South Korea's new government has unveiled 5.3 trillion won (US$4.7bil) in stimulus spending plans to generate jobs, support small business and bolster property prices hit by slow economic growth as well as fierce competitive pressure from the sliding yen.
The government of President Park Geun-hye, sworn in less than two months ago, said in a statement that fresh stimulus spending would help lift this year's economic growth to 2.6% or higher from around 2.3% seen otherwise.
The stimulus spending plans are part of a 17.3-trillion-won extra budget bill that the cabinet is due to send to parliament this week for approval, with 12 trillion won to make up for a budget shortfall because of lower than forecast revenue.
“I believe that, in conjunction with other policies like the property market measures announced earlier, an extra budget of this magnitude will be enough to kindle hopes for an economic recovery,” Finance Minister Hyun Oh-seok told reporters at an embargoed briefing held last week.
North Korea's threats of a nuclear war and the Japanese Prime Minister Shinzo Abe's massive monetary easing drive to end deflation both have recently emerged as fresh risks to South Korea's export-reliant economy.
But the relatively small stimulus plan 0.4% of annual gross domestic product (GDP) contrasts with Japan's massive stimulus policies and reflects a different, milder set of risks facing South Korea than those facing its bigger neighbour.
South Korea's economy has been growing for 15 successive years, inflation is a bigger risk than deflation, its currency is largely seen as undervalued and its household savings need to be raised after years of overspending.
The supplementary budget bill has been drawn up because Park's government sharply downgraded this year's economic growth projection from that of the previous government, which saw Asia's fourth largest economy growing 3% this year.
Public funds will boost it spending by two trillion won this year to help support the economy. These stimulus plans, along with property market boosting measures announced earlier, would lift this year's economic growth by 30 basis points, or 0.3%, and next year's by 40 basis points, the ministry said.
The government now plans to sell a net additional 8.8 trillion won worth of bonds this year to fund the extra budget. It will spread out the increase in debt sales to avoid a spike in supply in certain months or specific tenors.
The government now expected this year's fiscal deficit to reach 1.8% of annual GDP, compared with a 0.3% deficit seen previously and a 1.4% deficit posted last year, the ministry said. - Reuters
Showing posts with label Economics News and Policy. Show all posts
Showing posts with label Economics News and Policy. Show all posts
Wednesday, 17 April 2013
Mida eyes RM120bil investments in services sector
GEORGE TOWN: The Malaysian Investment Development Authority (Mida) aims to attract RM120bil in investments in the services sector this year.
Last year Malaysia saw RM162bil in overall investments, with the services sector accounting for RM117bil, and the manufacturing sector providing RM41bil.
Mida executive director (services development) Datuk Mathialakan Chelliah said the agency was looking to attract potential investors from Europe and the Asia Pacific region, namely Australia, Japan and Singapore in order to achieve the investment target.
“Mida is targeting to attract 14 European companies in the first half of this year and between 40 and 50 companies from the Asia Pacific region,” he added.
He was speaking to reporters after officiating at Mida’s seminar on, “Government’s Initiatives to Propel the Services Sector”, here yesterday.
Mathialakan also urged companies in the northern region to participate in the RM1bill Domestic Investment Strategic Fund (DISF) announced on July 3 last year.
The fund is to accelerate the participation of Malaysian-owned companies in the global supply chain, namely high-value added, high technology, knowledge-intensive and innovation-based industries. “Mida has approved 15 companies with grants totalling RM107.8mil since last July and is aiming for full distribution by 2015,” he said.
He said the targeted sectors under the DISF were aerospace, medical devices, pharmaceutical, machinery and equipment, advanced electronics, as well as services related to design, research and development and engineering.
On the seminar, Mathialakan said it was an avenue for exchanging views and knowledge, updating participants with the latest government policies and initiatives, as well as opportunities in the services sector.
Source: The Star
Last year Malaysia saw RM162bil in overall investments, with the services sector accounting for RM117bil, and the manufacturing sector providing RM41bil.
Mida executive director (services development) Datuk Mathialakan Chelliah said the agency was looking to attract potential investors from Europe and the Asia Pacific region, namely Australia, Japan and Singapore in order to achieve the investment target.
“Mida is targeting to attract 14 European companies in the first half of this year and between 40 and 50 companies from the Asia Pacific region,” he added.
He was speaking to reporters after officiating at Mida’s seminar on, “Government’s Initiatives to Propel the Services Sector”, here yesterday.
Mathialakan also urged companies in the northern region to participate in the RM1bill Domestic Investment Strategic Fund (DISF) announced on July 3 last year.
The fund is to accelerate the participation of Malaysian-owned companies in the global supply chain, namely high-value added, high technology, knowledge-intensive and innovation-based industries. “Mida has approved 15 companies with grants totalling RM107.8mil since last July and is aiming for full distribution by 2015,” he said.
He said the targeted sectors under the DISF were aerospace, medical devices, pharmaceutical, machinery and equipment, advanced electronics, as well as services related to design, research and development and engineering.
On the seminar, Mathialakan said it was an avenue for exchanging views and knowledge, updating participants with the latest government policies and initiatives, as well as opportunities in the services sector.
Source: The Star
Tuesday, 2 April 2013
Cyprus partially eases capital controls in new decree
02 Apr 2013
NICOSIA: Cyprus announced a partial relaxation of currency controls on Tuesday, raising the ceiling for financial transactions that do not require central bank approval, but keeping most other restrictions in place.
