Malaysia will remain the key destination for Singaporeans to spend their holidays due to its close geographical proximity and cordial bilateral ties with the country, said Tourism Malaysia director for Singapore, Zalizam Zakaria. In 2010, Malaysia received 24.6m tourists, who spent RM56.5bn. Of the total, Singaporeans accounted for RM28.4bn, with 13m arrivals, he said. (Bernama)
Japan: Industrial production increases more than expected
Japan’s industrial production increased more than analysts forecast in Dec, as manufacturers bolstered production to make up for disruptions caused by Thailand’s worst floods in 70 years. Factory output rose 4% from Nov, when production slid because of supply disruptions, the trade ministry said in Tokyo. Manufacturers from Honda Motor to Toyota Motor are optimistic about demand as they recover from a year of natural disasters at home and in Thailand. The report indicates companies are resilient to the stronger currency and a slowing global economy. [Bloomberg]
China's Premier Wen Jiabao said government debt is at an "overall safe and controllable" level, that funding for key projects would be ensured and that applying the brakes to the economy would be done in a way to avoid systemic risks. (Reuters)
Chinese banks extended a total of Rmb1.26tr (US$199.4bn) in new loans to property developers and home buyers in 2011, down 38% from 2010, the central bank said. (Reuters)
The International Monetary Fund is reviewing whether China's currency should still be considered "substantially undervalued," in light of its rapid rise in the past year. The IMF has called China's currency "substantially undervalued" for the past half-decade. (WSJ)
The People’s Bank of China postponed the much-anticipated cut in lenders’ reserve requirements, but instead injected Rmb353bn (US$55.9bn) into the financial system using 14-day reverse-repurchase contracts, the most since Bloomberg began collecting such data in 2008. (Bloomberg)
The State Bank of India said the Indian government has agreed to inject up to 79bn rupees (US$1.6bn) into it via preferential shares, but did not mention when that would take place. The government currently owns 59.4% of SBI, but is making this decision as rising bad loans and a surge in provisions weigh on the bank's profitability, and have raised concerns on whether the lender has sufficient capital. (WSJ)
South Korea: Output declines as Europe crisis saps demand
South Korea’s industrial production fell for a third month in December as Europe’s sovereign-debt crisis hurt exports and business confidence. Output declined 0.9% from Nov, when it dropped a revised 0.3%, Statistics Korea said. South Korea, which grew the least in two years in the fourth quarter, is facing increased uncertainty from Europe’s debt crisis, Finance Minister Bahk Jae Wan said. The Bank of Korea refrained from raising interest rates for a seventh month on 13 Jan to support growth amid faltering global expansion and signs of easing inflation. [Bloomberg]
S. Korean finance minister Bahk Jae-Wan called for early negotiations on a free trade pact with China so Seoul can compete against Taiwan in the lucrative Chinese market, saying that a sweeping China-Taiwan free trade agreement signed last year will put South Korean firms, which compete against Taiwanese firms in many sectors and most notably information technology, at "a great disadvantage." (AFP)
The Philippines grew 3.7% yoy in 4Q (3.6% in 3Q). GDP growth increased 0.9% qoq (0.8% in 3Q). The median estimates were for a 3.8% yoy and 0.1% qoq. For 2011, the Philippine economy expanded 3.7% compared with a 7.6% increase in 2010, missing the government‟s official 12-month target of 4.5-5.5%. (Bloomberg, Philippine Daily Inquirer)
Indonesia’s government clarified that the option of raising the subsidized fuel oil price is still being discussed. Armida S Alisjahbana, National Development Planning Minister, said that the government is studying the drafting of a more accurate subsidy policy. (Indonesia Finance Today)
Thailand is looking to assist companies in the seven industrial estates inundated late last year by revising the terms of THB15bn in soft loans, with two-thirds of the money given away and the rest offered as soft loans carrying interest of 0.01% and a maximum 15-year repayment period. (Bangkok Post)
The Thai government will work with the private sector on forging a four-year tourism strategy to restore confidence in Thailand and prepare the country for the Asean Economic Community in 2015. (The Nation)
Thailand’s growth should stand at -5% in 4Q11 and 1.1% for 2011, Fiscal Policy Office director general Somchai Sujjapongse said. (Bangkok Post)
