Update: The current account surplus has further slipped to RM2.6bn in the second quarter of 2013 from RM8.7bn in the first quarter.
Meanwhile, the ringgit continues to weaken against the US dollar, moving in the opposite direction of analysts’ predictions that it would strengthen to 3.00 by the end of the year. So much for upbeat predictions.
Original post (8 August 2013)
Malaysia’s current account, which mainly reflects the net surplus or deficit in external trade of goods and services, fell to RM8.7bn or 3.7 per cent of GDP in the first quarter of 2013.
This was lower that the fourth quarter 2012 balance of RM22.9bn or 9.4 per cent of GDP.
The figure was also lower than the first quarters of 2011 (RM25.4bn) and 2012 (RM16.9bn).
Earlier, the current account balance had plunged from RM102.4bn in 2011 to RM57.3bn in 2012, suggesting that there could be long-term structural vulnerabilities in our external trade.
The local press noted that exports in June 2013 had shrunk by 7.4 per cent from a year ago. It was the fifth successive drop, mainly due to sluggish demand from the developed nations and China for electronic and electrical products (which make up a third of Malaysian exports) especially integrated circuits and palm oil. Exports were down 3.8 per cent for the first six months.
Bloomberg surveys expect the current account surplus to slide to 6 per cent of GDP this year, down from 6.1 per cent in 2012 and 12 per cent in 2011 – though still higher than the average of 2.8 per cent for Asian countries and 2.4 per cent for China.
The structural vulnerability of Malaysia’s current account has been cited by some as one of the reasons for the weaker ringgit. Since 1 August, the ringgit has weakened further to over 3.25 yesterday – an almost 6 per cent weakening since the start of the year.
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The US has not yet started to wind down its monetary stimulus but it has already caused so much turmoil in the financial world. Once the winding down starts it will send shock waves around the world financial markets, but probably not as severe as the last financial crisis just over 5 years. So friends, get ready for another rough ride.
The mere mention of US stopping printing dollar bills has caused the Indian Rupee to depreciate 10% so far this year.
The Indian PM should learn from Tun M to find a scapegoat like George Soros?
The last time I heard about Malaysia’s currency pegging system is that it has detached itself from pegging solely against the USD in favour of a basket of major currencies. But I undestand that our currency has been losing ground of late against all major against all the major currencies such as the USD, Euro, and Yen. So what is the RM pegged against? The rupee?
The widening of the exchange rate (in Singapore’s favour) between Malaysia which is much larger and richer in natural resources vis-a-vis the land scarced Singapore is a testimony of the failure of the BN government who has been ruling our country since independence. Why? Is it because of the lacking in capability or sincerity of our leaders? Perhaps we should do some form of objective comparisons between our PMs and their counterparts in Singapore, starting with TDM and LKW.
Rafiz, which country gives away its land or rather territory, especially with reputed and proven oil-rich off-shore territory to another country!! In fact countries would go to war to defend every inch of its land, and, yet, it seems like we ‘gifted’ away oil-rich land/territory to Brunei! And what is the catch here?
Good question. I dont think that deal went through parliament either.
And yet the same government is urging us to show our patriotism by waving Jalur Gemilang as well as singing Negaraku in the cinema to love and protect our country from the intruders (e.g. Sulu as shown on the propaganda video).
A good friend of mind bid me farewell last week. He has decided to take up a job in Singapore. The exchange rate and the high property prices in Malaysia are double whammies for us.
Many Malaysians are now living in JB and shuttle to work in Singapore daily, mostly by CausewayLink buses or by motorbikes. Renting a HDB room (yes, room, not the entire flat) will cost you S$600 (yes $, not ringgit). That is why you see many cars with Singapore car plates in JB, most Malaysians who are Spore PR but live in Malaysia (buying properties with bank loan) and cannot drive Malaysian cars to Singapore. Now they are happy that SingDollar is 2.5x of Ringgit. I think it is still not to late to earn a living in Singapore. My neighbour… Read more »
Good observation.
Johor state government is considering the idea of charging RM7 for each Singapore-registered car entering Johor at the causeway/2nd Link. This will definitely impact the Malaysians who are Singapore PRs who drive the Singapore registered cars to work daily. But I guess this is the right move as these people enjoy cheap petrol in Malaysia and live in the lower cost JB but dd not pay Malaysian income tax as they contribute only to Singapore income tax.
The Awakened book wants to challenge Che Det’s Doctor In The House book on MPH best seller list ?
Someone got to buy in bulk and distribute them for free to be best-sellers.
