20100413 1026 Global Economic News.

US posted a budget deficit for a record 18th straight month in March, reflecting gains in government spending to bolster the economy. The excess of spending over revenue declined to US$65.4bn last month, compared with a shortfall of US$191.6bn in Mar 09.This brings the six-month total to US$717bn, vs. the US$781.4bn at this point last year. The year-over-year narrowing reflected a decline in outlays for the Troubled Asset Relief Program to shore up financial firms. The March deficit was more than the US$62.0bn economists anticipated. (Bloomberg, Xinhua)

The US government's bailout of the financial system is expected to cost US$89bn, much lower than earlier projections, the Wall Street Journal reported, citing Treasury Department officials.

• The US$89bn estimate is also 42% less than the savings-and-loan crisis. However, this figure does not include losses at Fannie Mae and Freddie Mac, which are projected to be US$370bn through 2020. 
• The Journal also said that Treasury officials were looking into ways to disentangle the government from its nearly 80% stake in American International Group. The officials are hopeful that the bailed-out insurer could be on its own within a year and they see a profit of US$8bn from the Treasury's investment of US$245bn in banks. (CNBC)

The National Bureau of Economic Research (NBER) said that it is too soon to determine when the US recession ended. Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature. However, some committee members have said recently that they believed the recession ended last summer or fall, judging by economic growth, employment and other factors. (CNBC)

A total of 33 states in the US and the Virgin Islands have depleted their funds and borrowed more than US$38.7bn to provide a safety net, according to the National Employment Law Project. "The nation's financing system for jobless benefits is under unprecedented stress," said Andrew Stettner, deputy director of the New York-based advocacy group for the unemployed. (CNN Money)

US FDIC Chair Sheila Bair said the "balance sheets of households and financial institutions remain under pressure, in large part due to the decline in real estate prices and the scale of household borrowing over the past decade. As a result, we expect this recovery to be relatively slow compared with those that followed previous recessions." (Xinhua)

Bank of Japan policy makers Tadao Noda and Miyako Suda said they opposed bolstering a lending program last month because it couldn’t be explained given improving economic conditions, minutes of the 16-17 Mar meeting showed. Suda said “there was no solid justification for enhancing easy monetary conditions. The market may also increasingly come to consider that the bank would take whatever policy action the market has anticipated.” (Bloomberg)

The Bank of Korea raised its Gross Domestic Product (GDP) growth projection from 4.6% to 5.2% for 2010 while cut the forecast for core inflation, which excludes oil and fresh food, to 1.8% this year from 2.5% in the December projection. It added that the economy likely expanded 1.6% qoq and 7.5% yoy in 1Q10, marking the fastest pace since 2006. The central bank kept its 2011 economic-growth projection unchanged at 4.8%.

• Headline inflation is expected to increase by 2.6% this year (2.8% in 2009). 
• South Korea will likely post a current-account surplus of US$10.5bn in 2010 (US$42.7bn in 2009), down from the central bank’s previous forecast of US$17.0bn as import growth outweighs that of exports.
• Goods exports will likely advance 18.6% to US$431.0bn in 2010 and imports may gain 28.3% to US$414.5bn on a customs-cleared basis. (Bloomberg)

Chinese banks’ lending fell 43.0% yoy to Rmb2.6tr in 1Q as the government winds down its stimulus and tries to cool a credit boom while keeping its recovery on track. The figures indicated the central bank's efforts to prevent runaway lending and restore financial discipline in China's state-owned banking industry might finally be taking hold, lessening the need to raise interest rates to curb inflation. The New Yuan Loans also moderated to Rmb510.7bn from Rmb700.1bn in February. (CNBC, Bloomberg)

China’s foreign-exchange reserves rose at a slower pace to US$2.447tr as at end- March. The currency holdings gained by about US$47.9bn in 1Q (+US$127bn in 4Q09). Market forecast it would increase to US$2.5tr. (Bloomberg)

Fitch Ratings is “very concerned” about the impact of violent protests on Thailand’s public finances and won’t rule out any action on the country’s debt rating, analyst Vincent Ho said. “We will have to look at the impact of the current political situation on the credit fundamentals of Thailand and then consider any rating action that we think is appropriate,” he said. (Bloomberg)

India’s industrial production growth exceeded 15.0% for a third month as demand for cars and televisions increased, adding to inflationary pressures that may prompt the central bank to raise interest rates this month. Output at factories, utilities and mines expanded 15.1% yoy in February (16.7% in Jan). That was less than the economists’ forecast for a 16.0% gain. (Bloomberg)

The World Bank believes that the East Asian region will have to start to withdraw fiscal and monetary stimulus sometime this year. But the bank said this can only be achieved when private sector investment becomes the region's growth driver. (Channel News Asia)

Indonesia’s economy may have expanded 5.5%-5.7% in 1Q 10, Anggito Abimanyu, head of the finance ministry’s fiscal policy agency, said. (Bloomberg)