Malaysia’s economy contracted at a slower pace of 3.9% for the second quarter ended June 30 (Q2) compared to a year ago as the effects of the fiscal measures totalling RM67bil by the Government begin to kick in.

Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said at a media briefing Wednesday that the country’s gross domestic product (GDP) contracted 3.9% compared to a contraction of 6.2% in Q1. Economists in a Bloomberg survey expected a 5% contraction.

Zeti said the slower pace of contraction was due to higher public spending and positive growth in private consumption.

However, she said growth continued to be affected by weak external demand, which saw a drop of 26.3% following a fall of 20% in Q1 on weaker demand for manufactured goods from major trading partners and exports contracting significantly by 40.6%.

“We expect Q3 to show further improvement as the pace of decline slows and we expect Q4 to show positive growth,” Zeti said, adding that data pointed to a stabilising economic environment going forward.

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I used to subscribed to Reader’s Digest during the 70s and 80s. Great book.

Reader’s Digest Association Inc., publisher of the widely read Reader’s Digest magazine, said Monday it would likely file for Chapter 11 bankruptcy for its U.S. businesses to cut its debt load. Bankruptcy financing of $150 million already committed.

The media company, known worldwide for its family-friendly namesake magazine, been trying to slash costs and boost growth since it was taken private in 2007 by an investor group led by Ripplewood Holdings LLC.

The bankruptcy would take the form of a so-called pre-arranged filing, Reader’s Digest said in a statement. A pre-arranged filing comes after a company has already reached deals with its lenders to cut its debt.

The Chapter 11 filing will apply only to the company’s U.S. businesses. Its operations in Canada, Latin America, Europe, Africa, Asia and Australia-New Zealand will not be affected.

“Restructuring our debt will enable us to have the financial flexibility to move ahead with our growth and transformational initiatives,” said President and Chief Executive Officer Mary Berner, in a statement.

Reader’s Digest calls itself the the world’s largest paid-circulation magazine.

The Pleasantville, N.Y., media company said the bankruptcy would help facilitate an agreement with lenders to exchange a portion of its $1.6 billion in senior secured debt for equity, and transfer company ownership to the lender group.

The agreement, which is subject to court approval, also includes a commitment from some members of the senior lender group to provide $150 million in debtor-in-possession financing, which would help fund operations during the reorganization. The pre-arranged plan proposes to cut debt by 75% to $550 million from the current $2.2 billion.

The company has offices in 44 countries, marketing books, magazines, educational products, recorded music collections and home video products. It also publishes food magazine Every Day with Rachael Ray.

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Freddie Mac, the second largest provider of U.S. home mortgage funding, Friday posted its first quarterly profit in two years as gains from hedges and a one-time accounting change offset still-lofty credit losses.

For the first quarter in four, Freddie Mac said it would not need a capital injection from the Treasury to maintain its business of providing credit for U.S. housing. But it said it continues to rely on government money to keep it afloat.

Freddie Mac and larger rival Fannie Mae are seen as key barometers of the U.S. housing market, having expanded their scope as competitors fell during the financial crisis. Under government control since September, they are also being asked to do more for U.S. efforts to stabilize the shaky housing market, even though that is turning out to be a costly effort.

Together, the companies own or guarantee more than $5 trillion in U.S. mortgages.

“Our outlook remains cautious due to rising foreclosures, growing unemployment, tight lending standards, and buyers’ reluctance to reenter the market,” John Koskinen, Freddie Mac’s interim chief executive officer, said in a statement.

Freddie Mac reported second-quarter net income of $768 million, compared with a $9.9 billion loss in the first quarter and a $821 million deficit in the period a year ago.

After payments of $1.1 billion in preferred stock dividends to the U.S. Treasury, Freddie Mac had a net loss of 11 cents per diluted common share.

Freddie Mac said profit was cushioned by a $5.1 billion increase in equity due to the adoption of accounting rules that govern how it must recognize losses. It also had a $4.2 billion gain from derivatives that rose in value as interest rates rose, and greater interest income as its borrowing costs fell.

Provisions for credit losses declined to $5.2 billion in the second quarter from $8.8 billion in the previous period, driven by recent home price improvements, it said. But that benefit is likely seasonal, and provisions will probably rise again, it said.

Fannie Mae on Thursday reported a $14.8 billion quarterly net loss, and noted a “significant uncertainty” to its long-term health given the lingering housing crisis and costs taken to slow foreclosures.

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