20120903 1020 Local & Global Economy Related News....

Broad money (M3) expanded 13.5% yoy in Jul (12.8% in Jun). Net financing to the private sector grew 13.2% yoy in Jul (13% in Jun) due to higher growth in outstanding banking system loans (13% vs. 12.6% in Jun). (Bank Negara Malaysia)

Bank Negara Malaysia Governor  Tan Sri Dr Zeti Akhtar Aziz said the highly accommodative monetary policy environment has generated higher global liquidity. It has contributed to the recent surges in capital flows to emerging economies. “These inflows have resulted in significant strengthening of our currencies, rising asset prices, credit growth  and for some, overheating conditions in our economy. This has been partially offset by deleveraging in developed economies,” she said. “For an open economy where exports are more than 150% of GDP, that has consequences on our economy,” she added. For emerging Asian economies “an important policy shift is to rebalance our economies and diversify our sources of growth” and “promote domestic demand, in particular domestic consumption”, she said. The growth of Asia’s domestic banks had “allowed the financial intermediation process to continue without disruption during the recent global financial crisis”. Emerging Asian economies will “continue to be vulnerable” to these global shocks. “To be in a better state of readiness and to withstand these eventualities, the policy priorities are therefore to build resilience,” she said. (Starbiz)

Bank Negara is projecting  foreign currency inflows amounting to RM12.88bn or US$4.12bn in the next 12 months due to interest income and the drawdown of project loans. The central bank said in a statement that in the next 12 months, the predetermined  short-term outflows of foreign currency loans would amount to RM1.07bn arising from scheduled repayments of external borrowings by the government. Data showed that only contingent short-term net drain on foreign currency assets are the government’s guarantees of foreign debt due within one year, amounting to RM351.2m. The central bank said that long forward positions amounted to RM21.4bn as at end-Jul 2012. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organizations, banks and other financial institutions. Bank Negara also does not engage in foreign currency options vis-à-vis ringgit, it said. (Starbiz)

Producer price index (PPI) declined by 0.2% yoy in Jul (-0.9% in Jun), dragged down by the decrease in the PPI for local production (-0.5% vs. -1.5% in Jun). The import price index, however, rose 0.8% in Jul (0.8% in Jun). (Starbiz, Department of Statistics)

Malaysia’s external sector, unlike its regional peers, has been showing resilience and it is forecast to grow 1.4% in US dollar terms this year. The projection by the  FocusEconomics Consensus Forecast panelists, published in the latest edition of FocusEconomics' macro economic forecasts for Asia, also expects Malaysia's trade surplus to narrow slightly to US$39bn (RM153bn) from US$39.9bn in 2011. For 2013, the panel expects exports to grow 9.8% while the trade surplus will rise to US$42.1bn. As for the country's GDP, the Consensus Forecast panelists maintain their forecast of a 4.3% growth this year, while for 2013, they see GDP growing by 5%. Consensus Forecast panelists project  industrial production to grow 3.1% this year while for next year, they expect industrial output to expand 4.6%. It expects inflation to average 2.3% this year and 2.8% in 2013. On the Overnight Policy Rate (OPR), the Consensus Forecast panelists expect the OPR to reach 2.98% by year-end and 3.13% in 2013. (BT)

Federal Reserve Chairman Ben Bernanke, in his remarks at Jackson Hole, defended the effectiveness of unconventional monetary policies such as bond purchases and signaled he would soon deploy them again to attack unemployment. (Bloomberg)

The  world's big central banks ought to  cooperate more  by taking into account the global impact of their individual policy decisions,  Bank for International Settlements general manager Jaime Caruana said, but he was immediately challenged by Federal Reserve Chairman Ben Bernanke, who noted that a discussion about international monetary policy cooperation also implied cooperation on foreign exchange rates. (Reuters)

The  Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 123.6 in the week ended 24 Aug from 123.3 the prior week. (Reuters)

US farm exports will set a sales record in the new marketing year due to high commodity prices that will magnify the value of dramatically smaller harvests amid the worst drought in half a century, the Agriculture Department said. (Reuters)

US crude oil imports fell in Jun, dropping 134,000 barrels per day from a year earlier to average at 9.101m barrels per day, the fourth consecutive monthly decline, the Energy Information Administration said. (Reuters)

US farm prices rose 1.1% mom in Aug (6.0% in Jul), whilst on a yoy basis, the measure gained 4.3% (5.5% in Jul). (Bloomberg)

The  US Reuters/University of Michigan consumer sentiment index had a final reading of 74.3 in Aug, up 2 full points from the final Jul reading. Analysts expected a level of 73.5. (Bloomberg)

US factory orders rose 2.8% mom in Jul (-0.5% in Jun), overshooting consensus of 2.0%. (Bloomberg)

China's manufacturing activity slumped in Aug to a nine-month low of, as the government's purchasing managers' index (PMI) fell to 49.2 from 50.1 in Jul. The August reading was the lowest since 49.0 in Nov last year, and below the median forecast of 50.0. (CNA)

China Premier Wen Jiabao said it was too early to  loosen curbs on speculative property investment. Wen said government efforts to rein in runaway housing prices had been largely successful, but the controls over the real estate market are still in a critical period. (CNA)

Taiwan and China on Friday signed a deal paving the way for Taiwanese banks to take Chinese yuan deposits and make yuan loans. The memorandum of understanding outlines the new arrangement, known as direct yuan clearing, which is expected to come into force in 60 days. (CNA)

