Global

· IMF Chief Economist Says 2015 Growth Forecasts a Bit Too Gloomy. The International Monetary Fund was perhaps too pessimistic when it downgraded its forecast for 2015 global economic growth, in part because of the benefits of low oil and a weaker euro and yen, the IMF's chief economist said on Tuesday. "I think that our forecasts were probably a bit pessimistic," especially on the positive effects of low oil prices, Olivier Blanchard said of the forecasts the IMF released last month. "They should maybe be a bit more optimistic." Speaking at a New York forum hosted by The Economist newspaper, he added: "I think we are seeing some upside risk for Europe in particular because of the depreciation of the euro." In January, the IMF cut its projected growth forecasts for both 2015 and 2016 by 0.3 percentage points each, citing lingering gloom from the financial crisis and lower potential growth. (Reuters)

Malaysia

· IPI Up 7.4%. The Industrial Production Index (IPI) grew at a faster than anticipated rate of 7.4% YoY in December compared to consensus and our estimates of 4.1% and 4.5% respectively. This is following a revised growth of 4.8% YoY in November (per-revision: 4.7%). On a MoM basis, the index expanded by 4.5% (November: -2.5%). Adjusted for seasonal factors, the index in December saw only a 2.0% growth from the previous month. For the quarter ended in December (4Q14), the IPI grew at an annual rate of 5.8%, beating 3Q14’s 4.1%. For the full year, output expanded by 5.1%, higher than the 3.4% recorded in 2013. (Please refer to Economic Viewpoint for further comments)

· S&P Affirms Malaysia Currency Ratings With Stable Outlook. Standard and Poor's Rating Services has affirmed its "A- /A-2" foreign currency and 'A/A-1' local currency sovereign credit ratings on Malaysia. "The stable outlook balances Malaysia's strong external asset position and high monetary flexibility with its moderate fiscal performance," it said on Tuesday. The ratings agency lowered its oil price assumptions for 2015-2018 owing to a sharp fall in international oil prices in recent months. "We currently expect Brent oil prices to average US$55 per barrel in 2015 and US$70 per barrel in 2015- 2018," it said. S&P said the decline in oil prices has a moderate negative impact on Malaysia's fiscal position, given that government revenue has a high dependence on the energy sector. We now forecast the annual rise in general government debt to average about 2.8% of GDP in 2015-2018. "However, we believe the decline in oil prices will not derail Malaysia's long-term fiscal consolidation efforts. The country's strong external position can absorb some weakness in the oil and gas sector," it said. (The Star)

· International Reserves of Bank Negara as at 30 January 2015. The international reserves of Bank Negara Malaysia amounted to RM386.5 billion (equivalent to USD110.6 billion) as at 30 January 2015. The reserves position is sufficient to finance 7.9 months of retained imports and is 1.1 times the short-term external debt. (BNM)

Asia

· Japan Foresees Revenue Shortfall In Surplus Target Year 2021. Japan is set to miss budget-balancing pledges in coming years, government forecasts showed on Tuesday, underscoring the difficulty in reducing the country's huge debt burden, despite growth policies that have boosted tax revenues. Finance Ministry calculations, submitted to a panel of Abe's Liberal Democratic Party, forecast that even with economic growth of 3 percent a year, 2020/21 general budget spending will exceed tax and other revenues by 40.8 trillion yen, widening from a 36.9 trillion yen shortfall forecast for the coming fiscal year. (Reuters)

· China January Inflation Hits Five-Year Low. China's annual consumer inflation hit a five-year low in January while factory deflation worsened, underscoring deepening weakness in the economy and heaping pressure on policymakers to inject more stimulus to underpin growth. More policy support is expected from Beijing after the National Bureau of Statistics said on Tuesday that China's consumer price index rose 0.8% in January year-on-year, undershooting expectations of a 1.0% rise and marking the weakest reading since November 2009. The data showed producer price index dropped 4.3% in January from a year earlier. (Reuters)

