Malaysia 

· 4Q14 GDP surprisingly up by 5.8%. Malaysia’s GDP growth for the final quarter of 2014 exceeded expectations, successfully managing a 5.8% YoY expansion, ahead of our estimate of 5.1% as well as the consensus’ 5.8%. It also  outpaced the 5.6% growth recorded in 3Q14. As expected, the predominant driver of growth came from domestic demand,  mostly in the form of private investment and consumption. This phenomenon is typical to the run-up of the Goods and  Services Tax (GST) as consumers tend to increase spending to avoid higher cost after April 1. Compared to the previous  quarter, GDP rose by 3.2% (3Q14: 3.0%), whilst the seasonally adjusted figure saw a 2.0% increase, over double of 0.9%  registered in the 3Q14. For the whole of 2014, Malaysia’s GDP registered its strongest growth in four years at 6.0%, a big  jump from 4.7% in 2013 and just ahead of our own 5.8% estimate and poll’s 5.9%. (Please refer to Economic Viewpoint for  further comments) 

· 4Q14 Current account surplus surprisingly narrowed to RM6.1b.The current account surplus narrowed to RM6.1b in  the 4Q14, from RM7.6 in the 3Q14, making it the third consecutive quarter of narrowing surplus. This led to its ratio to  nominal GDP to lessen further to 2.2%, from 2.8% in the 3Q14 and considerable lesser than the same quarter 2013, which  posted a 5.6% of GDP. For the whole of 2014 however, the current account surplus widened to RM49.5b or 4.6% of GDP  from RM39.9b or 4.0% of GDP in 2013. (Please refer to Economic Viewpoint for further comments) 

· Oil To Account For 22% Of Govt Revenue This Year. The oil and gas (O&G) sector is projected to account for 22% of  Government revenue this year, due to the diversification of the economy over the last few years that has resulted in lesser  dependence on the mining sector and lower oil prices. Oil revenue was as much as 40% years ago and had fallen to 30%  of Government income in 2014. “The diversification is very important and it needs to be taken into account. This is the  wrong perception, and maybe part of it caused the ringgit to depreciate because of wrong assessments of the significance  of O&G in our economic structure, our employment and our exports,” she told the media after announcing the fourth-quarter  gross domestic product (GDP) numbers yesterday. The decline in oil prices by more than 50% since its peak last June has  squeezed Government revenue and prompted a review of spending plans under Budget 2015. (The Star)

 Asia Pacific 

· China Eases Rules on Foreign Banks' Yuan Trades. China has made it easier for foreign banks without full yuan  business licenses to buy or sell foreign currencies against the yuan, its foreign exchange regulator said on Thursday. Under  the rules issued by the State Administration of Foreign Exchange (SAFE), foreign banks that have not yet started a yuan  business in China will be allowed to open special yuan accounts for currency dealings with their clients. Chinese firms typically sell their foreign currency income from exports to banks and buy them back for importing. Banks settle their currency positions with the central bank. Foreign banks will be allowed to withdraw cash from their special yuan accounts.  But each bank's outstanding funds in its yuan account cannot exceed 20% of its registered capital or its operational capital,  the SAFE said. (Reuters) 

· India Inflation Quickens, Industrial Output Growth Slows. India's consumer inflation rose slightly last month while  industrial production growth slowed in December, according to new figures released on Thursday, days after the country  sharply raised its annual growth forecast. India on Monday predicted its economy would grow by 7.4% this financial year up to March, a marked improvement on earlier estimates issued under a revised formula for calculating gross domestic  product. Analysts however said on Thursday's figures indicated Indian industry was struggling to regain momentum after a long economic slowdown. Production by India's factories, mines and utilities grew by 1.7% in December, just less than half the 3.8% growth recorded in November. (AFP) 

· Australian Unemployment in Surprise Jump to 6.4%. Australia's unemployment rate surged to 6.4 per cent in January,  making its surprise fall to 6.1 per cent in December short-lived. The Australian Bureau of Statistics said on Thursday that  the number of people employed fell by 12,200 to 11.668 million in January, against market expectations of a fall of 5,000.  This took the official unemployment rate to 6.4 per cent from 6.1 per cent in December, while the participation rate  remained steady at 64.8 per cent of the population. The figures were well below expectations, and the Australian dollar  plunged more than half a US cent, to US76.63 cents. (Sydney Morning Herald) 

USA 

· Jobless Claims Rise More Than Expected in Latest Week. The number of Americans filing new claims for  unemployment rose more than expected last week, but the underlying trend remained consistent with a strengthening labor  market. Initial claims for state unemployment benefits increased 25,000 to a seasonally adjusted 304,000 for the week  ended Feb. 7, the Labor Department said on Thursday. The prior week's data was revised to show 1,000 more applications  received than previously reported. Economists polled by Reuters had forecast claims rising to 285,000 last week. The fourweek  moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility,  fell 3,250 to 289,750 last week. (Reuters) 

