20120827 1025 Local & Global Economy Related News.

Economy: Bank Negara international reserves stand at RM430.5bn
Bank Negara's International reserves amounted to RM430.5bn (equivalent to US$134.7bn) as at Aug 15. The reserves are sufficient to finance 9.5 months of retained imports and is 3.9 times the short-term external debt, the central bank said in a statement. It said the main components of the international reserves are foreign currencies (US$121.8bn); International Monetary Fund reserves (US$800m); Special Drawing Rights (SDRs) (US$1.9bn); gold (US$1.9bn) and other reserves assets (US$8.3bn). Bank Negara's total assets, including international reserves, stood at RM479.277bn. (Bernama)


Singapore: Sees taxes rising on social spending as nation ages
Singapore will need to raise taxes in the next two decades as the government boosts social spending to support an aging population, Prime Minister Lee Hsien Loong said as he proposed measures to boost the country’s birth rate. The prime minister pledged to ensure sufficient affordable housing for citizens, invest in pre-school education and add nursing homes for the elderly. He urged Singaporeans to build a more compassionate society, reject anti-foreigner sentiment and have more babies, saying the nation needs to re-invent itself to progress as the economy faces slower growth after years of rapid expansion. “As our social spending increases significantly, sooner or later, our taxes must go up,” Lee said. (Bloomberg)

South Korea: Consumer confidence slides to lowest in seven months
South Korean consumer confidence dropped to the lowest level in seven months as Europe’s debt crisis and a slowdown in China dragged on exports. The sentiment index was at 99 in August from 100 in July, the Bank of Korea said. A reading below 100 indicates pessimists outnumber optimists. The data adds pressure on Finance Minister Bahk Jae Wan to take extra measures to spur the economy after growth cooled to its slowest pace in almost three years in the second quarter and exports tumbled in July. He’s resisting lawmakers’ calls for a supplementary budget as he preserves ammunition to counter any deeper slowdown. South Korea’s Kospi index fell 1.4% last week. Na Seong Lin, acting chairman of the ruling party’s policy committee, said that a “sizeable” extra budget is needed soon. (Bloomberg)

China: Wen targets confidence as China risks weakest growth in 13 years
China’s Premier Wen Jiabao urged extra measures to support exports and help meet economic targets as evidence mounts that the nation’s slowdown is deepening. “The 3Q is a crucial period for realizing full-year targets on export growth,” Wen said during an inspection tour of Guangdong, the nation’s biggest exporting province. “Facing the current difficulties, China should substantially improve the environment for companies’ operations and improve companies’ confidence.” Wen’s visit was the latest in his tours of export-reliant provinces on the coast as he tries to boost confidence in an economy at risk of the weakest expansion in 13 years. (Bloomberg)

India: Worst Asia currency loss reverses on growth goal
Indian Finance Minister Palaniappan Chidambaram’s promise of faster action to revive growth and Asia’s highest investment-grade yields are helping restore confidence in the region’s worst-performing currency. The rupee, which tumbled 17% in the past year, has rebounded 3.3% from a record low of 57.33 per USD on 22 June as Chidambaram pledged to shore up public finances and clarify tax laws. Foreign holdings of local bonds climbed USD800m since June, after last quarter’s smallest gain since 2009 of USD230m, as global policy makers boosted efforts to revive growth. Dollar-based investors will earn 4.4% on rupee assets including interest by year-end, compared with 3.1% on Indonesia’s rupiah, 1.8% on South Korea’s won and the Chinese RMB’s 1.2%, according to analysts’ forecasts compiled by Bloomberg. Chidambaram called on banks this month to lower lending rates to help achieve projected economic expansion of 6.7 percent, which would be the fastest pace after China among the region’s major economies. (Bloomberg)

US: Bernanke sees further scope for easing to spur US economy
Federal Reserve Chairman Ben S. Bernanke said the central bank has the ability to take additional steps to boost the economy. “There is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery,” Bernanke said in a letter dated 22 Aug to California Republican Darrell Issa, the chairman of the House Oversight and Government Reform Committee. Bernanke repeated the statement from the Federal Open Market Committee’s 1 Aug meeting that the Fed will provide “additional accommodation as needed.” He has an opportunity to expand on his views. US stocks rose, paring the S&P’s 500 Index’s first weekly decline in almost two months, on speculation the central bank will act to boost economic growth. (Bloomberg)

US stocks snap six-week rally amid Europe concern
The Standard & Poor’s 500 Index snapped a six-week gain amid concern European leaders may fail to tame the region’s debt crisis and as investors speculated whether central banks will provide further economic stimulus. Equities rallied the final day on bets the Federal Reserve will act to boost growth. The S&P 500 declined 0.5% to 1,411.13, after the benchmark index for American equities briefly topped a four-year high during the week. The Dow Jones Industrial Average dropped 117.23 points, or 0.9%, to 13,157.97. (Bloomberg)