20120229 1013 Local & Global Economic Related News.

Malaysia's declining oil production has hit economic growth by as much as a full percentage point or more, said Minister in the Prime Minister's Department, Datuk Seri Idris Jala. However, the economy managed to grow by 5.1% last year showed that other sectors were still growing, he said. The output from the oil and gas (O&G) sector had declined by 5.7% last year. The decline in oil production was largely attributed to problems in the Kikeh oil field off Sabah and maturing oil fields off Peninsular Malaysia. Jala said that Murphy Oil had encountered "a serious problem" with sand in Kikeh which had impaired production levels and would take two years or more to fix. Under the Economic Transformation Programme, some RM132bn worth of commitments to O&G projects had been announced so far which would make it possible to arrest the decline of production over the next 10 years, he said. (Malaysian Insider)

The Philippines’ trade deficit narrowed to US$1.2bn in Dec (from US$1.6bn in Nov). (Bloomberg)

Total imports into the Philippines shrank 6.5% yoy in Dec, following a 0.7% increase in Nov. (Bloomberg)

China’s financial hub of Shanghai joined Beijing and Shenzhen in boosting the minimum wage by 13% to Rmb1,450 (US$230) a month, as policy makers seek to spur consumer spending. (Bloomberg)

The People's Bank of China met with banks to say it would inject money into the market if necessary to aid a liquidity shortage via possible open market operations. (Reuters)

South Korea’s current account recorded a US$772m shortfall in Jan, the first since Feb 2010’s deficit of US$549m, compared with a revised US$2.81bn surplus in Dec. The Bank of Korea expects the current account surplus to fall to around US$13bn this year from US$27.65bn in 2011. (AFP)

Japan: Back on track
Japan’s retail sales exceed economists’ forecasts in January, signaling a recovery in consumer spending that will help the world’s third-largest economy return to growth this quarter. Sales rose 1.9% from a year earlier, after a 2.5% increase in December, the Trade Ministry said yesterday. The median forecast of 15 economists surveyed by Bloomberg News was for a 0.1% decline. From a month earlier, sales gained 4.14%. (StarBiz)

India: Longest bond rally since 2008 seen ending on oil
India’s government bonds are set to reverse the longest rally since 2008, strategists predict, as surging fuel prices stoke inflation in the world’s fourth-biggest oil consumer. The yield on 10-year notes is headed for a fourth month of declines in February, falling seven basis points to 8.21%, according to the central bank’s trading system. The median forecast of seven financial companies in a Bloomberg survey is for the benchmark to rebound to 8.5% by the end of June. (Bloomberg)

Euro: ECB special lender status threatens bond backlash
The European Central Bank’s willingness to ride roughshod over bondholder rights risks pushing up borrowing costs for indebted governments by making investors less willing to lend. The ECB swapped about EUR50bn (USD67bn) of Greek bonds for new securities, identical to the old ones in every way save for identification numbers. The switch makes the ECB senior to other investors, exempting it from the largest sovereign restructuring in history as Greece rewrites the terms of its notes to ensure lenders forgive 53.5% of the debt. The European Investment Bank is getting a similar exemption, two regional officials familiar with the matter said. (Bloomberg)

Euro: Papademos gets backing for USD4.3bn of cuts in race for aid
Greece’s Parliament ratified a EUR3.2bn (USD4.3bn) package of spending cuts to the 2012 budget, taking PM Lucas Papademos one step closer to the country securing a rescue package to avert financial collapse. A total of 202 lawmakers voted in favor of the law and 80 against, Acting Parliament Speaker Grigoris Niotis said in remarks carried live on state-run Vouli TV yesterday after a roll-call vote. The vote is to be followed today by another that legislates permanent changes to pension funds and health-care spending, measures demanded by the European Union and International Monetary Fund in return for the EUR130bn lifeline. (Bloomberg)

US: Consumer confidence rises to one-year high
Confidence among US consumers climbed to a 12-month high in February, signaling household spending will help sustain the expansion. The Conference Board’s index increased more than forecast, to 70.8 from 61.5 in January. Americans are growing more upbeat after unemployment fell to a three year low and stock-market rally boosted household wealth, helping them withstand lower home prices and higher gasoline costs. Another report showed durable goods orders declined in January by the most since 2009 after the expiration of a tax break allowing full expensing of business equipment purchases. (Bloomberg)

US: Home prices in 20 cities decline 4%, more than forecast
Home prices in 20 US cities dropped more than forecast in December to the lowest level since the housing crisis began in mid-2006, indicating foreclosures are hampering the industry’s recovery. The S&P/Case-Shiller index of property values in 20 cities fell 4% from a year earlier, after decreasing 3.9% in November, a report from the group showed today in New York. The median forecast of 31 economists surveyed by Bloomberg News called for a 3.7% decline. (Bloomberg)

US: Durable goods orders slump 4%, most in three years
Orders for US durable goods fell in January by the most in three years, led by a slowdown in demand for commercial aircraft and business equipment. Bookings for goods meant to last at least three years slumped 4%, more than forecast, after a revised 3.2% gain the prior month, data from the Commerce Department showed today in Washington. Economists projected a 1% decline, according to the median forecast in a Bloomberg News survey. (Bloomberg)