,” she said. “Given the on-going financial crisis, if it were to deteriorate beyond the current circumstances, yes it is going to be a risk to our growth," she said. On another note, Zeti said Malaysia already has a resolution framework in place should conventional or Islamic financial institutions in the country, including foreign banks, come under stress. “Islamic finance is insulated by the first-round effect because it is more resilient. It is totally linked to the real economy and there are built-in checks and balances in profit- sharing, therefore more responsible lending. But of course, if companies slow down and financial markets get corrected, this will affect financial institutions,” she noted. (Bernama, BT)
Malaysia's bilateral trade with the South Korea amounted to RM36.91bn with exports valued at RM19.25bn and imports RM17.65bn for Jan to Sep this year. International Trade and Industry Ministry's senior director of Economic and Trade Relations Division, Wong Seng Foo, said Korea continues to be one of Malaysia's main sources of foreign direct investment since 1980. To date, a total of 296 projects have been implemented with total investment of US$2.72bn, he said. (Bernama)
The increased focus on financial stability, especially fundamental changes in the regulatory environment, is the central aspect of the new Islamic financial landscape in an increasingly more challenging environment, Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz said yesterday. These include changes to institutional arrangements for oversight of the financial system -- both at the international level and within national borders in a number of countries. The two institutional arrangements, the Islamic Financial Services Board (IFSB) and the International Islamic Liquidity Management Corporation (IILM), were established for overall stability of the global financial system in a way that better serves households and businesses. (Bernama)
China: Central bank sells bills at lower rate for second week
China’s central bank sold one-year bills at a lower rate for a second week, pushing government bond yields lower on speculation policy makers will keep pumping cash into the economy. The People’s Bank of China issued the bills at 3.49%, beneath its benchmark deposit rate for the first time since January and compared with 3.57% at a 8 Nov sale, according to a trader at a primary dealer required to bid at the auctions. The monetary authority yesterday issued CNY52bn (USD8.2bn) of the securities, the most in six months. (Bloomberg)
Indonesia: Bank Indonesia cuts GDP forecasts as global slowdown hurts Asia
Indonesia’s central bank cut growth forecasts for Southeast Asia’s largest economy, adding to signs Europe’s debt crisis is hurting expansion in Asian nations from the Philippines to Singapore. Bank Indonesia lowered its 2012 economic growth forecast to 6.5% from a previous estimate of 6.7%, Perry Warjiyo, director of economic research and monetary policy, said in Jakarta. The bank cut its fourth-quarter forecast to 6.6% from 6.7%, he said. Indonesia led Asian economies in cutting interest rates last month while the government has said it is preparing a fiscal stimulus package that may be implemented in the first half of 2012. (Bloomberg)
New Zealand: English says Asia-Pacific exports ‘critical’ to economy
New Zealand’s exports to Asia Pacific nations will be “critical” to rebalancing the nation’s economy away from consumption and debt as bigger free-trade blocs emerge, Deputy Prime Minister Bill English said. English, also the finance minister, is relying on exports to fan an economic recovery that has been hurt by a slump in spending and confidence after devastating earthquakes that struck Christchurch, New Zealand’s second-biggest city. The country faces a NZD20bn repair bill and expects rebuilding to stoke expansion from 2012. (Bloomberg)
UK: Inflation may have slowed ahead of King forecast cut
UK inflation probably eased from a three-year high in October and may slow further as Europe’s debt crisis depresses the economic outlook. Inflation slowed to 5.1% from 5.2% in September, according to the median estimate of 33 economists in a Bloomberg News survey. Because the rate exceeds the government’s 3% upper limit, Bank of England Governor Mervyn King will be required to write a letter of explanation to Chancellor of the Exchequer George Osborne. The Bank of England is in the second of a four-month program of bond purchases aimed at supporting the recovery. (Bloomberg)
E.U: Italian yields reach 7%, French debt slides as bond rout deepens. Italian bonds led a slump in euro-area government debt as investors abandoned all but the safest assets amid rising borrowing costs at auctions and concern the region's financial woes are deteriorating. German two-year rates dropped below 0.3% for the first time, while the extra yield investors demand to hold 10-year bonds from France, Belgium, Spain and Austria instead of bunds all increased to euro-era records. (Source: Bloomberg)
Germany: Investor sentiment fell to three-year low in November on concern the sovereign debt crisis will push Europe's largest economy into recession. The ZEW Center for European Economic Research in Mannheim, Germany, said its index of investor and analyst expectations, which aims to predict developments six months in advance, declined to minus 55.2 from minus 48.3 in October. (Source: Bloomberg)
Spain: Underlying inflation rate was unchanged in October as the economy stalled and unemployment surged. Core consumer prices, which exclude energy and fresh food, gained 1.7% YoY, the same as in September, the National Statistics Institute in Madrid said. Headline inflation, based on European Union calculations, held at 3.0% YoY. (Source: Bloomberg)
Italy: Monti says he’s confident Italy can overcome current crisis
Mario Monti, Italy’s prime minister designate, said he is “convinced” the country can overcome the current crisis as he prepares to meet with President Giorgio Napolitano tomorrow to present his new government. Two days of talks seeking support from political parties, unions and employers were “intense and useful,” Monti said at a briefing in Rome. The former European Union Competition Commissioner has been under pressure to announce his new team, with the yield on Italy’s 10-year bond exceeding the 7% threshold yesterday. (Bloomberg)
US: Sales rise more than forecast, driving growth
Retail sales rose more than projected in October as American shoppers gave the economy a boost at the start of the fourth quarter. The 0.5% gain, helped by the biggest jump in electronics purchases in two years, followed a 1.1% increase for September, Commerce Department figures showed in Washington. The median forecast of 81 economists surveyed by Bloomberg News called for a rise of 0.3%. Stocks rose, propelled by technology shares, as the sales figures and separate figures showing New York-area manufacturing expanded in November for the first time in six months tempered concern about Europe’s debt crisis. (Bloomberg)
U.S: Wholesale prices declined 0.3% MoM as the cost of energy and automobiles decreased, pointing to waning inflation. The so-called core measure, which excludes volatile food and energy, was unchanged, marking the first time without an increase since November 2010. (Source: Bloomberg)
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