Friday, activity remained hectic in Asia at the end of the week and gloomier data were released from some key economies in the region.
Members of the Bank of Japan's policy board felt last month that the nation's economic recovery could be delayed by slumping exports stemming from the growing trouble in global financial markets. The BoJ released minutes from the September 17-18 policy board meeting. At the meeting, the board voted unanimously to keep its benchmark interest rate at 0.5%. While members expressed confidence that the economy was likely to return to a "growth path," some felt "the possibility that it might do so later than expected should be borne in mind."
The broad measure of liquidity in Japan climbed 0.6% on year in September, the Bank of Japan said in a report, standing at 1,430 trillion yen. That follows a 0.8% annual gain in August worth 1,434 trillion yen.
An advanced estimate for third-quarter GDP from the Ministry of Trade and Industry showed that Singapore's economy shrank on an annualized quarter-on-quarter basis by 6.3% in the third quarter compared with a 5.7% decline in the previous quarter. The economy contracted 0.5% year-on-year.
The economy is now expected to expand around 3% in 2008, revised down from an earlier estimate of 4%-5%. Further, the government said economic growth would possibly stay below its potential over the coming few quarters and chances of recovery in the latter half of 2009 depend considerably on how conditions would evolve in the G3 and regional economies.
Meanwhile, inflation forecast for 2008 remain unchanged at 6%-7%. The MAS underlying inflation measure, which excludes accommodation and private road transport costs, is expected to 5%-6%.
The Monetary Authority of Singapore shifted its policy stance to a zero percent appreciation of the Singapore dollar nominal effective exchange rate, after the economy contracted in the third quarter. According to the central bank, the current level of the policy band will be maintained and there would be no re- centering of the band or change to its width. The MAS had maintained its policy of gradual appreciation of Singapore dollar nominal effective exchange rate or S$NEER policy band since April 2004.
The central bank stated in its Monetary Policy Statement that it stands willing to intervene to dampen excessive volatility in the S$NEER, if necessary. The MAS would continue to closely watch developments in the external economy and their influence on the Singapore economy.
In a speech, Singapore's Prime Minister, Lee Hsien Loong said the world is caught up in a financial storm, and dark clouds fill our immediate horizon. "In Singapore, our growth is already slowing, but our financial system is sound, and our economy remains competitive".
There were a slew of reports from the Indian economy. The Reserve Bank of India reduced the Cash Reserve Ratio by 150 basis points to 7.5%, with effect from the fortnight beginning October 11 instead of the 50 basis points reduction announced on October 6, which was the first reduction in CRR in at least five years. The central bank stated reduction in the CRR would add 600 billion rupees or $12.2 billion into the financial system.
Welcoming the central bank move, India's Finance Minister Palaniappan Chidambaram said a group of experts will be constituted to make a quick assessment of the requirements of liquidity and advise the government. The minister said credit is the lifeline of trade, commerce and business and, hence, it is important that credit continues to flow to all sectors of the economy.
Later in the day, the Central Statistical Organization said in a report that India's industrial production grew 1.3% in August from the previous year. Industrial output growth for July was revised up to 7.4% from 7.1%. Economists were looking for an annual increase of 6% in August.
Elsewhere, official data showed that India's inflation based on wholesale price index fell marginally to 11.80% for the week ended September 27 against 11.99 % in the previous week. The annual rate of inflation stood at 3.36% for the corresponding week of last year.The fall in inflation is due to decline in prices of food items that includes cereals and pulses.
In other news, Malaysia's Department of Statistics said in its report that the Industrial Production Index rose 0.9% year-on-year in August, slower than the revised 2.4% gain logged in July. Economists had expected a growth rate of 1.9% for August.
The government statistics office of the Philippines said exports from the country increased 6.5% year-on-year in August. Electronics product exports shrank by 2.8% when compared to a year earlier, following a 2.6% on-year increase in July.
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