May be some charity folks (ex 4th floor boys of son-in-law) can offer them to the public ?
The ‘Awakening tales’ from LKY’s views of the world meanwhile talked about talent flow from Malaysia to Singapore due to the BN’s discrimination policy. A topic worth discussing as we watch the discussion of this topic on recent KiniTV dialogue:
The Awakening tales for Malaysians from LKY whose country has (for decades) benefitted from our ready talents & skilled+trained workers who also contributed to XXXL Singapore Milo tin of CPF, which also in turn helps in liquidity cash flow for investment in SingLand.
Very pathetic for our PMs, past & present.
A graph, a graph; my kingdom for a graph.
Okay, you got two graphs now!
Pak Lah in his ‘Awakening’ book (from Zzzzz…) claimed that he stopped Mahathir’s mega project to reduce the country deficit and has helped to prevent bankruptcy. Is he trying to redeem himself for the 2008 GE failure? The record still shows that the deficit was not reduced under his administration.
Pak Lah should tell us why he dare not stand up against Mahathir – perhaps because of his involvement in the Limbang oil field deal? Seems like many Umnoputeras carry baggages that Tun M could exploit?
Yes, huge question marks over the oil fields handed over to Brunei, just a couple of weeks before Abdullah left office. If I remember, that deal was not brought up for prior debate in Parliament.
Every Political Trader in High places carry some “baggage”
rajraman.My rubbish,road work repair and common property area of my housing estate in poor condition.Dear MB Selangor i think you are dirty fellows because although you have 2.8billion under your pillow, you neglect Cleanness.
You are dirty fellows. I handcuff myself by buying a property worth million but you handcuff Selangor people with your tak ada apa attitute towards cleanness.
I whack Pakatan as I whack Barisan.
Pak Lah got a big mandate in 2005
He got a bad mandate in 2008
Najib got an even worse mandate in 2013
And he & UMNO tried to blame it on the Chinese.
At least Pak Lah has the graciousness to blame it on himself.
There is no point in regretting your mistake when you are at your deathbed. However, I still think Pak Lah did not reveal the whole truth so as not to implicate himself in some issues. We shall wait for the backlash from Che Det. Interesting events leading to Umno assembly? Looks like all Umno minions will have to be careful now as more beans are been spilled, intentionally or unintentionally. Looks like lots of wayang in Umno and MCA between now and December. Che Det will be the Tok Dalang again knowing that Najib is a puppet in the string… Read more »
Sleeping as a PM, and awakened as an ex-PM?
What a joke.
He should continue to sleep unless he really dare to take on Mahathir in his so-called awakened state.
Don`t take a sleeping lion for granted.
Mahathir has been doing that.
Now that it has awaken, he should beware.
So it will mean our ringgit wil weaken so imports will be more expensive,fuel prices will increase,then Tenaga will increase tariff,then food prices will increase,going overseas will be more expensive,import of capital goods will be more expensive so development cost will increase so will property prices,but salary cannot increase much(employers said profit less so got to cut cost,so cannot increase salary). The UMNOputras could not care,NgOs like PERKASA will still fighting for their ‘ketuanan melayu’ and blaming other races for the fiasco. That m kutty will still spew his rhetoric philosophy of the importance of NEP (Never Enough Policy). Alas!… Read more »
For easy quick, reading and the ability to understand the financial situation of Malaysia, one needs to borrow is because one does not have the means to pay for ones expenditure. Simple as that, you have self claimed ‘experts’ coming up with all kinds of explanations and all kinds of figures, just to confuse the issue. With the hope that at the end of it all you are so confused that you end up comprehending nothing which is the aim of it. Malaysia needs to borrow to pay for the expenditures is because Malaysia just does not have collect enough… Read more »
Current surplus keep going down down down
Deficit keep going up up up
Rakyat continue to suffer suffer suffer
I got this in my email from a friend: The greatest danger to the economy is the high debt to GDP ratio, much if it created by UMNO to finance their return to power, and not in the nation’s best interest. The era of economically unsustainable subsidies and a bloated civil service receiving above inflation salary increases will ultimately come to a very painful end, and then the government of the day will change, until then the country will be run to ruin. So long as people’s attention can be diverted to focus on prayer room incidents, Facebook pictures and… Read more »
Federal government lead by some brainless Political Trader will say it’s nothing to worry because it’s a worldwide problems.It’s doesn’t reach critical level.
rajraman.The problems is brain drain like LKY said but Mahathir already denied.Lucky we still have Petronas and EPF to bails UMNO cronies.