Since October 2007, when the Fed’s policy committee began giving
quarterly predictions for GDP growth and the jobless rate, the central bank has
downgraded its nearer-term forecasts almost two-and-a-half times as often as it
upgraded them.
The gap between Wall Street’s
expectations for 2012 growth and the Fed’s own current view points to yet
another downgrade on Thursday, when policymakers wrap up a two-day meeting that
has world financial markets rapt.
The trend of back-pedaling shows
how poorly the central bank has fared at reading the economic tea leaves, with
the Fed’s optimism a likely factor in policy decisions through the Great
Recession and its fallout, economists say.
Policy makers and economists
predicted on Tuesday that the sovereign debt crisis will continue to cast a
shadow over the European economy, but called for confidence in the euro.
The eurozone crisis is
stabilizing and risks are decreasing in the region’s fiscal and monetary
systems as well as in its financial markets, but the risks to economic growth
are rising, International Monetary Fund (IMF) Deputy Managing Director Zhu Min
told reporters on the sidelines of the 2012 Summer Davos Forum in north China’s
Tianjin.
Deterioration in the European
economy will have a huge impact on the global economy as Europe is one of the
world’s largest economies and accounts for one third of value-added exports to
Asia, Zhu said.
“We should talk more about the
growth side, not the financial side (of the eurozone crisis),” he told a panel
discussion during the forum.
In the worst-case scenario, a
more disastrous situation in Europe could lead to a 1.5 percent-2 percent
growth cut in the United States and a 1 percent-1.5 percent cut in China, as
IMF models showed, according to Zhu.
Singapore
While Singapore continues to
grow, the Government stands ready to act if the economy hits a downturn, said
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam in Parliament
today.
He elaborated that specific
measures and the level of Government risk-sharing with businesses and banks
would depend on the severity of the downturn.
Mr Tharman said: “The Ministry of
Trade and Industry expects the Singapore economy to grow by 1.5 to 2.5 per cent
for the whole of 2012.
“Nevertheless, I can assure
members that we are monitoring the downside risks to Singapore’s economic and
financial stability very closely. The government stands ready to provide
assistance to businesses and workers should there be a more significant
economic downturn.”
Mr Tharman was responding to
Nominated MP Teo Siong Seng, who asked whether the Finance Ministry will
implement extraordinary financing measures like the Special Risk-Sharing
Initiative (SRI) introduced as part of the resilience package launched during
the financial crisis in 2008/2009.
The Government had taken up 80
per cent of the risk share for the bridging loan programme to help SMEs in the
event the economy goes into a tailspin.
Thailand
Thailand plans to introduce a
bill letting it borrow 2.2 trillion baht ($70.8 billion) for infrastructure
projects over the next seven years, the finance minister said on Monday.
Even with the increased borrowing,
to boost the economy following last year’s devastating floods, the government
still aims for a balanced budget in 2017, Kittirat Na Ranong told a briefing.
Earlier, the plan was to borrow
1.6-2.0 trillion baht, but the amount has been increased to include utilities
and telecommunications project, he said.
“With the current fiscal
position, there is room to invest in long-term infrastructure projects to
increase the country’s competitiveness,” the minister said.
A bill on the borrowing is under
preparation before approval is sought from the cabinet and parliament, Kittirat
said. He did not give details about the timeframe and how the money would be
raised.
Kittirat said public debt was
still low at 43.34 percent of gross domestic product, below its legal limit of
60 percent.
In February, the government
pushed through an emergency decree to borrow 350 billion baht for water
management projects after the floods in late 2011 that dragged economic growth
down to just 0.1 percent for last year. The central bank has forecast the
economy will grow 5.7 percent this year.
Philippines
Philippine exports grew faster in
July after a slowdown in the previous month but a downtrend was reported in
electronics.
Outbound shipments increased 7.8
percent in July from a year earlier as growth in export items like metal
components and activated carbon offset a sharp drop in electronics and
seminconductors.
The July export figure marked an
improvement from 4.3 percent in June.
According to the National
Statistics Office, exports in July registered $4.807 billion in receipts,
higher than $4.460 billion reported in the same month last year.
