Malaysia

Exports In August Rose By 1.7% YoY following a 0.6% gain in July, exceeding market expectations of a 1.4% decline. This is on account of a stronger than expected rebound following the shorter working month previously, coupled with robust demand for E&E goods. Imports swelled by 7.6% YoY versus market polls of 0.4% and after falling by 0.7% in the previous month. As a result of stronger exports, trade surplus slightly widened to RM3.8b from RM3.6b. Total trade in August increased by 4.4%. (Please refer to Economic Viewpoint for further comments)

IMF: Malaysia’s Growth To Remain Strong. The International Monetary Fund is upbeat about Malaysia’s growth outlook, projecting a robust 5.9 and 5.2% growth for 2014 and next year, respectively. This year’s projection comes above the projected 4.7% for Asean 5, which includes Indonesia, Thailand, the Philippines and Vietnam. Malaysia and the Philippines are forecast to remain strong in 2014–2015, helped by favourable external demand and broadly accommodative policies and financial conditions. Inflation will also pick up in a few economies such as Malaysia, in which a subsidy or tax reform is expected to be implemented or in which output is estimated to be above potential. It has projected the Consumer Price Index to accelerate to 4.1% in 2015 from 2.9% this year. It expects a gradual normalisation in the monetary policy to address this risk. (NST)

Global

IMF Cuts Global Outlook As Risk Of ‘Frothy’ Stocks Raised. The International Monetary Fund cut its outlook for global growth in 2015 and warned about the risks of rising geopolitical tensions and a financial-market correction as stocks reach “frothy” levels. The world economy will grow 3.8% next year, compared with a July forecast for 4%, after a 3.3% expansion this year, the Washington-based IMF said. U.S. growth is helping lead a worldwide acceleration that’s weaker than the fund predicted 2 1/2 months ago as the outlooks for the euro area, Brazil, Russia and Japan deteriorate. The euro area will grow 1.3% next year, slower than the 1.5% pace predicted in July, after a 0.8% gain this year, according to the IMF. The IMF said Japan’s economy will expand 0.8% next year, compared with a 1.1% advance predicted in July. Among emerging markets, Brazil suffered the biggest cut to its growth outlook. The country’s economy is expected to grow 0.3% in 2014, down from the IMF forecast of 1.3% in July. The IMF now sees Brazil growing 1.4% next year, compared with 2% in July. China is forecast to expand 7.4% this year and 7.1% next year, little changed from the fund’s forecasts in July. Bloomberg)

Global Sales Of Semicon Surge To US$28.4b In August. Global sales of semiconductors surged to US$28.4bil in August 2014, up 9.4% on-year and gained 1.3% from July as the industry continues to see broad and sustained growth. The USbased Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing and design, said the August sales were up 9.4% from the US$26bil a year ago while they were up 1.3% from the US$28.1bil in July. Year-to-date sales through August were up 10.1% from the previous corresponding period in 2013. Regionally, on-year sales increased in Asia Pacific (12.3%), Europe (10.9%), and the Americas (7%), but decreased slightly in Japan (-1.7%). (The Star)

Asia

IMF Urges Japan To Push Ahead With Second Sales Tax Hike. Japan must raise its sales tax again next year as scheduled, the International Monetary Fund said, even as it sharply cut its economic forecasts for the country and warned that the higher levy will take a toll on domestic demand. The Bank of Japan (BOJ) should ease monetary policy further if inflation stalls or economic growth disappoints, though such action should be accompanied by structural reforms and efforts to boost Japan's long-term growth potential, the IMF said in its World Economic Outlook report on Tuesday. (Reuters)

BOJ's Kuroda Pledges Prolonged Stimulus But Signals No Immediate Action. Bank of Japan Governor Haruhiko Kuroda stressed his resolve to maintain massive stimulus for a prolonged period but shrugged off the need to expand it soon, remaining upbeat on the outlook despite signs the economy may be in a mild recession. Kuroda also stuck to his view that a weak yen is positive for Japan's economy. But he slightly modified his tone by nodding to concerns from the business community that further yen declines will hurt small firms and households by boosting import costs. (Reuters)

