Monday, the Japanese government forecast the economy to contract more than it initially estimated in fiscal 2009 to show the biggest decline since the government started to compile growth in 1955. Elsewhere, Malaysia liberalized its financial service sector.

Japan's Cabinet Office said the economy is expected to contract 3.3% this fiscal year on plunging exports. Earlier, the government had projected a nil growth for the fiscal year 2009. The new projection is worse than the 1.5% contraction seen in fiscal 1998. The government said the economy is deteriorating at an unprecedented speed.

The government said the economy would shrink 5.2% in this fiscal without the stimulus measures announced by Prime Minister Taro Aso.

In Malaysia, Prime Minister Najib Razak announced a liberalization plan for the financial services sector to attract foreign investment in the slowing economy. Measures include raising foreign equity participation in Islamic and investment banks and insurance companies to 70% from 49%. Accordingly, existing domestic Islamic banks are given greater flexibility to enter into strategic partnerships with foreign players through increased foreign equity. But the foreign equity limit for domestic commercial banks will remain at the current 30%.

Up to two Islamic banking licenses will be granted to foreign players to set up new Islamic banks with paid-up capital of at least US$1 billion this year.

The National Statistics Office of the Philippines said in a report that the volume of production in manufacturing dropped 21.1% year-on-year in February, at a slower pace compared to a revised 23.8% fall recorded in January. This was mainly due to decline in output from 18 of the 20 major sectors.

Hong Kong recorded a trade deficit of HK$18.2 billion in March, lower than a deficit of HK$28.1 billion in the previous year, the Census and Statistics Department said. Economists expected a trade deficit of HK$19.2 billion. Exports fell 21.1% year-on-year in March to HK$175.5 billion. Imports were down 22.7% annually to HK$193.7 billion.

Taiwan's Council for Economic Planning and Development said the leading index rose a seasonally adjusted 1.5% month-on-month in March, following a 1.1% increase in February.

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