Archive for 2015
Malaysia Economic Growth: A Summary
Whenever I read about economic articles, it always led me to ponder about what I've learnt so far, and trying to memorized and applied the lesson on the particular article. I admit, I am still not yet that good, as I need to take time to think and relate with the lesson that I've learnt in the class. Sometimes, I have the urged wanting to revise my revision books. For example, when I heard about Greece's proposal for "bridge loan", that particular term was not learnt in class. So I have to ask "Professor Google" about it. Actually, that is not what I am intended to write right here, What I am intended to write here is regarding the forecasted Malaysia's economic growth since that was the headline for today's New Straits Times.
Since most Malaysian are too lazy to read, I'm going to simplify and extract out the essence of the article. This article is due to our Bank Negara Malaysia governor, Tan Sri Zeti Akhtar Aziz comments at the release of 2014 Bank Negara annual report yesterday.
1. In a highly open economy, in the event that external risks materialized, Malaysia will adversely affected, but our "strong fundamentals" will act as buffer to mitigate the impact.
As expected, the challenging market out there will somehow affected our economy. However, in order to make people feel ease a little bit about it, we can say that the impact will not be sudden. But I guess it will be proportionally felt by us. Those "fundamentals" can be assumed as cushion or airbag to slow down the impact.
2. Headline inflation is projected to be lower at two to three per cent this year compared to average 3.2% last year due to the lower global energy and food prices.
Aside from the fluctuates fuel price, I can't relate any of it or even imagine it, at least right now . So far, every expenses burden me. Maybe this can be changed later on this year?
3. Ringgit was significantly undervalued.
She however dismissed the notion that this happened due to Malaysia's dependence on a particular sector *cough* Oil & Gas *cough*. She said that 80% of the economy structure are services and manufacturing sector combined. Which currency depreciation is beneficial for those two sector because it can increased exports from the country. So, should I suggest we go for local products as alternatives for imported product before?
4. Local banking sector remained strong.
She claimed that Bank Negara Malaysia conducted stress tests on a quarterly basis so that action can be taken whenever there is vulnerability that can cause economic disruption detected.
5. The implementation of the GST will affect the earning of commodity-related sector.
This is due to the lower consumption by the public, as expected. But she said it can be neutralized by the lower fuel price. She also claimed that GST impact on overall headline inflation was expected to be contained, because basic necessities are either zero-rated or exempted from GST while for some other items, the GST would merely replace the existing SST, she said.
6. Public consumption expected to grow moderately, public investment to grow positively.
7. Gross exports is projected to moderate amid lower commodity prices. Export of manufactured products, however, expected to increase at a stronger growth rate.
8. Steady inflow of new large private projects and strong domestic demand are expected to drive growth in imports.
In my personal opinion, we have to see this as a whole. Maybe it is right, Malaysia's economy expected to grow steadily. But that is just a valuation based on the number. A holistic approach should be taken in order for us to achieve our dream to be a fully developed nation by 2020 (still skeptical about it). It would mean nothing if we manage to be a highly-income nation yet our wealth disparity still yet near to be solved. We shouldn't be selfish in developing a nation. Let us grow together and together, we can enjoy fruitful and prosperous nation.
Since most Malaysian are too lazy to read, I'm going to simplify and extract out the essence of the article. This article is due to our Bank Negara Malaysia governor, Tan Sri Zeti Akhtar Aziz comments at the release of 2014 Bank Negara annual report yesterday.
1. In a highly open economy, in the event that external risks materialized, Malaysia will adversely affected, but our "strong fundamentals" will act as buffer to mitigate the impact.
As expected, the challenging market out there will somehow affected our economy. However, in order to make people feel ease a little bit about it, we can say that the impact will not be sudden. But I guess it will be proportionally felt by us. Those "fundamentals" can be assumed as cushion or airbag to slow down the impact.
2. Headline inflation is projected to be lower at two to three per cent this year compared to average 3.2% last year due to the lower global energy and food prices.
Aside from the fluctuates fuel price, I can't relate any of it or even imagine it, at least right now . So far, every expenses burden me. Maybe this can be changed later on this year?
3. Ringgit was significantly undervalued.
She however dismissed the notion that this happened due to Malaysia's dependence on a particular sector *cough* Oil & Gas *cough*. She said that 80% of the economy structure are services and manufacturing sector combined. Which currency depreciation is beneficial for those two sector because it can increased exports from the country. So, should I suggest we go for local products as alternatives for imported product before?
4. Local banking sector remained strong.
She claimed that Bank Negara Malaysia conducted stress tests on a quarterly basis so that action can be taken whenever there is vulnerability that can cause economic disruption detected.
5. The implementation of the GST will affect the earning of commodity-related sector.
This is due to the lower consumption by the public, as expected. But she said it can be neutralized by the lower fuel price. She also claimed that GST impact on overall headline inflation was expected to be contained, because basic necessities are either zero-rated or exempted from GST while for some other items, the GST would merely replace the existing SST, she said.
6. Public consumption expected to grow moderately, public investment to grow positively.
7. Gross exports is projected to moderate amid lower commodity prices. Export of manufactured products, however, expected to increase at a stronger growth rate.
8. Steady inflow of new large private projects and strong domestic demand are expected to drive growth in imports.
In my personal opinion, we have to see this as a whole. Maybe it is right, Malaysia's economy expected to grow steadily. But that is just a valuation based on the number. A holistic approach should be taken in order for us to achieve our dream to be a fully developed nation by 2020 (still skeptical about it). It would mean nothing if we manage to be a highly-income nation yet our wealth disparity still yet near to be solved. We shouldn't be selfish in developing a nation. Let us grow together and together, we can enjoy fruitful and prosperous nation.