China Cuts Thousands Of ‘Phantom’ Workers From State Payroll. China’s government removed tens of thousands of “phantom employees” from state payrolls amid a campaign by President Xi Jinping to crack down on corruption and eliminate waste. A total of 162,629 employees who had continued to draw salaries after leaving their posts were cleared out of central and provincial governments, state-controlled financial companies and universities as of Sept. 25, the official People’s Daily reported yesterday. The country also disposed of 114,418 government vehicles, it said in a separate report. (Bloomberg)

Indonesia's Central Bank Sits Tight, Keeps Key Interest Rate On Hold. Indonesia's central bank on Tuesday held its key interest rate steady, as widely expected, at its last policy meeting before Joko Widodo becomes president on Oct. 20. Bank Indonesia (BI) said the current benchmark rate BIPG - which has held since November 2013 - is "adequate" for keeping inflation within the target and for the central bank's effort to rein in the current account deficit, which topped 4% of gross domestic product in the second quarter. All 16 analysts in a Reuters poll had projected no change to the benchmark rate. (Reuters)

USA

Job Openings Signal Hiring In U.S. To Be Sustained. The number of jobs waiting to be filled in the U.S. climbed in August to the highest level in 13 years as employers gained confidence to expand their workforces. Openings rose to 4.84 million in August, the most since January 2001, from a revised 4.61 million the prior month, according to Labor Department data issued today in Washington. The report also showed hiring and firing cooled, while fewer people quit their jobs. The median forecast in a Bloomberg survey of economists called for 4.7 million openings after a previously reported 4.67 million in July. The number of jobs available climbed by 910,000 in the year ended August, the biggest 12-month gain since records began in December 2000. Today’s Job Openings and Labor Turnover Survey, known as JOLTS, showed employers hired 4.64 million people in August, down from 4.93 million the month before. (Bloomberg)

U.S. Consumer Credit Posts Smallest Gain Since November. U.S. consumer credit increased by the smallest amount since November and growth for the prior month was revised lower, giving a cautious signal about the pace of economic expansion. Total consumer credit rose $13.5b to $3.25 trillion in August, the Federal Reserve said on Tuesday. The figure for July was revised down to show a gain of $21.6b. Economists polled by Reuters had expected consumer credit to increase $20b in August. (Reuters)

Europe

German Industrial Output Dives 4% In August. Germany's economic ministry said industrial production shrank 4% in August adding to the growing picture of a struggling economy. The fall was the biggest since early 2009 and was far sharper than the 1.5% drop expected. Weak demand for goods in both the eurozone and China, and disruption to trade with important trading partner Russia, are holding back orders. The fall in production came in sharp contrast to the rise of 1.6% recorded in July, although that was revised down from the initial estimate of 1.9%. (BBC)

Currencies

Dollar Falls To Three-Week Low Against Yen. The dollar continued to dip lower against the yen Tuesday afternoon, reaching its lowest point in more than three weeks, in a move described as a correction following a strong run up. The dollar was at 107.85 yen from ¥108.78 late Monday in New York. Meanwhile, the euro fell against the dollar, reversing course after two days of gains. The euro traded at $1.2679 Tuesday, compared to $1.2653 Monday evening. Against the pound, the euro traded at £0.7873, compared to £0.7869 Monday. The ICE U.S. Dollar Index , a measure of the greenback’s strength against six rival currencies, fell to 85.7010 Tuesday, compared to 85.9280 Monday. (Reuters)

Commodities

Oil Deepens Slump On Economy, Demand Data; Arbitrage Hits Wti. World oil prices resumed a months-long rout on Tuesday to close at their lowest in more than two years, pressured by reduced economic and demand growth forecasts. Brent November crude fell by 68 cents to settle at $92.11 a barrel. Brent fell to a contract low of $91.25 on Monday before recovering in late trading. U.S. November crude fell by $1.49 to $88.85, then slid further in late trade. (Reuters)

Gold Rises After IMF Cuts Forecast, German Data Lags. Gold rose for a second session on Tuesday as its safe-haven appeal increased after the International Monetary Fund cut its global economic growth forecasts and weak German industrial data stoked further concerns. Spot gold was up 0.4% at $1,211.20 an ounce by 3:18 p.m. EDT (1918 GMT). It jumped 1.3% on Monday, its biggest one-day gain in two months. Palladium rose 2.9% to $782.60 an ounce, its biggest one-day gain in over six months, helped by short covering after the metal fell on Monday to its lowest since Feb. 27. Platinum was up 1.3% at $1,255 an ounce. Silver dropped 0.8% to $17.16 an ounce. (Reuters)