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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