A poll by Bangkok University found that the economic confidence level in Thailand stood at 28.41, pressured by uncertainties in exports, private investment and tourism in the aftermath of floods. Outlook for the next three and six months should increase, as the expectation confidence was 63.41 and 72.19, respectively. (The Nation)
EU: Sarkozy transaction tax may drive investors from French stocks
The French stock market, Europe’s second-biggest by value, may fall out of favor with investors after President Nicolas Sarkozy unveiled plans to unilaterally impose a 0.1% tax on financial transactions. Sarkozy, who faces elections in a two-round vote in Apr and May, wants to make good on a pledge he made to impose such a tax when France last year held the presidency of both the G-8 and G-20 group of countries. He said on 29 Jan that France will impose the levy starting in Aug in spite of opposition from banks. The tax will apply to share purchases, including high frequency trading, and credit default swap transactions. [Bloomberg]
EU: Stumbles on Greek plan as Merkel signals debt deal delay
European leaders sparred with Greece over a second rescue program, clouding progress toward a permanent aid fund and tougher budget rules designed to stabilize the Euro. Greece faced criticism that its economic makeover is faltering, and it fended off German-led calls for a European overseer to take command of its budget after its deficits surpassed targets for two years. Bargaining with Greece over a debt writedown and its economic management threatened to overshadow a summit meant to point the way out of the financial crisis by speeding the set-up of a full-time EUR500bn (USD654bn) rescue fund. [Bloomberg]
European leaders have agreed to back a fiscal discipline treaty, whereby Euro zone countries would be legally bound to balance national budgets over time. The treaty aims to force Euro zone countries with high debt levels to bring budget deficits down to 0.5% of GDP. The treaty, which will be formally signed in Mar, is the first move in a carefully orchestrated strategy to win back market confidence. The treaty will come into force on 1 Jan 2013 provided 12 countries have ratified it by then. The second step is likely to come in mid-Feb, when EU officials hope to resolve the gap in Greece‟s budget. (FT)
The EU Summit is expected to announce up to €20bn (US$26.4bn) of unused funds from the EU's 2007-2013 budget will be redirected toward job creation and free up bank lending to small- and medium-sized companies. (Reuters)
A draft of the EU summit communiqué calls for "growth-friendly" consolidation and job-friendly growth,‟‟ an indication that EU leaders have come to realize that austerity measures, like those being put in countries like Greece and Italy, risk stoking a recession and plunging fragile economies into a downward spiral. (NY Times)
The European Commission's economic sentiment indicator rose by 0.6 pts to 93.4, the first improvement in sentiment since Mar 2011 as some confidence returned to services, consumers and construction. (Reuters)
US: Consumer spending stalls as Americans lift savings
Consumer spending stalled in December as Americans took advantage of a jump in incomes to restore depleted savings, indicating households remain focused on repairing finances. Purchases were little changed after rising 0.1% the prior month, Commerce Department figures showed in Washington. The median estimate of 77 economists surveyed by Bloomberg News called for a 0.1% increase in sales. Incomes climbed by the most in almost a year, pushing the savings rate to a four-month high. [Bloomberg]
US: Treasury cuts quarterly borrowing estimate 18% to USD444bn
The US Treasury Department lowered its borrowing estimate for the current quarter by 18% to USD444bn, reflecting higher receipts and lower spending. The Treasury reduced its net borrowing estimate for January through March by USD97bn from a projection of USD541bn three months ago. US Treasury officials also see net borrowing of USD200bn in the second quarter. The estimates set the stage for the Treasury’s quarterly refunding announcement on 1 Feb. [Bloomberg]
The US Architecture Billings Index held at 52 last month, a sign of expansion. The commercial and industrial component, a proxy for private building activity, climbed to 54.1 in Dec. (Bloomberg)
More than two-thirds of US banks in a Federal Reserve survey of senior loan officers said they had tightened credit to European financial firms in Jan, underscoring the continent's severe banking crisis. Domestic lending standards were largely unchanged this month, while loan demand picked up somewhat. (Reuters)
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