Global

· IMF Downgrades Global Growth Forecast. The International Monetary Fund (IMF) has lowered its forecast for global economic growth for this year and next. The IMF now expects growth of 3.5% this year, compared with the previous estimate of 3.8% which it made in October. The growth forecast for 2016 has also been cut, to 3.7%. The downgrade to the forecasts comes despite one major boost for the global economy - the sharp fall in oil prices, which is positive for most countries. The IMF expects that to be more than offset by negative factors, notably weaker investment. (BBC)

· U.S. Is Bright Spot For Davos CEOs In Troubled Global Economy. Chief executives are more worried than a year ago about the global economic outlook, as deflation stalks Europe and commodity prices wilt, but the United States stands out as a bright spot. That is the verdict of a worldwide survey of more than 1,300 CEOs, released on the eve of the Jan. 21-24 World Economic Forum annual meeting in Davos, that also found business leaders still moderately confident in their own firms' ability to grow revenues. Just 37% of CEOs think global economic growth will improve in the year ahead, down from 44% last year, and 17% think growth will decline, more than twice as many as in 2014. But when it comes to their own businesses, 39% of CEOs said they were "very confident" of growing revenues in the next 12 months, an unchanged reading from a year earlier and slightly up from 36% in 2013. (Reuters)

Malaysia

· PM: New Fiscal Deficit For 2015 At 3.2%. The Prime Minister said the new fiscal deficit for 2015 for the revised Budget is at 3.2%, which was slightly higher than the 3% set in the Budget 2015 proposals announced in October last year. In his special address on the current developments and government’s financial position, Datuk Seri Najib Tun Razak announced specific and proactive measures to align the country’s economy with the recent global economic developments. “We are not in crisis. Indeed, we are taking preemptive measures following the changes in the external global economic landscape which is beyond our control,” he said. Najib said the government also revised the economic forecast for 2015 to between 4.5% and 5.5%. This was lower than the target of 5% to 6%. (The Star) Please refer to Economic Viewpoint: Budget Revision for comments.

· Interest Rate At 3.25pc Is Still Accommodative To The Economy: Zeti. The central bank said the current interest level at 3.25% is still accommodative. "We'll review the risks to growth and inflation at this point," Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said during an analyst briefing here. The government announced a downward revision in growth forecast to 4.5 - 5.5% for 2015. "The midpoint at 5% in this challenging conditions is still a positive." She said credit growth will also benefit households and businesses especially the small and medium enterprises. (NST)

· No Exodus Of Funds From Malaysia: Zeti. There will not be any exodus of funds from Malaysia, says Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz. Despite the ringgit’s fall, Malaysia’s current account surplus was healthy while foreign direct investments continued to flow into the economy. Zeti said this phenomenon included fluctuations in the foreign exchange market which was not unique to Malaysia. Developed financial markets such as Malaysia would be subject to volatile capital flows and Malaysia had experienced all this before, she said. (NST)

· Malaysia’s Revised Budget Shows Determination To Cut Fiscal Deficit: S&P. Standard & Poor’s Ratings Services views Malaysia’s revised Budget as an indication of the government’s continued focus on fiscal consolidation. Its associate director of sovereign ratings, Phua Yee Farn said the sharp decline in oil prices since late 2014 meant that government is unlikely to achieve its initial projected budget deficit of 3% GDP. “The government expects to achieve the revised projection of 3.2% of GDP largely through spending cuts,” Phua said. "However, a prolonged slump in crude oil price could derail fiscal consolidation efforts. (NST)

Asia Pacific

· China's Growth Slows To Weakest In 24 Years. China's economic growth slowed to its weakest in 24 years, expanding 7.4% last year from 7.7% in 2013. Growth in the world's second largest economy missed its official annual growth target of 7.5% for the first time in 15 years. But, the annual growth figures still came in higher than market expectations of about 7.2%. China's economy expanded by 7.3% in the October-to-December period from a year earlier. (BBC)

· China Raises Wages For Government Workers At Least 31%. China has raised the wages of government workers by at least 31%, according to a document seen by Reuters on Tuesday, as part of efforts to combat corruption and lift the spending power of millions as the country seeks to increase consumption. The basic salaries of some civil servants would be almost tripled, according to the document distributed to China's cabinet and dated Jan. 12. It said the increases would be effective from Oct. 1, 2014. The change is part of a broad effort by Beijing to reform the compensation levels of government workers to improve efficiency, reduce graft and hold officials more accountable for their own performance. (Reuters)

