The global recession is already creeping up on us with the spectre of job losses looming. Already, we hear multinational corporations here slowing down production, asking workers to take annual leave and going for planned shutdowns. No bonus, no increments, etc…
That’s not surprising. US third quarter 2008 economic growth was already in negative territory: – 0.5 per cent (preliminary figure). Personal consumption in the States was down by 3.7 per cent – and that could worsen – while retail sales fell 15 per cent. Housing prices there are expected to slide further. US unemployment could soar to 8.5-9.0 per cent by the end of 2009.
That’s grim reading, isn’t it? It would be foolish to think Malaysia can be spared, especially when traditionally, 20 per cent of Malaysia’s exports have gone to the United States – 12 per cent to the giant US electronic multinationals – while Europe is also sucked into the maelstrom.
Blog reader Drachen mocks the thinking in some circles:
Nah, Anil! Don’t be a Chicken Little! Malaysia’s economy has STRONG FUNDAMENTALS! We are managed by SUPERIOR LEADERSHIP! NOTHING will affect our growth and prosperity! We can take ANYTHING the world can throw at us! We are IMMUNE! Let’s all go back to sleep! HAHAHA!
We are talking of a recession in Malaysia that could be worse than that of 1997, which was essentially triggered by a regional financial crisis. In contrast, the coming recession would be more akin to what we experienced in 1986, when exports weakened and commodity prices slumped, sparking job losses.
Read this Bloomberg report, which warns of job cuts next year among US electronic firms in Malaysia:
SALES by US electronics makers in Malaysia will fall this year and next as a global recession saps demand for Dell Inc computers and other devices, the head of an industry group said.
Electronics manufacturers in the Southeast Asian nation will probably have to cut jobs next year after reducing overtime and letting workers take longer Christmas holidays this year to lower costs, said Wong Siew Hai, chairman of the Kuala Lumpur-based American Malaysian Chamber of Commerce’s electronics industry group. Full article here.
In addition to falling global demand, Malaysian export earnings will falter as oil and palm oil prices have plunged.
We need to come up with a national retrenchment fund fast and create more employment opportunities. We also have to radically restructure our low-wage economy, which has suppressed local wages by importing migrant workers and widened income disparities. Jeyakumar Devaraj suggests that the Public Works Department could hire temporary local workers to handle pump-priming infrastructure projects to enhance the multiplier effects on the local economy.
Faced with the looming crisis, I wrote this piece for IPS:
ECONOMY-MALAYSIA: Job Losses Feared as Recession Bites
By Anil Netto
PENANG, Nov 26 (IPS) – The global economic slowdown is slowly creeping onto Malaysian shores leaving many worried about the impact it will have on workers.
Although Malaysia’s financial institutions and banks are in better shape than they were during the East Asian financial crisis in 1997, the economy is already feeling the effects of the recession in the West.
Economic growth for the country is projected at 3.5 percent for next year but even that could be optimistic. Some analysts are not ruling out an economic contraction and there is growing concern that workers, both Malaysian and migrants, could be vulnerable. Full article here