China called on the World Trade Organisation (WTO) to mediate in a US$7.3bn trade dispute with the United States over 22 types of products. (CNA)

China's outbound direct investment (ODI) increased 8.5% yoy (21.7% yoy in 2010) to US$74.65bn in 2011. (Xinhua)

Japan may  extend mortgage tax benefits by five years and raise the deduction rate to cushion an expected slowdown in home sales in 2014 when a consumption tax increase takes effect. (Bloomberg)

Japan’s Markit/JMMA Japan Manufacturing Purchasing Managers Index fell to a seasonally adjusted 47.7 in Aug from 47.9 in Jul. (Reuters)

Japan’s overall household spending rose 1.7% yoy in Jul (1.6% in Jun), helped by government support for buyers of fuel-efficient cars. This exceeded the median market forecast for a 1.2% increase. (Reuters)

Japan’s vehicle production gained 16.7% yoy in Jul (20.3% in Jun). (Bloomberg)

Japan’s housing starts fell 9.6% yoy in Jul (-0.2% in Jun), the second fall in a row. Economists expected a fall of 10.3%. (Bloomberg)

Japan’s industrial production contracted a seasonally adjusted 1.2% mom in Jul (+0.4% in Jun) in a preliminary reading. That was well shy of forecasts for an increase of 1.7%. On a yearly basis, production was down 1.0%, again missing expectations for a gain of 1.8% after dropping 1.5% in the previous month. (RTTNews)

Japan’s construction orders gained 8% yoy in Jul (4.6% in Jun), the second consecutive month of increase. (MNI)

Japan's jobless rate remained steady in Jul at 4.3%, unchanged from Jun and in line with economists’ median  forecast, and the availability of jobs improved to 0.83 (0.82 in Jun), matching forecasts and is partly helped by reconstruction demand continuing to underpin the jobs market. (Reuters)

Japan’s core nationwide CPI fell 0.3% yoy in Jul (-0.2% in Jun), putting the central bank’s 1% inflation target further from reach. (Bloomberg)

Organisation for Economic Cooperation and Development chief Angel Gurria  urged yesterday the  European Central Bank to give a credible signal to markets and resume bond-buying to help debt-wracked Italy and Spain as soon as possible. (AFP)

Eurozone’s annual rate of consumer price inflation accelerated to 2.6% in Aug from 2.4% in Jul, Eurostat reported in a preliminary estimate. Economists had forecast a rise to 2.5%. The unemployment rate stood at 11.3% in Jul, unchanged from an upwardly revised reading in Jun and in line with forecasts. (WSJ)

Portugal will pursue a rescue package designed to drag the country out of its debt crisis with “determination and audacity,” Prime Minister Pedro Passos Coelho affirmed. (AFP)

Iraq's oil exports reached their highest level in more than three decades last month as the country's output has continued to increase. (AFP)

Sixteen nations home to roughly half the world's population have agreed "in principle" to create a free trade area spanning Asia, the secretary-general of ASEAN said on Friday. Trade ministers from ASEAN and their counterparts from China, Japan, South Korea, India, Australia and New Zealand will press their leaders to start talks on the trade zone at a regional summit in Nov. (CNA)

India's economy expanded at a slightly faster pace of 5.5% yoy in April-June (5.3% in 1Q12). This topped the 5.2% expansion expected by the market. However, investment has slowed sharply as another sign of malaise and stepped up pressure on the government to push through new policies to spur growth. (AWSJ)

A panel set up by India’s prime minister recommended deferring a proposal to crack down on tax avoidance by three years to the assessment year 2017-18 on “administrative grounds,” a move investors said may help boost capital inflows amid the threat of a rating downgrade to junk. (Bloomberg)

Thai exports in Jul fell 4.46% yoy to US$19.544bn.  Imports totaled US$21.29bn, up by 13.73% yoy. The country had a trade deficit of US$1.746bn. The government’s exports growth forecast for 2012 is now expected at only 5-6% versus 12.8% earlier.  (Bangkok Post)

Vietnam’s state budget revenues through mid-Aug totalled an estimated VND418.5tr, equal to about 56.5% of  this year's target, somewhat behind the pace needed to meet the target at year's end, whilst  spending totalled VND534tr, resulting in a deficit estimated at VND116tr. (Vietnam News)

Vietnam’s total retail revenue of goods and  services in 8M12 surged 17.9% yoy to VND1,517tr, according to the General Statistics Office. (Vietnam News)

Vietnam is optimistic about  rice exports totalling 2.82m tonnes in the remaining months of this year, for 2012 sales to hit over 7m tonnes. (Vietnam News)

The  Philippine economy grew 5.9% yoy in 2Q12 (6.3% in 1Q12), ahead of expectations of a 5.5% increase. On a qoq basis, growth touched 0.2% (3% in 1Q12). (Bloomberg)

The  index for hiring expectation of firms in the Philippines rose to +27.4% for 4Q12 (+23.2% in 4Q11), the highest index registered since the central bank started conducting the quarterly survey in 2006. (Philippine Daily Inquirer)

Indonesia’s government said capital spending by the end of the year will be about 90% of the budget. The slow absorption of capex of only 30% as of 23 Aug 2012 of the ceiling set in the 2012 State Budget and Expenditure Amendment (APBN-P) amounting to Rp168.7tr is due to the lack of billing for ministries/institutions’ project implementations. (IFT)

Bank Indonesia governor Darmin Nasution said that the country needed to allow the rupiah to weaken against the dollar to allow the country’s exports to become more competitive. (Jakarta Globe)