BNM: Gross inflows of FDI still ‘significant’ at RM98.9bn for 2011
Gross inflows of foreign direct investments (FDI) remained significant at RM98.9bn in 2011, accounting for 11.9% of gross national income (GNI), in tandem with the strong overall domestic investment outlook and revival of corporate earnings, according to the central bank. Bank Negara Malaysia, in its 2011 annual report released yesterday, said this was evident in the larger inflows of equity capital and extension of inter-company loans, amid sizeable earnings retained by existing multinational corporations for reinvestment purposes. (Malaysian Reserves)
Malaysia: Sees slower growth this year on persistent global risks
Malaysia’s GDP will expand at a slower pace this year as financial and economic restructuring in developed nations curb global growth, BNM predicts. The economy may expand 4% to 5% in 2012 while inflation may slow to a range of 2.5% to 3% this year from 3.2% in 2011, it added. (Bloomberg)
Malaysia's potential output is estimated to return to its trend growth rate of about 5% over the medium term, said Bank Negara Malaysia in its Annual Report 2011. The higher growth in potential output needs to be supported by continuous improvement in productivity, higher private investment to sustain stock accumulation and job creation, especially for high-skilled workers. (Bernama)
Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said financial institutions have demonstrated capacity to absorb volatile capital flows. Given the maturity of the financial markets in Asia and strength of the intermediaries, there was now the capacity to cope with volatility in the market, she said. The central bank would closely monitor hot money in the market and as well any surges that would be destabilising to the Malaysian market, she added. (Bernama)
There is no need to introduce tightening measures on consumer credit, said Bank Negara Governor, Tan Sri Dr Zeti Akhtar Aziz. Household debts were not at alarming levels with the declining trend in non-performing loans. "All those who have affordability should be eligible to borrow," she said. The quality of loan portfolios have also improved, she added. The implementation of new Guidelines on Responsible Financing, which came into effect Jan this year, was introduced largely to curb speculative buying in the property market and limit the increase in house prices, she said. (Bernama, Financial Daily)
Thai exports fell 6.1% yoy in Jan (-2.1% in Dec 2011) to US$15.5bn. Imports declined 2.5% yoy in Jan (+19.6% in Dec) to US$15.0bn, resulting in a trade surplus of US$0.5bn in Jan (-US$0.2bn in Dec). Thailand’s current account balance stood at US$0.8bn in Jan (US$1.9bn in Dec), undershooting market expectations of a US$1.5bn surplus. The overall balance of payments in Jan was a deficit of US$0.2bn (-US$1.0bn in Dec). (Bloomberg)
The Bank of Thailand’s monetary policy committee left the repurchase rate unchanged at 3%, deeming the level of the key policy rate suitable for boosting the economy and curbing inflation. (Bangkok Post)
Indonesia’s government forecasts that the country’s economic growth in 2013 may reach between 6.7 and 7.4%, mainly driven by growing investment and an expanding budget for infrastructure. (Jakarta Post)
Japan’s all-industry activity index dropped 1% mom in Jan, reversing a 1.6% gain in Dec and exceeding the expected fall of 0.7%. (RTTNews)
The Japanese Cabinet Office continued in Mar to deem the economy as ―still picking up slowly, while difficulties continue to prevail due to the Great East Japan Earthquake.‖ (Bloomberg)
Japan convenience-store sales grew 9.6% yoy in Feb (5.7% in Jan) on a total sales basis to hit ¥675.58bn. (Bloomberg)
China: Cuts reserve ratios for 379 Agribank branches
China boosted rural credit by cutting reserve requirements for an additional 379 branches of Agricultural Bank of China, the nation’s third-biggest lender by market value. Effective 25 March, the ratio will fall by 2% for the branches in the provinces of Heilongjiang, Henan, Hebei and Anhui. The move expands a trial that previously lowered requirements for 563 branches in eight provinces. The latest move means a total of CNY23bn has been freed up. (Bloomberg)
India: May cut rates in April after inflation eased
India may start cutting interest rates from April to bolster economic growth following a moderation in inflation, its Economic Affairs Secretary R. Gopalan said. “If inflation remains at this level after factoring in various things, then interest-rate reversal may start in April. It is important for this country since we are looking for higher growth,” Gopalan, one of the finance ministry’s top bureaucrats, said. (Bloomberg)
UK: Government cuts income tax, austerity drive undimmed
UK Chancellor George Osborne cut the top rate of income tax while imposing new levies on the wealthy, in a political high wire act designed to rejig the burden of austerity without wavering on plans to erase a huge budget deficit. Britain should avoid a renewed recession and while the recovery was set to remain modest this year, growth should pick up thereafter, Osborne said. Its government has made erasing a huge budget deficit - which topped 11% of GDP before it took office - within the next five years its core objective, and the latest forecasts showed it remained on track. (Reuters)
US: Home sales show strength, prices rise
Home sales fell in February, but upward revisions to the prior month's pace and the first yearly increase in prices in 15 months pointed to steady improvement in the housing market. Existing home sales fell 0.9% in February from January but still notched their second highest level since May 2010. (Reuters)
US Federal Reserve Chairman Ben Bernanke said Europe must further strengthen its banks and that its financial and economic situation ―remains difficult‖ even as a ―welcome development‖ came in the form of reduced stresses. (Bloomberg)
US Federal Reserve Chairman Ben Bernanke warned that higher energy prices ―would probably slow growth, at least in the short run‖ as they ―create at least short-term inflation pressures, and moreover, they act as a tax on household purchasing power and reduce consumption spending, and that also is a drag on the economy.‖ (Bloomberg)
US existing-home sales fell 0.9% mom in Feb to 4.59m units (a revised 4.63m in Jan), but still notched their second highest level since May 2010. Economists had expected a rise to 4.62m. (Reuters)
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