20120228 1025 Local & Global Economic Related News.

Bank Negara Malaysia will keep interest rates “accommodative” as the outlook for the global economy remains uncertain, Governor Tan Sri Dr Zeti Akhtar Aziz said. “Given the external environment is a difficult environment, we will keep the interest rates at an accommodative stance and it is just an issue of degree of accommodation,” Zeti said yesterday. “Right now, our interest rate level, we say, is accommodative. Certainly at 3%, it wasn’t an inhibiting factor for increasing loan growth,” she said. “We can say with a high degree of confidence that domestic demand is on a solid and steady growth path. But in the external environment, we are seeing of course our export performance being affected by the slowing in demand in the US and in Europe and other parts of the world. We are not going to be immune to these kinds of developments,” she added. (BT)

The government will introduce another initiative under the government transformation programme (GTP) to curb political financing as a proactive measure to enhance transparency and public confidence in political organisations in the country, said PM Datuk Seri Najib Tun Razak. The initiative would emphasise that any contribution made to any political party whether at the central or state level must be channeled through the official party account, he said. Every contribution made must be issued with a receipt and deposited into the party account. Through a proper receipt account, this contribution could be audited at the end of each financial year, he said. 'Political Financing' is one of the suggestions made by the Anti-Corruption Committee and Anti-Corruption Advisory Board of the Malaysian Anti-Corruption Commission (MACC). Meanwhile, the government planned to display the draft of every bill on the website of the ministry concerned to ensure that every bill in the country was transparent and took into consideration the views of every one before it was enforced, he added. (Bernama)

China has reached a "turning point" in its economic development, with the pace of growth likely to nearly halve in the next two decades, World Bank and Chinese government researchers said. This makes the case for reform “compelling,” says World Bank President Robert Zoellick at the launch of the “China: 2030” study. (AFP)

Vietnam’s YTD exports climbed 24.8% yoy in Feb (-11.1% in Jan), while YTD imports increased 11.8% yoy in Feb (-18.7% in Jan). (Bloomberg)

Thailand’s manufacturing production index fell 15.2% yoy in Jan (-25.3% in Dec), a deeper decline than the 14% fall expected by economists. Total capacity utilisation improved to 58.5% in Jan (51.9% in Dec). (Bloomberg)

South Korea: Current-account in deficit for the first time in two years
South Korea posted its first current-account deficit in nearly two years as exports dropped due to Europe’s debt crisis and the Lunar New Year holiday. The deficit was USD772.2m in January, the first shortfall since February 2010, compared with a revised surplus of USD2.8bn in December, the Bank of Korea said in a statement in Seoul today. The current account is the broadest measure of trade, tracking goods, services and investment income. (Bloomberg)

Bank Indonesia said the plan to raise subsidized fuel oil sale price will boost inflation to 7%, higher than the central banks’ target of 4.5%, +/- 1%. (IFT)

Indonesia’s government has been asked to prioritize the plan on whether to increase the price of oil fuel (BBM) subsidy or electricity tariff this year, so that the two policies are not applied simultaneously in a single year. (IFT)

International Monetary Fund Managing Director Christine Lagarde urged global leaders for more actions to steer the economy out of the woods, saying that “the G-20 countries must now strengthen resilience to further shocks that could result from still-fragile financial systems, high public and private debt, and higher world oil prices.” (The Nation)

Standard & Poor's cut Greece’s credit rating to "selective default" after banks agreed to write off more than half of their Greek debt holdings in a second EU bailout of the country. The rating was lowered from the already junk-level “CC” grade to “SD” in view of “the Greek government's retroactive insertion of collective action clauses (CACs) in the documentation of certain series of its sovereign debt on 23 Feb 12," according to a statement by the rating agency. (AFP)

Greece will still be at high risk of defaulting despite the agreement last week on a rescue and part cancellation of its debt, Moody's Investors Service said, warning that the terms of the debt swap could result in a severe further weakening of the capital base of the Greek banking system. (AFP)

EU: Merkel wins Greek aid vote after warning of ‘incalculable damage’ on delay
Chancellor Angela Merkel won a parliamentary vote on Greek aid after warning German lawmakers that pushing Greece out of the euro would risk “incalculable” damage, defying a public backlash against more bailout funds. In a vote that showed dissent in her coalition growing, 496 members of the lower house, or Bundestag, voted in favor of the 130 billion-euro (USD174bn) package yesterday in Berlin; 90 voted against and five abstained. While questions on Greece’s remaining in the euro “have their justification,” Merkel warned that a failure of the euro might endanger the Europe Union and the global economy. (Bloomberg)

UK: Home prices supported by rush to beat tax-holiday end
UK house prices held their value for a second month in February, boosted by a seasonal increase in demand and a rush to beat the expiration of a property-tax exemption, Hometrack Ltd said. The average cost of a home in England and Wales was unchanged from January and 1.4% lower than a year earlier, the London-based property research company said in a report today. The number of potential buyers registering with estate agents rose 18% over the month, the largest gain for five years. (Bloomberg)

US: Pending home resales show housing market regaining footing
More Americans than forecast signed contracts to buy previously owned homes in January, indicating the industry that sparked the last recession is improving. The index of pending home resales climbed 2% after a 1.9% decrease the prior month that was smaller than previously estimated, the National Association of Realtors said in Washington. The median forecast of 44 economists surveyed by Bloomberg News called for a 1% advance. (Bloomberg)

The US National Association of Realtors’ Pending Home Sales Index increased 2% mom to 97.0 in Jan (a revised -1.9% in Dec), the highest reading since Apr 10. (Reuters)

US consumer indebtedness shrank 1.1% qoq or US$126bn from the end of Sep to US$11.53tr on 31 Dec, led by a 1.6% decline in mortgage balances, according to the Federal Reserve Bank of New York. (Bloomberg, Reuters)