The island introduced curbs on money movements when banks reopened on March 28 after a two-week shutdown while the government negotiated a 10 billion euro (8.45 pounds) bailout from the International Monetary Fund and the European Union.
Cyprus's status as a financial hub has crumbled in the space of a fortnight after authorities were forced to split one bank and slap heavy losses on depositors in a second in return for the financial aid.
Its capital controls are a first for the euro zone, introduced by Cyprus as it strives to prevent a cash drain.
A Finance Ministry decree on Tuesday, the third since controls were first introduced, raised the ceiling on transactions which do not requireCentral Bank approval to 25,000 euros from 5,000 euros. It also permits the use of cheques worth up to 9,000 euros per month.
Other restrictions introduced last week, including a 300 euro per day cash withdrawal limit and a 1,000 euro limit on the amount travellers can take overseas, remain in place.
The decree - signed by Cypriot finance minister Michael Sarris and dated April 2 - is valid for two days. Cypriot officials have said it could take up to a month for restrictions to be fully removed.
Cypriot President Nicos Anastasiades, who has been in power for just over a month, says he was forced to accept onerous terms imposed by lenders to avert a default and an exit by the island from the euro zone.
On Tuesday, he appointed three retired Supreme Court judges to investigate political, civil and criminal responsibilities over the demise of the economy, one of the bloc's smallest.
Cyprus last week agreed to break up its No. 2 lender Popular Bank, kept on an ECB liquidity lifeline for months, into a "good" and a "bad" bank. The bank's "good" assets will be transferred to Bank of Cyprus, where depositors have been forced into accepting massive losses on uninsured deposits of more than 100,000 euros.
The process, known as a "bail-in" sees 37.5 percent of deposits exceeding 100,000 euros converted into equity in the bank, and an additional 22.5 percent used as a buffer which could also be converted into equity if circumstances warrant it.
In a deal brokered early on Tuesday morning, it was also agreed that a small portion of the remaining 40 percent in uninsured deposits effectively frozen under the arrangement, 10 percent, be unblocked.
The Cypriot government had unsuccessfully argued that the entire 40 percent be unblocked, a source familiar with the consultations said. - Reuters
Euro-Area Unemployment Rises to Record 12% Amid Slump
02 April 2013
The euro-area jobless rate rose to a record 12 percent in early 2013, adding to signs that the currency bloc’s recession extended into the first quarter.
The euro-area jobless rate rose to a record 12 percent in early 2013, adding to signs that the currency bloc’s recession extended into the first quarter.
Unemployment in the 17-nation euro area was 12 percent in February and the January figure was revised up to the same level from 11.9 percent estimated earlier, the European Union’sstatistics office in Luxembourg said today. That is the highest since the data series started in 1995 and matches the median estimate of 31 economists in a Bloomberg News survey.
The euro-zone economy has contracted for five straight quarters and that trend is forecast to continue in the first three months of this year, a separate Bloomberg survey shows. The European Central Bank, which holds a rate-setting meeting this week, forecasts the economy will shrink 0.5 percent in 2013. The ECB has held its key rate at 0.75 percent since July.
“An end to the euro zone’s labor-market downturn is not yet in sight,” Martin van Vliet, economist at ING Bank NV, said in a research note. “We cannot fully rule out a surprise rate cut or new unconventional support on Thursday.”
Today’s report showed that 19.1 million people were unemployed in the euro area in February, up 33,000 from the previous month.
The European Commission predicts unemployment rates of 12.2 percent this year and 12.1 percent in 2014. ECB President Mario Draghi said on March 7 that “it is of particular importance at this juncture to address the current high long-term and youth unemployment.”
Shedding Jobs
Businesses ranging from banks to carmakers and airlines are trying to cut costs by shedding jobs. Spain’s CaixaBank (CABK) last week reached an accord with its unions to cut 2,600 jobs. Danone (BN), the owner of Evian bottled-water and Activia yogurt, plans to shed 900 jobs in Europe as demand weakens.
Fiat SpA (F) Chief Executive Officer Sergio Marchionne last month spoke out against deeper budget cuts. “I understand austerity, but we can lose weight until we die,” he said.
Renault SA (RNO) CEO Carlos Ghosn urged government spending to revive the region’s anemic car sales, which he forecast won’t recover for another three years.
The strains in the region have spread to the U.K., where a measure of manufacturing contracted for a second month amid weak demand in Europe for British exports. A gauge of factory activity was 48.3 in March, the second month of contraction, Markit Economics said today.
Manufacturing Gauge
A separate release in the euro area showed a manufacturing gauge at 46.8. That compares with an initial estimate of 46.6 on March 21. The index in Germany, the region’s largest economy, was at 49.
The Purchasing Managers’ Index for China rose to 50.9 last month, an 11-month high, from 50.1 in February, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on April 1. A separate gauge from HSBC Holdings Plc and Markit Economics rose to 51.6 in March from 50.4.
Elsewhere, Australia’s central bank kept its benchmark interest rate unchanged to match a half-century low in response to a recovery in household spending as traders pushed out bets on the next reduction in borrowing costs.
Governor Glenn Stevens left the overnight cash-rate target at 3 percent, saying “recent information suggests that moderate growth in private consumption spending is occurring,” according to a Reserve Bank of Australia statement in Sydney today. “There are a number of indications that the substantial easing of monetary policy during late 2011 and 2012 is having an expansionary effect.”
Data due today in the U.S. will probably show that orders to U.S. factories rose 2.9 percent in February, according to the median estimate of 60 economists in a Bloomberg poll. Bookings dropped 2 percent in January, the most in five months.
Source: Bloomberg
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