Electronics, which accounted for
about a third of revenue in July went down 25.6 percent to $1.675 billion from
$2.253 billion registered in July 2011.
Semiconductors, which make up
bulk of electronic exports, earned $1.344 billion in July, down 12.1 percent
from $1.529 billion a year ago.
Month-on-month, exports went up
11.4 percent from $4.314 billion in June.
Aggregate exports from January to
July rose 7.7 percent to $31.564 billion from $29.306 billion during the same
period last year.
Malaysia
KLCI index lost 6.80 points or
0.42% on Tuesday. The Finance Index fell 0.79% to 14367.87 points, the
Properties Index dropped 0.72% to 1015.97 points and the Plantation Index down
0.11% to 8374.53 points. The market traded within a range of 17.30 points
between an intra-day high of 1618.61 and a low of 1601.31 during the session.
Actively traded stocks include
INGENS, MAYBANK, INGENS-WA, CIMB, TANCO, NEXTNAT, AIRASIA, UTOPIA, ASUPREM and
THHEAVY. Trading volume increased to 961.10 mil shares worth RM1789.42 mil as
compared to Monday’s 876.44 mil shares worth RM1440.18 mil.
Leading Movers were IOICORP (+8
sen to RM5.07), PETCHEM (+11 sen to RM6.39), GENTING (+5 sen to RM8.98), SIME
(+1 sen to RM9.80). Lagging Movers were CIMB (-12 sen to RM7.28), TENAGA (-12
sen to RM6.63), HLBANK (-36 sen to RM13.00), MAXIS (-9 sen to RM6.78) and PPB
(-32 sen to RM12.68). Market breadth was negative with 199 gainers as compared
to 604 losers.
Yesterday in Asia
Tokyo fell 0.70 percent,
or 61.99 points, to 8,807.38, Sydney closed 0.18 percent, or 8.0 points, lower
at 4,325.8 and Seoul lost 0.24 percent, or 4.70 points, to close at 1,920.00.
Shanghai ended down
0.67 percent, or 14.34 points, at 2,120.55 but Hong Kong staged a late rally to
close 0.15 percent higher, adding 30.71 points to 19,857.88.
Taipei edged up 2.39
points, or 0.03 percent, at 7,485.13.
Taiwan Semiconductor
Manufacturing Co. rose 1.08 percent at Tw$84.4 while Hon Hai Precision added
1.80 percent at 90.4.
Manila ended flat, nudging
down 4.76 points to 5,186.05.
BDO Unibank eased 0.59 percent to
59.25 pesos and Megaworld fell 1.37 percent to 2.16 pesos.
Wellington closed up
0.48 percent, or 18.05 points, at 3,744.96.
Fisher & Paykel Appliances
was up 7.22 percent at NZ$1.04.
Singapore closed 0.26
percent, or 7.68 points, higher, at 3,016.40.
Fraser and Neave rose 1.29
percent to Sg$8.66 and Singapore Airlines fell 0.28 percent to Sg$10.52.
Kuala Lumpur lost 6.80
points, or 0.42 percent, to end at 1,614.24.
Malayan Banking shed 0.22 percent
to 9.15 ringgit, while CIMB Group Holdings declined 1.62 percent to 7.28. Felda
Global Ventures Holdings gained 1.07 percent to 4.73 ringgit.
Bangkok fell 0.21 percent,
or 2.61 points, to 1,248.32.
Coal producer Banpu fell 2.69
percent to 434 baht, while PTT lost 0.61 percent to 327 baht.
Jakarta closed 0.13 percent
lower, or 5.30 points, at 4,155.36.
Carmaker Astra International fell
2.0 percent to 7,250 rupiah, Bank Mandiri declined 1.9 percent to 7,750 rupiah,
while coal company Indika rose 2.0 percent to 1,540 rupiah.
Mumbai rose 0.49 percent,
or 86.17 points, to 17,852.95.
India’s private housing finance
firm HDFC increased 2.49 percent to 758.1 rupees. The country’s largest private
iron-ore producer Sesa Goa fell 5.81 percent to 159.8 rupees.
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