Malaysia’s Gross Domestic Product (GDP) grew an
impressive 6.2% in the first quarter of this year, one of the highest first
quarter (1Q) growth in the region. On a quarter-on-quarter basis, though,
1Q2014 growth is slower at 0.8%, compared to 4Q2013’s 1.9%.
The unexpected surge in 1Q GDP sparked off a slew of
revisions in growth forecast for 2014, with projections averaging around 5.5%,
compared to 5% before.
Is this strong growth sustainable?
In releasing the 1Q performance data, Bank Negara
Malaysia guided that GDP performance in 1Q is “exceptional” and unlikely to be
repeated in the subsequent three quarters.
Indeed, while the top line numbers are looking good,
there are still pockets of weaknesses in the economy, which if not addressed in
the coming months, will undermine the growth prospects of the country over the
longer term.
Will domestic demand and export performance which are
the main growth drivers of the 1Q GDP growth be sustainable moving forward?
Some economists are concerned of the prospect
especially amidst a period of rising inflation, high household debt and the
impending interest rate rise by Bank Negara Malaysia which is likely to happen
in July.
With rising government spending and a budget deficit
to tackle, the slack in public consumption is likely to be filled by private sector
investments. BUT can private investments
deliver the figures?
Read the full analysis in The Edge this week.
Firstly, is the number real and justified? Raising interest rate will make the house hold debt worse. Private sector investment is driven by the demand of general public, if everyone have 'less' money to spend, and keep spending 'future' money...this is not a healthy grow. Gov basically need to assure the number is nice so the country rating won't be downgrade as they can keep issuing Bonds with low funding cost. But in long term, i would share Warren Buffet quote to describe this wicked Malaysia Gov's intention...
ReplyDeleteOnly when the tide goes out do you discover who's been swimming naked.
Obviously, Malaysia should produce higher value products esp. for export. If stuck in low value chain production, then we are stuck in the low income level. Boosting consumption is just a stop gap measure , not a healthy strategy esp. by indebtedness. Or could we increase productivity , not so desirable in a resource based economy which might be negated by price decrease. Therefore, talent and high quality education is utmost.
ReplyDeleteI think most important is get rid of corruption, nepotism, cronyism, improve human capital value chain, encourage open financial system, improve development especially public transport, media freedom. We try emulate US by having Putrajaya , Cyberjaya & now Razak Xchange??? What is the points have all this hard stuff where the simple soft part can be implemented & lot of crook politicians still at large after stealing rakyat money ....
ReplyDeleteI mean the simple soft part can't be implemented.... Now the worse part is this wicked politicians try play racial issues... What is this???? Are we back to stone ages. We also have white raja who rule my home state .... Is this called civilized society??? The rural rakyat there still suffering...FYI..... To change the whole system, we must find the roots of the problem.... The roots is the crooked & wicked must go....
DeleteMalaysia is good in certain areas which require labour like palm oil , natural gas , rubber , gloves , timber .. And oil
ReplyDeleteWhat it's not good at is technology advancement .
We don't have advance / own made planes , satellite , car , submarines , ships , drones etc
To propel forward we shld take in Knowledge workers or foreign manufacturers who are willing to transfer or teach us all the new technologies so that we go beyond living in coconut shell
It's pointless to be a jaguh kampung ..
We shld compete first with Japan and south korea first not just in badminton or soccer but in economy and techno..
Else I forsee us being a 6 % growth but product wise uncompetitive economy
We need to move fwd and not import in millions of unskilled workers who take home the knowledge and income
We shld try to import or attract knowledge workers e instead of millions from Bangladesh , Nepal , afrika , Indo , Sri Lanka , Vietnam ..
Why can't we learn & attract those from USA , Germany , Japan , Korea ? Haha