PP 7767/09/2010(025354)

Economic Highlights
Global
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MARKET DATELINE

23 March 2010

1 Greek Stalemate Deepens As The ECB Rejected Loan

Subsidy Call

2 Bank Indonesia May Keep Rate Unchanged This Year

3 Vietnam’s GDP To Grow By About 6.0% Yoy In 1Q

2010

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Today’s Highlight

Greek Stalemate Deepens As The ECB Rejected Loan Subsidy Call

Disagreement over possible aid for Greece deepened as the European Central Bank (ECB) rejected offering low-interest
loans for which the Greek government has pressed for. German Chancellor Angela Merkel, on the other hand, pushed
for sanctions against nations that breach deficit limits and made the strongest suggestion that the International Monetary
Fund should handle a bailout if Greece is threatened with insolvency. The ECB and French President Nicolas Sarkozy,
however, opposed the move, as using the IMF would be an admission that Europe has no ability to deal with its problems.
Conflicting signals from European officials before the summit of European Union (EU) leaders on 25-26 March triggered
three days of declines in Greek debt that pushed the yield on 10-year bonds to 6.44% on 22 March, the highest since
Feb 25. The surge in financing costs and the reluctance of EU leaders to help may force Greece to turn to the International
Monetary Fund. Meanwhile, Greece has to refinance more than €22bn (US$29.8bn) in maturing debt by end-May. Since
the beginning of the year, Greece has raised about €5bn with the recent bond issue and they now have €7bn in cash.

Asian Economies

Bank Indonesia May Keep Rate Unchanged This Year

◆ Bank Indonesia’s Deputy Governor indicated that Indonesia may keep its benchmark interest rate unchanged
this year, as inflationary pressure remains benign. “If the inflation rate hovers at around 5-6%, there is no
urgency for the central bank to raise the interest rate”, according to the Deputy Governor. Indonesia’s inflation
picked up to 3.8% yoy in February, from +3.7% in January and a low of +2.4% in November 2009. The central
bank expects inflation of between 4-6% in 2010, compared with 2.78% in 2009. Bank Indonesia slashed the
benchmark rate by 3 percentage points to 6.5% from December 2008 to August 2009, the lowest level since its
introduction in July 2005. The key policy rate has been maintained at this level since then.

Vietnam’s GDP To Grow By About 6.0% Yoy In 1Q 2010

◆ Vietnam’s economy will expand by about 6% yoy in the 1Q this year, predicted the Vietnamese central bank.
The government is targeting a 6.5% economic growth in 2010, which is largely in line with our expectation. The

Peck Boon Soon

(603) 9280 2163
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 23 March 2010

country’s economy began to turn around in 2Q 2009, fueled by the government’s stimulus spending and a recovery
in exports. The economy continued its upward trend and it expanded at a faster pace of 6.9% yoy in the 4Q,
compared with +5.8% in the 3Q, bringing the full-year growth to 5.3% in 2009. Meanwhile, Vietnam’s government
is likely to adopt pro-growth policy measures and will unlikely tighten its policy too much in the run-
up to the January 2011 national congress of the ruling Communist Party. The move will add pressure
to inflation, which accelerated to 8.5% yoy in February, from a low of +2.0% in August 2009.

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