· China Data Shows Liquidity Outpaces Economic Growth. China's outstanding total social financing (TSF), a broad measure of liquidity in the economy, rose to 122.86 trillion yuan ($19.7 trillion) at the end of 2014, up 14.3 percent from a year earlier, the central bank said on Tuesday. This is the first time the People's Bank of China has released data on outstanding TSF, which captures lending outside traditional loans, such as trust loans and other forms of shadow financing. Previously, it only published incremental TSF data. Policymakers have been trying to reduce the economy's reliance on credit and investment - a legacy of massive stimulus launched during the height of the global crisis in 2008-09, but they have to tread cautiously to keep economic growth on track. (Reuters)

· China Central Bank Vows To Support Growth, Avoid 'Pumping Out' Too Much Cash. China's central bank made clear on Tuesday it is ready to fight any downturn in the world's second-largest economy as it warned of strong headwinds to growth and likely anemic global demand. But at the same time the central bank acknowledged concerns about rising debt levels in China by saying said it would avoid any excessive credit stimulus that could stoke financial risks. The People's Bank of China reiterated in its fourth-quarter monetary policy report that it would keep policy prudent to ensure it is neither too tight nor too loose. "The economy still faces relatively big downward pressure amid the process of economic restructuring," the central bank said. "Looking ahead, it's hard to see any big improvement in external demand. Some industries with excess capacity are still increasing capacities at a great speed, which could increase downward pressure on prices, especially industrial prices." (Reuters)

USA

· US Job Openings Rise To 14-Year High; Job Quits, Hiring Up. The number of available jobs posted by U.S. employers rose in December to the highest level in 14 years, a sign recent strong job gains will likely continue. Employers also filled more jobs and more employees quit, two additional signs of an improving labor market. Job openings rose 3.7% to a seasonally adjusted 5 million, the Labor Department said Tuesday. That is the most since January 2001. Total hires also increased 1.9% to 5.1 million, the most in more than seven years. The number of quits rose 2.1% to 2.7 million. More quits are a sign of confidence in the economy, because people typically quit when they have another job lined up, usually at higher pay, or are optimistic that they can find a new position. (AP)

· U.S. Small Business Sentiment Retreats In January. U.S. small business optimism fell in January amid worries over the near-term outlook, but a strengthening labor market should keep the economy on solid ground early in the year. The National Federation of Independent Business said on Tuesday its Small Business Optimism Index fell 2.5 points to 97.9 last month, reversing December's gains, which had taken the index over the 100 threshold for the first time in eight years. It was held back by a plunge in expectations for the next six months as well as pessimism over sales and earnings. Businesses were also less enthusiastic about increasing inventories, undertaking capital investment projects and expansion plans. Still, they retained an upbeat view of the jobs market. (Reuters)

· US Wholesale Stockpiles Record Smallest Gain in 17 Months. U.S. wholesale businesses increased their stockpiles in December at the slowest pace in 17 months, and sales were weak for a fifth month. Wholesale stockpiles edged up a slight 0.1% in December, the smallest increase since a similar 0.1% rise in July 2013, the Commerce Department reported Tuesday. Inventories had been up 0.8% in November. The deceleration of stockpile growth in December could be a reaction to the sales slowdown, with businesses cutting back on restocking in the face of weaker demand. But economists remain optimistic that sales will rebound in 2015 and help push the economy forward. (AP)

Europe

· Greece to Push for Revision of Bailout by EU Partners. Greece's left-wing government has drawn up a 10-point plan to replace 30% of its massive bailout deal, reports say. Greece will present the plan to eurozone finance ministers at a special meeting on Wednesday. But EU officials say a new deal is unlikely this week. German Finance Minister Wolfgang Schaeuble says Greece must not renege on the bailout conditions. The EU-IMF bailout for debt-laden Greece expires on 28 February and Athens does not want it extended. The new Syriza government in Athens says the bailout conditions - sweeping public spending cuts and job losses - have impoverished Greece. The new 10-point plan includes bond swaps to reduce Greece's debt mountain and a proposal to make the primary budget surplus target for this year 1.49% of GDP instead of the 3% demanded by its creditors, a Greek finance ministry source said. (BBC)

· France's Industrial Production Rebounds, up 1.5%. French Industrial output rebounded in December as production rose across the eurozone's second largest economy, the national statistics agency Insee said Tuesday. Industrial production in France rose 1.5% in December from November. The increase topped the expectations of economists polled by The Wall Street Journal who had forecast a rise of just 0.4%.France's battered manufacturers showed signs of revival in various sectors. Mining and energy production rose by 2.8% while coke and refining jumped 3.4%. Transportation climbed 2.9% and appliances production rose 1.2%. (MarketWatch)

