Monday, June 11, 2012

20120611 1054 Local & Global Economy Related News.

Economy: First 2013 budget focus group to meet on June 13
Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said the first focus group on the 2013 Budget will meet on June 13 to discuss 16 topics including macroeconomic, sectoral and social issues. He said the discussions, themed "New Initiatives in Enhancing Private Investment" and involving representatives from business and non-governmental organisations, will centre around 84 memorandums received by the ministry on 20 macroeconomic, 49 sectoral and 15 social aspects. Ahmad Husni said the issues include boosting domestic demand through raising incomes, policy formulation, meeting the needs of target groups, enhancing the efficiency of Islamic finance, improving syariah education, strengthening social cohesion, and youths. (Bernama)

Vietnam: Central bank cuts policy rates for fourth straight month
Vietnam’s central bank cut interest rates for the fourth straight month to spur an economy that may expand at the slowest pace in more than a decade, joining policy makers from Brazil to China in countering a global slump. The central bank’s refinancing rate was cut to 11% from 12%, while the discount rate was lowered to 9% from 10%.Short-term lending rates will be capped at 13% for some sectors, and the monetary authority will cut its rate cap on dong deposits by 2 ppt to 9%. Vietnam’s inflation rate slowed to 8.34% in May from 23.02% in August 2011. (Bloomberg)

China: Trade surprise signals domestic stimulus focus
China’s exports grew in May at more than double the pace analysts estimated while industrial output and retail sales trailed forecasts, signaling last week’s cut in interest rates was aimed at countering a domestic slowdown. Overseas shipments climbed 15.3% y-o-y while Industrial output rose by less than 10% for a second month and retail sales increased the least in almost six years excluding holiday-month distortions. China’s resilience in trade indicates Europe’s debt crisis has yet to produce a collapse in world commerce on the scale of the 2008 global recession. (Bloomberg)

China: May industrial output rise 9.6%
China’s industrial output rose 9.6% in May y-o-y, compared with the median estimate of 9.8% and 9.3% growth in April. Retail sales, meanwhile, gained 13.8%. Fixed-asset investment excluding rural households rose 20.1% in the first five months of the year, compared with forecasts for a 20% gain. Retail sales growth compared with estimates of 14.2% and April’s 14.1% increase. (Bloomberg)

China: Passenger-vehicle sales rise 22.6% YoY, exceeding estimates. China's passenger-vehicle sales rose more than analysts estimated in May as purchases of Toyota Motor Corp. and Honda Motor Co. cars recovered from disruptions caused by last year's natural disasters. Deliveries, including multipurpose and sport-utility vehicles, rose to 1.28 million units last month. (Source: Bloomberg)

South Korea: Producer price inflation eases to 29-month low
South Korean producer inflation moderated to a 29-month low as meat and fish prices and some service fees declined. Prices rose 1.9% in May y-o-y, the smallest gain since December 2009, after a 2.4% increase in April. They fell 0.6% from April. Consumer inflation remained at a 21-month low of 2.5% in May. (Bloomberg)

S. Korea: BOK held off from altering borrowing costs for a 12th straight month as easing inflation gave policy makers room to wait and see how Europe's debt crisis and China's slowdown affect the economy. Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate unchanged at 3.25%. The decision was unanimous and the board didn't discuss a possible increase or cut, Kim told reporters after the meeting. (Source: Bloomberg)

Japan: Posted a smaller-than-expected current-account surplus in April, highlighting weak global demand that is depressing exports. The excess in the widest measure of the nation's trade was JPY 333.8b (USD 4.2b), the Ministry of Finance said. (Source: Bloomberg)

Japan’s economy grew a revised 1.2% qoq in 1Q12, more than the preliminary reading of 1.0% and economists’ median forecast for a 1.1% expansion. (Reuters)

EU: Spain asks for EUR100bn bank bailout
Spain asked euro-region governments for as much as EUR100bn to rescue its banking system. The loan will be channeled through the state’s bank-rescue fund, known as FROB, and extended to banks that need it. FROB will act as the “agent of Spanish government,” which “will retain the full responsibility of the financial assistance and will sign the MoU.” Conditions will be “focused on specific reforms targeting the financial sector,” and only lenders that need capital will get the loans. EUR100bn is equivalent of about 10% of Spain’s GDP. FROB debt counts as public debt, which amounted to 69% of GDP last year. Interest on the loan will affect Spain’s deficit. (Bloomberg)