· IMF Cuts Growth Projection For Asia’s Emerging, Developing Economies. The International Monetary Fund has cut its growth projections for emerging and developing Asian economies, including Malaysia. In its latest World Economic Outlook, it said the Asean 5 – Indonesia, Malaysia, the Philippines, Thailand and Vietnam -- will likely grow by 4.5% in 2014 ( a 0.2% cut from its previous outlook) and 5.2% in 2015 ( a 0.1% cut from previous outlook) . These five countries are projected to grow by 5.3% in 2016. In its latest outlook versus the previous one in October, the Fund said the growth is projected to remain broadly stable at 4.3% in 2015 and to increase to 4.7% in 2016 — a weaker pace than the October forecast. “Emerging markets will face two challenges – high interest rates from the US and tighter financial conditions and also internal challenges which pushes countries like China to do reforms.” (NST)

· New Zealand Consumer Prices Fall For First Time Since 2012. New Zealand consumer prices fell for the first time in two years as fuel slumped, giving Reserve Bank Governor Graeme Wheeler scope to keep borrowing costs on hold for an extended period. The consumers’ price index fell 0.2% in the fourth quarter from the previous three months, the first decline since the final quarter of 2012, Statistics New Zealand said in Wellington today. The median forecast of 15 economists surveyed by Bloomberg was for no change. From a year ago, prices rose 0.8%. (Bloomberg)

USA

· U.S. Homebuilder Sentiment Edges Lower In January: NAHB. U.S. homebuilder sentiment fell modestly in January, but builder sentiment remained stronger than the early months of 2014, the National Association of Home Builders said on Tuesday. The NAHB/Wells Fargo Housing Market index fell to 57 from a revised 58 in December, the group said in a statement. Economists polled by Reuters had predicted the index would show a reading of 58. (Reuters)

Europe

· Demand For Home Loans Jumps In Euro Zone. One in four banks across the euro zone saw a rise in home loan demand toward the end of last year and almost as many expect the trend to continue, a survey by the European Central Bank showed on Tuesday. As consumers bet on rising house prices and banks loosen lending standards, demand for home loans has shot up, the study found, a trend that will fuel concerns in Germany and elsewhere that cheap money could be blowing up a property bubble. (Reuters)

· German Investor Confidence Rises Again In January. German investor confidence rose for the third month in a row in January, hitting its highest level since February 2014, a survey suggests. The closely followed poll by German think tank ZEW rose to 48.4 points this month, up from 39.4 in December. Falling oil prices and a weak euro boosted sentiment, ZEW said. The better-than-expected rise comes ahead of Thursday's European Central Bank meeting, where it is due to take action to boost the eurozone economy. (BBC)

Currencies

· Dollar Rises Against Rivals On Central-Bank Expectations. Monetary-policy expectations were the dominant drivers of the foreign-exchange market Tuesday, as traders sold euros, yen and Canadian dollars and bought the greenback ahead of central-bank meetings in Canada, Japan and Europe later in the week. Currency traders were unfazed by stronger-than expected growth in gross domestic product out of China and resurgent Japanese stocks. The dollar traded at ¥118.7710 in recent trade, its highest level against the yen in a week, down from ¥117.81 Monday afternoon. The U.S. dollar traded as high as 1.2115 Canadian dollars, compared with 1.20 Canadian Monday. The euro traded at $1.1554, compared with $1.16 Monday afternoon. It hit an 11-year low around $1.1480 Monday. The Swiss franc traded slightly higher against both of its major rivals. It was at 1.0107 francs per euro, compared with 1.02 Monday afternoon. One dollar bought 0.8775 francs, compared with 0.88 francs Monday. The ICE U.S. Dollar Index a measure of the dollar’s strength against a tradeweighted basket of six rival currencies was up 0.52% on the day to 93.0000. (Marketwatch)

Commodities

· Oil Falls Again As IMF Cuts Forecast; Iran Hints At $25 Oil. Oil fell as much as 5% on Tuesday after the International Monetary Fund cut its 2015 global economic forecast and key producer Iran hinted prices could drop to $25 a barrel without supportive OPEC action. Benchmark Brent crude closed down 85 cents, or 1.8%, at $47.99 a barrel. It earlier touched a session low of $47.78. U.S. crude settled down $2.30, or 4.7%, at $46.39 a barrel, after tumbling to an intraday bottom of $45.89. Traders said activity in U.S. crude was heightened somewhat by the expiry of the February futures contract as the front-month. (Reuters)

· Gold Hits 5 Month High On ECB Stimulus Worries. Gold rose more than 1% on Tuesday to a five-month high as uncertainty over the extent of a stimulus program the European Central Bank is expected to unveil on Thursday drove investors into assets seen as lower risk. Buying accelerated on a break of the previous day's high, dealers said, as stops were triggered, ultimately lifting the metal to a session high of $1,296.85 an ounce. Spot gold was up 1.3% at $1,292.54 at 2:58 p.m. EST (1958 GMT), while U.S. gold futures for February delivery settled up 1.4% an ounce at $1,296.20. Among other precious metals, silver was up 1.5% at $17.91 an ounce, platinum was up 1.6% at $1,278.24 an ounce and palladium was up 2.5% at $772.50 an ounce. (Reuters)