· U.K. Manufacturing December Gain Caps Best Year since 2010. U.K. manufacturing output unexpectedly rose in December, capping its best annual performance since 2010. Factory production increased 0.1% after a 0.8% surge in November, the Office for National Statistics said in London Tuesday. Economists in a Bloomberg News survey had forecast a 0.1% decline. For the full year, manufacturing climbed 2.7%. “The fall in oil prices looks set to provide some timely stimulus to the sector’s recovery soon,” Paul Hollingsworth, an economist at Capital Economics, said in a research note. “Nonetheless, given the strength of the pound and the weakness of demand in the euro zone, we expect any pickup in the pace of the manufacturing recovery to be fairly modest.” (Bloomberg)

· Italy's Industrial Output Rises for Second Month. Italy's industrial production gained in December, rising for the second consecutive month for the first time in more than a year, a sign that the country's struggling economy may be close to recovery, although output appears to be primarily dependent on foreign demand. Industrial output in the eurozone's thirdlargest economy rose 0.4% on the month in seasonally-adjusted terms, national statistics institute Istat said Tuesday. The rise was led by a 3.0% jump in investment goods, a 1.1% advance in durable goods and a 0.3% increase in intermediate ones, Istat said. The last time there were two monthly rises in a row was in September-October 2013. (MarketWatch)

Currencies

· Venezuela Announces New Currency System, Large Devaluation Seen. Venezuela on Tuesday launched a new foreign exchange platform that will likely devalue the bolivar heavily in efforts to bolster state coffers amid tumbling oil revenue, but risk a spike in already soaring inflation. The change amounts to an easing of 12-year-old currency controls and marks a small step toward market economics as the state-led model created by late socialist leader Hugo Chavez struggles with shortages, swelling grocery lines and recession. However, the changes by Nicolas Maduro's government do not eliminate the unwieldy three-tiered exchange structure seen by investors as the country's principal stumbling block to economic growth. (Reuters)

· Greenback bounces back from Monday’s losses. The dollar recovered Tuesday, after depreciating against most of its rivals during Monday’s session. Tumbling commodity prices, a weak reading on year-end manufacturing activity in the U.K., and “growing concerns about the Greek crisis all helped boost the greenback against its major trading partners,” wrote Boris Schlossberg, managing director of FX strategy. The dollar traded at ¥119.44, its highest level in a month, compared with ¥118.58 late Monday in New York. The euro recently traded at $1.1314, compared with $1.1315 Monday. The pound traded at $1.5252, compared with $1.5220 Monday. (Market Watch)

Commodities

· Oil Drops Sharply as IEA Expects Inventories to Rise. Crude oil prices fell for the first time in four sessions on Tuesday after the International Energy Agency (IEA) warned that ample supplies will raise global inventories before investment cuts begin to significantly dent production. Oil stockpiles in member countries of the Paris-based Organization for Economic Cooperation and Development (OECD) may approach a record 2.83 billion barrels by mid-2015, said the IEA, advisor on energy policy to a group of Western nations. U.S. March crude futures fell $2.84, or 5.37 percent, to settle at $50.02 a barrel, after dropping to $49.86. Brent March crude fell $1.91, or 3.3 percent, to settle at $56.43 a barrel, having fallen as low as $56.11. (Reuters)

· Gold dips as firmer dollar offsets euro zone concerns. Gold prices eased on Tuesday as a rise in the dollar offset the supportive impact of concerns over Greece's future in the euro zone and fears over escalating violence in Ukraine, which hurt risk appetite. A 0.2% rise in the dollar against its currency basket led gold to stall after the previous day's rise, preventing a steeper recovery from Friday's three-week low. Spot gold was down 0.4% at $1,233.52 an ounce at 3:18 p.m. EST (1618 GMT), while U.S. gold futures for April delivery settled down $9.30 an ounce at $1,232.20. Among other precious metals, silver was down 0.6% at $16.91 an ounce. Platinum was down 0.5% at $1,207.25 an ounce, while palladium was down 1.2% at $767.70 an ounce. (Reuters)