The International Monetary Fund’s World Economic Outlook report for 2009 is just out here.
It projects the Malaysian economy to contract by 3.5 per cent in 2009 (compared to -2.8 per cent for the US and -1.3 per cent for the world). The Malaysian government, for its part, has been sticking to its -1.0 to +1.0 per cent range, which in the light of the IMF’s projections, seems hopelessly optimistic (as ever). The Malaysian Institute of Economic Research’s latest projection is a contraction of 2.2 per cent.
Not only that, the IMF warns that all the risks are on the downside, i.e., hugely dependent on what happens to the US. In addition, Malaysia is also dependent on Europe, Japan and China.
My own forecast for Malaysia is grimmer than the IMF’s projection. Just a casual look at the sharp drops in our exports and manufacturing sales is enough for me to say GDP could be minus 5 per cent this year.
For 2010, the IMF projects that the Malaysian economy will grow by 1.3 per cent. Again this looks somewhat optimistic. The global financial crisis is nowhere near satisfactorily resolved; it could take years.
What’s more, there is now a huge disconnect between recent global stock market bear rallies and the depressed real economy especially in the United States. This has led some to believe that speculators are once more in action – in the stock markets this time.
Don’t think so? Despite the Bursa Malaysia stock market rally in recent weeks, just look at the Malaysian Statistics Department’s monthly manufacturing statistics released on 16 April. It shows sales value plunging by 28 per cent in Jan-Feb 2009 compared to the same period a year ago. In the same period, the number of employees fell by 68,000 (6.5 per cent) while salaries and wages dropped by 9.9 per cent.
Source: Statistics Department, Malaysia
Meanwhile, although the CPI has moderated downwards, the food price index is still up almost 9 per cent in March 2009 compared to a year earlier. This is based on the basket of goods used to calculate the food CPI.
People in their everyday shopping generally appear to be facing even stickier prices that have refused to go down by much ever since the price spikes last May as a result of the badly thought-out oil price hike back then.