20111018 1042 Local & Global Economic Related News.

Malaysia doesn't need a "Plan B" to stimulate the economy even if the global  economic climate worsens, said  Minister in the Prime Minister's  Department Tan Sri Nor Mohamed Yakcop. The current plan that has  been outlined by the government, including the GTP, ETP and political  transformation were done in such a way that they were adjustable even in the  worst case scenario, he noted.  The ETP can be adjusted accordingly to cushion any potential external  headwinds due to the economic uncertainties in Europe and the US.  Even with the challenging global economic situation, the 5% growth  targeted by the nation was achievable as the economy has been  managed quite well, he added. (Bernama)

Malaysia attracted RM35.8bn in  investments, foreign and domestic, in 585  approved manufacturing projects in the first eight months of this year. Deputy  Minister of International Trade and Industry, Datuk Mukhriz Mahathir  Mohamad, said of the total, RM19.4bn (54.2%) was foreign direct investments  (FDIs) and RM16.4bn (45.8%) domestic direct investments (DDIs).  The five key sectors which attracted the FDIs were electronics and  electrical products, basic metal products, chemicals and chemical  products, non-metallic mineral products and food manufacturing.  The sectors which attracted DDIs were transport equipment, petrolium  products, including petrochemicals, basic metal products, fabricated  metallic products and electronic and electrical products. (Bernama)

Thailand: Thai floods adding to European risks may pause rates in boost to Yingluck
Thailand may pause tomorrow after seven interest-rate increases as the worst floods in five decades and weakening global growth threaten to curb output and weaken demand for exports. The Bank of Thailand will keep its benchmark one-day bond repurchase rate at 3.5%, according to 16 of 17 economists surveyed by Bloomberg News ahead of a decision due at 2:30 p.m. in Bangkok tomorrow. One predicted a 25-basis point cut. The country has raised borrowing costs more than any other major Asian economy after India, where there have been 10 rate increases since the beginning of July 2010. Floods that have killed more than 300 people, shutting factories and wiping out crops, may convince the nation‟s central bank to heed calls from Prime Minister Yingluck Shinawatra‟s government to put growth ahead of efforts to cool inflation. (Bloomberg)

EU: Germany shoots down ‘dreams’ of swift fix
Germany said European Union leaders won‟t provide the complete fix to the euro-area debt crisis that global policy makers are pushing for at a summit on 23 Oct. German Chancellor Angela Merkel has made it clear that “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won‟t be able to be fulfilled,” Steffen Seibert, Merkel‟s chief spokesman, said at a briefing in Berlin yesterday. The search for an end to the crisis “surely extends well into next year.” Group of 20 finance ministers and central bankers concluded weekend talks in Paris endorsing parts of Europe‟s emerging plan to avoid a Greek default, bolster banks and curb contagion. Providing a week to act, they set the 23 Oct meeting of European leaders in Brussels as the deadline. (Bloomberg)

US: Central banks sell most US bonds since 2007
International central banks are selling the most Treasuries since the credit crisis began just as institutional investors load up on U.S. government bonds. The Federal Reserve said its holdings of U.S. government debt on behalf of central bankers and institutional investors outside America has plunged USD76.5bn in the last seven weeks, the most since August 2007. At the same time, bond mutual funds are adding Treasuries, banks have increased their holdings 45% in the past five years and the Fed has added USD656bn to its balance sheet this year. Rather than a referendum on the US‟ USD1.3trn budget deficit and rising debt burden, sales by foreign policy makers may have more to do with supporting their currencies after the Brazilian real weakened 11% and Taiwan‟s dollar lost 4.4% against the US dollar since June. (Bloomberg)

US: Manufacturing in New York Fed region shrinks more than economists forecast
Manufacturing in the New York region contracted in October at a faster pace than forecast, reflecting a lack of confidence in the US recovery that failed to be confirmed by measures of orders and sales. The Federal Reserve Bank of New York‟s general economic index rose to minus 8.5 from minus 8.8 in September. Economists projected an improvement to minus 4, based on the median of 53 forecasts in a Bloomberg News survey. Readings less than zero signal companies in the so-called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut, are cutting back. The central bank‟s measures of bookings and shipments climbed to the highest levels in five months, indicating the industry at the heart of the economic recovery may be regaining momentum. (Bloomberg)

US: Industrial production in US increases 0.2% on demand for cars, computers
Industrial production in the US advanced in September on growing demand for automobiles and computers after stalling the prior month, a sign manufacturers are contributing to growth. Output at factories, mines and utilities increased 0.2%, in line with the median estimate in a Bloomberg News survey, after being little changed in August, figures from the Federal Reserve showed yesterday. Factory production, which makes up 75% of the total, climbed for a third month. (Bloomberg)

US stocks fall as Germany damps optimism on Europe debt plan
Global stocks and the euro fell as Germany damped expectations for a fast resolution to Europe‟s debt crisis and a report showed New York-area manufacturing shrank more than forecast. The S&P 500 Index slid 1.9% to
1,200.86 while the Dow Jones Industrial Average fell 2.1% to 11,397.00. The MSCI All-Country World Index slipped 1.2% following last week‟s 5.4% rally. Steffen Seibert, German Chancellor Angela Merkel‟s chief spokesman, said European Union leaders won‟t provide the quick ending to the debt crisis that global policy makers are pushing for at a 23 Oct summit. (Bloomberg)

Japan: The government downgraded its assessment of the economy for the first time since April as the strengthening yen and slowing global growth weighed on the prospects for an export-driven recovery. "The Japanese economy is still picking up although the pace is decelerating," the Cabinet Office said in its monthly report. (Source: Bloomberg)

Philippine: Remittances increase may help support economy. Remittances sent home by Philippine citizens abroad increased at a faster pace in August, aiding domestic consumption even as a weakening global economy hurts the Southeast Asian nation's exports. The funds increased 11.1% YoY to USD 1.67b, the central bank said in a statement in Manila. Remittances grew 6.1% YoY in July, according to previously reported data. The gain was the fastest since 2009, according to Bloomberg data. (Source: Bloomberg)