Economy contracts in Q2
Singapore’s trade-driven economy contracted by 1.1 percent in the second quarter from the previous three-month period as debt woes dampened European demand, a government estimate showed yesterday. The unexpected contraction, down from 9.4 percent growth in the preceding quarter, was largely due to an output drop in the biomedical manufacturing industry, the trade ministry said in a statement. Compared to a year ago, GDP grew 1.9 percent, still within the government forecast of 1 percent to 3 percent expansion for the whole year and better than the first-quarter growth rate of 1.4 percent on the year. The economy is seen as a bellwether for Asia due to its sensitivity to demand from key markets like Europe and the US.
Senate investigates HSBC
HSBC Holdings PLC’s North American head Irene Dorner and global legal chief Stuart Levey are expected to answer Senate investigators’ questions about the firm’s failure to protect against money laundering, according to two people familiar with the matter. The Senate’s Permanent Subcommittee on Investigations will question Dorner, president and chief executive of HSBC North America Holdings Inc, and Levey, a former Treasury undersecretary hired by the London-based bank in January, at a hearing on Tuesday next week, according to the people, who asked not to be identified. The panel, working from its own report of about 400 pages, is expected to probe the bank’s dealings with embassy accounts, transactions with Iranian firms and risks of money laundering in its Mexican operations, one of the people said. During the hearing, senators are expected to question a total of six HSBC employees and a number of government officials, including Treasury Undersecretary for Terrorism and Financial Intelligence David S. Cohen, according to the person.
Deficit of US$1 trillion likely
The budget deficit grew by nearly US$60 billion last month, remaining on track to exceed US$1 trillion for the fourth straight year. Through the first nine months of the budget year, the federal deficit totaled US$904.2 billion, the Treasury Department reported on Thursday. The Congressional Budget Office predicts the deficit for the full year, which ends on Sept. 30, will total US$1.17 trillion. That would be a slight improvement from the US$1.3 trillion deficit recorded last year, but still greater than any deficit before President Barack Obama took office. One positive sign this year is the deficit is growing more slowly than last year. Last month was 6.8 percent behind the pace for the same period last year. A key reason for that is that revenues are up 5.2 percent this year, while spending is down by 0.9 percent.
ECB loans to Spain hit peak
European Central Bank (ECB) loans to Spain’s battered banks shot up 17.2 percent to a record 337.2 billion euros (US$411 billion) last month, the Bank of Spain said yesterday, as the banks struggle to raise money on wary interbank and debt markets. Borrowings from the ECB, which were up from the previous month’s record of 287.8 billion euros, have risen remarkably from a low point in April last year of 42.2 billion euros. The ECB pumped more than 1.0 trillion euros (US$1.3 trillion) in cheap loans into the European banking system in two operations in December and February, seeking to avert a dangerous credit squeeze.