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If we Malaysians think that the last couple of months are bad, think harder. It is going to be worse next year. Why the bad tidings during this day of cheer, after all it is Christmas? Well, bad news is not going to wait for anyone or for any occasion.
The pertinent question is not whether Malaysia will experience a downturn in the economy but just how bad it is going to be. There is no escaping the fact that the global economy is on a sharp declining trend and Malaysia’s trade geared economy will be affected accordingly. It is not something that can be avoided nor is it something that can be readily rectified. As a trading nation of consumer goods, we must export to earn those foreign funds. Declining growth is not the question here, as we face a zero growth situation. When global trade is reduced, merchandise export is proportionally reduced. It can also be said that when global trade is reduced, our export of raw materials will suffer accordingly. Initially, we look to China as our saviour but this is no longer pertinent owing to the fact that China herself requires help. No developing country is abstained from this calamity. Credit Suisse did an in depth analysis of Malaysia’s recent growth and attributed it to an increase in export to China. These are for the “intermediate” goods that are parts for reassembly into a product for eventual export (from China) to the US of A. When the US market demand for this products weaken, so will the production lines in China and ultimately here in Malaysia. It can be debated that not all Chinese products go to US. Some of it makes its way into the EU markets but that particular market has been hit as well. Intra-Asia trades of these intermediate goods were estimated at 70% of all China imports for re-exporting to the Western markets. Commodity trade is not faring any better as well. Malaysia is also a major commodity exporter and as global trade slackens, so will the quantity and price – a double whammy. Look at the depressing palm oil and rubber prices and estimate the potential earnings that are now wilting away. To make it worse, petroleum prices are rock bottom. Good for importers, not so good for exporters (like Malaysia). Commodity export for Malaysia represented 26% of GDP in 2007. If we are fortunate, we might break even this year. Forecast for next year is in the negative percentage figures. Swiss investment bank UBS (Union Bank of Switzerland) predicts that the Malaysian economic growth will fall from 5.4% in 2008 to 0% in 2009. That is correct – Zero Percent. Unprecedented and one can only hope that their (UBS) analysis is off the mark. Credit Suisse gave our country a bit more confidence by predicting an economic growth of 1.6%. Either way, both figures are disheartening but not as depressing as the ones for our southern neighbour. Both major banks predicted a negative growth for Singapore’s economy outlook. What does all this tell us? It unmistakably reveals the verity that, “the shit’s gonna hit the fan soon.” Avoidance is impossible as the salient points governing the economic growth of Malaysia are not of our own control but globally directed. No country is immune and impervious to its effects, not even the poor countries as economic aid will be drastically cut back. - Hakim Joe
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