· U.S. Retail Sales Data Point to Slower Economic Growth. U.S. consumer spending barely rose in January as  households cut back on purchases of a range of goods, suggesting the economy started the first quarter on a softer note.  Sluggish spending came despite cheap gasoline and a buoyant labor market, leaving economists to speculate that  consumers were using the extra income to pay down debt and boost savings. "There is a risk of a temporary soft patch for  the economy as it is somewhat surprising the consumer has stopped spending their savings from gasoline prices," said  Chris Rupkey, chief financial economist at MUFG Union Bank in New York. The Commerce Department said on Thursday  retail sales excluding automobiles, gasoline, building materials and food services edged up 0.1% last month. That followed  a 0.3% drop in December and was below Wall Street's expectations for a 0.4% increase. The so-called core retail sales  correspond most closely with the consumer spending component of gross domestic product. Overall retail sales slipped  0.8% in January, declining for a second straight month as falling gasoline prices undercut sales at service stations.  (Reuters) 

Europe 

· Greece, Eurozone Fail to Agree On Debt. Greece's new leftist government and its international creditors failed to agree  on a way forward on the country's unpopular bailout and will try again on Monday, with time running out for a financing deal.  In seven hours of crisis talks in Brussels that ended after midnight, eurozone finance ministers were unable to agree even a  joint statement on the next procedural steps. Both sides played down the setback, insisting there had been no rupture. But  Greek stock prices, which whipped higher after hours in New York on talk of an accord, sagged with disappointment when it  emerged that Greece's laconic new Finance Minister Yanis Varoufakis had walked away from a draft deal to extend current  credit terms after conferring with fellow Greek officials. "We had an intense discussion, constructive, covering a lot of  ground, also making progress, but not enough progress yet to come to joint conclusions," Jeroen Dijsselbloem, the  chairman of Eurogroup finance ministers, told a midnight news conference. (Reuters) 

· ECB Extends Emergency Funding for Greek Banks by About 5 Billion Euros. The European Central Bank has further  raised the cap on emergency funding for Greek banks by about 5 billion euros to 65 billion euros, Greek central bank and  government officials told Reuters on Thursday. The emergency liquidity assistance facility - on which Greek banks rely for  funding after direct access to ECB funding was cut off - was extended for a week until next Wednesday, Feb. 18, the central  bank official said. "We got the amount we requested," that official said. (Reuters) 

· Bank Of England Eyes Risk Of Falling Prices, Ready To Cut Rates If Needed. The Bank of England sees little need to  raise interest rates this year, and stands ready to cut them if inflation dips more deeply into negative territory than expected,  a new set of forecasts showed on Thursday. BoE Govenor Mark Carney said he expected inflation to fall below zero in the  coming months due to tumbling oil prices that are nearly at a six-year low, but stressed that this by itself did not mean that  the economy had entered deflation. "The UK is not experiencing 'deflation'," Carney said in a letter to finance minister  George Osborne explaining the difference between inflation - which stood at 0.5% in its most recent reading - and the  Bank's 2% target. (Reuters) 

· Sweden Adopts Negative Rates, Bond Purchases To Fight Deflation Threat. Sweden shocked markets on Thursday by  introducing negative interest rates, launching bond purchases and saying it could take further steps to battle falling prices.  The central bank joins a list of those including the European Central Bank, the U.S. Federal Reserve and the Bank of  England, to resort to unconventional monetary policy steps to confront an unusual combination of economic problems.  Unlike many other European countries, Sweden's economy is growing at a solid pace but even with that expansion, inflation  is still way under the central bank's 2% target and some economists say Sweden risks a deflationary spiral. The Riksbank  said it cut its key repo rate to -0.1% from zero where it had been since October, a surprise after a majority of analysts in a  Reuters poll had forecast no change. It also said it would buy bonds worth 10 billion Swedish crowns. (Reuters) 

Currencies 

· Dollar Tumbles on Weak U.S. Data; Euro Hits One-Week High. The dollar dropped across the board on Thursday after  weaker-than-expected U.S. economic data, although its outlook remained upbeat as many investors continued to price in  an interest rate hike by the Federal Reserve sometime this year. The dollar index, a gauge of its value against six major  currencies, fell after two straight days of gains. For the month of February, the dollar index was down 0.5%, on track for its  first monthly loss in eight months. In late New York trading, the dollar index was down 0.9% at 94.153 DXY posting its  largest one-day loss in more than a week. The dollar fell 1.3% against the yen to 118.88 JPY. The euro, meanwhile, rose to  one-week highs versus the dollar and was last up 0.6% at $1.1399 EUR. 

Commodities 

· Oil Jumps on Weak Dollar, Industry Cuts in Jobs, Spending. Oil prices rallied sharply on Thursday after two days of  losses as news of deeper industry spending cuts and a sinking U.S. dollar revived buying. U.S. crude closed above $51 a  barrel, shaking off a morning dip tied to data showing a potentially record rise in stockpiles at the Cushing, Oklahoma,  delivery hub. Its discount versus Brent crude expanded to around $6.84 a barrel intraday, the widest in five months, as  U.S. oil tanks swelled. (Reuters) 

· Gold Edges Up From 5-Week Low on Weaker Dollar, Greece. Gold was up a shade on Thursday, lifting from a five-week  low hit in earlier trade, helped by a weaker dollar, Sweden's surprise decision to launch monetary stimulus and heightened  uncertainty over Greece's debt. Spot gold fell to its lowest since Jan. 9 at $1,216.45 an ounce before recovering to trade up  0.2% at $1,221.56 by 1934 GMT. Silver rose 0.3% to $16.81 an ounce. Platinum gained 0.4% at $1,195.25 an ounce,  while palladium was up 1.1% at $773.80 an ounce. (Reuters)