UK: Business confidence declines as economy weakens
UK indexes of business confidence and job prospects dropped in May, indicating the economy will weaken and employment may fall later this year. A gauge of company sentiment fell to 95.5 from 96.2 in April. An employment measure declined to 94.9 from 95.5. A reading below 95 indicates contraction. An output index, which measures production expectations for the next three months, rose to 96.7 in May, a one-year high, from 95.8. Still, the decline in sentiment gauge, which predicts business performance six months ahead, indicates growth will “tail off later in 2012.” (Bloomberg)

U.K: Producer prices unexpectedly fell in May as the cost of petroleum products dropped the most in more than three years. The price of goods at factory gates fell 0.2% MoM from April, the first decline since December, the Office for National Statistics said. Raw material costs fell 2.5% MoM, the most since December 2008. (Source: Bloomberg)

Germany: Exports declined in April for the first time this year as Europe's worsening debt crisis and weaker global growth curbed demand. Exports, adjusted for work days and seasonal changes, fell 1.7% MoM from March, when they gained 0.8% MoM, the Federal Statistics Office in Wiesbaden said. Imports plunged 4.8% MoM. (Source: Bloomberg)

Italy: Industrial production declined in April as demand for the nation's manufactured goods slumped at home and abroad amid Europe's sovereign-debt crisis. Output dropped 1.9% MoM from March, when it rose a revised 0.6% MoM, national statistics office Istat said. Production fell 9.2% YoY on a workday-adjusted basis. (Source: Bloomberg)

U.S: Political risk may spur downgrade by 2014, S&P says. "The credit strengths of the U.S. include its resilient economy, its monetary credibility and the U.S. dollar's status as the world's key reserve currency," S&P said in a report. Weaknesses "include its fiscal performance, its debt burden, and what we perceive as a recent decline in the effectiveness, stability, and predictability of its policymaking and political institutions, particularly regarding the direction of fiscal policy." S&P stripped the U.S. of its top AAA ranking on Aug. 5, cutting it to AA+ while criticizing the nation's political process and saying that spending cuts agreed on by lawmakers wouldn't be enough to reduce record deficits. Moody's Investors Service and Fitch Ratings have kept their top grades on the U.S., both have a negative outlook. (Source: Bloomberg)

US: Obama says it's clear economy not doing fine
President Barack Obama stressed on Friday the US economy was not doing fine, seeking to clarify his earlier comments about the health of the private sector that Republicans pounced on to try to paint him as out of touch. Speaking to reporters in the Oval Office, Obama said that while corporate profits were strong and companies had been adding jobs, small businesses were having a tough time getting financing and other pockets of the economy needed more attention. (Reuters)

US: Fed proposal closely follows Basel capital pact
The Federal Reserve rejected pleas by the US banking industry in releasing a rigorous interpretation of an international agreement on higher capital standards for banks, known as Basel III. US banks have pushed the Fed, for instance, to allow them to more heavily count mortgage servicing rights and the unrealised gains and losses of certain securities toward their capital requirements than allowed by Basel III, but the US central bank's draft rule closely follows the international agreement. The basics of the Fed's proposals would capture even the smallest banks, a move likely to irritate community bankers who had been hoping to escape the brunt of the new standards. The Fed board voted 70 on Thursday to put the proposal out for public comment for 90 days. The Federal Deposit Insurance Corp and the Comptroller of the Currency are expected to approve the proposal soon as well. (Reuters)

US political and fiscal risks may lead to another downgrade of the its credit rating by 2014 by Standard & Poor’s, which affirmed its negative outlook on the nation’s debt. (Bloomberg)

US wholesale inventories rose 0.6% mom in Apr (0.3% in Mar), exceeding consensus of 0.5%. (Bloomberg)

The US trade deficit improved to US$50.1bn in Apr due to a drop in imports (a revised -US$52.6bn in Mar), but remains higher than the consensus of –US$49.3bn. (Bloomberg)

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