PP 7767/09/2010(025354)

Economic Highlights
Global
•MARKET DATELINE

22 April 2010

1 IMF Raised 2010 Global Economic Growth Forecast

And Sees Public Debt Risk

2 Japan Is Said To Consider Targeting A Budget

Surplus By 2020

3 Thailand Kept Its Key Policy Rate Unchanged

Tracking The World Economy...

Today’s Highlight

IMF Raised 2010 Global Economic Growth Forecast And Sees Public Debt Risk

The International Monetary Fund (IMF) raised its global real GDP forecast to 4.2% in 2010, the fastest pace since 2007
and from +3.9% projected in January (-0.6% in 2009). It, however, maintained 2011’s real GDP growth forecast of
+4.3% and cautioned that a failure of nations to contain soaring public debt might have severe consequences for the
world economy. The IMF warned yesterday that rising government debt has replaced financial industry stress as the
biggest threat to the global economy. The spread of sovereign risk to banks and through the real economy threatens
to undermine global financial stability and economic recovery, if left unchecked.

Stronger global economic growth is underpinned by an upward revision in advanced economies’ growth to +2.3% in 2010,
from +2.1% forecast in January. US real GDP growth is projected to expand by 3.1% in 2010 (+2.7% projected
previously), before slowing to +2.6% in 2011. Similarly, the outlook for Japan’s economy this year was raised to +1.9%
(up from +1.7% predicted in January) and growth will likely be slightly stronger at 2.0% in 2011. In the same vein,
the Canadian economy was forecast to grow by 3.1% in 2010 (+2.6% projected previously) and growth will likely inch
up to +3.2% in 2011. Projection for the Euroland’s economy, however, was maintained at +1.0% this year, unchanged
from the January projection. Nonetheless, the region’s growth will likely strengthen to +1.5% in 2011. The IMF forecast
UK economy to grow by 1.3% in 2010 and 2.5% in 2011.

Emerging and developing economies including China, Brazil and Russia will grow by 6.3% in 2010, a 0.3 percentage point
higher than the previous forecast. These economies will likely expand at a faster pace of +6.5% next year. China’s
growth is forecast to accelerate to 10% in 2010, unchanged from the January projection. Growth forecast for India and
Asean economies was revised up to 8.8% and 5.4% respectively in 2010, from the corresponding rates of +7.7% and
+4.7% projected previously.

As a whole, the IMF said that emerging and developing economies that are off to a strong start are likely to remain in
the lead, as growth in developed nations is held back by lasting damages to financial sectors and household balance
sheets.

Peck Boon Soon

Please read important disclosures at the end of this report. (603) 9280 2163
bspeck@rhb.com.my

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 22 April 2010

Asian Economies

Japan Is Said To Consider Targeting A Budget Surplus By 2020

◆ Japan is said to consider targeting a budget surplus by 2020 after calls by international credit-rating
agencies for a credible plan to rein in the country’s public debt, according to a government official familiar
with the matter. A second option is to aim to reduce the budget deficit to around 6% of GDP by 2015 and further
to 3% of GDP by 2020, from a deficit of 9.4% in 2010. The Japanese government in December set a June deadline
for publishing a long-term fiscal plan. The move is aimed at preventing a collapse in confidence in Japan’s
government debt in the aftermath of fiscal sustainability concerns sparked by Greece. Japan’s public debt will rise
to around 200% of GDP soon, the highest in the 30-member Organisation for Economic Cooperation and Development
(OECD), as tax revenue has been affected by deflation and four recessions in the past two decades. Also, Japan
faces a diminishing pool of domestic savings to support the nation’s debt funding. Japan’s debt has come under more
scrutiny since Standard & Poor’s cut its outlook on the nation’s AA sovereign rating in January.

Thailand Kept Its Key Policy Rate Unchanged

◆ The Bank of Thailand left its key policy rate unchanged at a 5-year low of 1.25% for an eighth meeting,
as political unrest is hurting confidence, tourism, private consumption and investmen, and threatens to slow the
country’s economic recovery. Heightened political risks also prompted Fitch Ratings to cut Thailand’s local-currency
credit rating outlook to negative from stable this week. Furthermore, inflation is still manageable and it eased to
3.4% yoy in March, the second consecutive month of easing and from +3.7% in February. The Bank of Thailand
said that they would continue to monitor the situation and interest rate normalisation is the central bank’s next
move.

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