Recent Views On Malaysia

• Growth forecasts revised down: 2008: 5.7% (IMF), 5.6% (ADB), 5.5%(WB) 5%(Govt), 4.8-7.2%(I-banks). Forecast for 2009: 4.8% (IMF), 4.5% (ADB); 0.5-5.6%(I-banks)
• Q3-08 GDP growth rate slowed to 4.7%y/y, lowest level in 3 yrs (2Q-08: 6.7%) led by decline in exports, easing investment (credit crunch, slowing demand).
• Export growth moderated in Q3 but stayed firm at 16.9% (Q208: 20.8%) due to high exports price and sustained demand of resource-based products; Imports went up by 10.3% (Q208: 9.9%); Net real export good and services declined by 14.8% (Q208: +20%)
• In Oct, exports fell 2.6% yoy due to low global demand for electronics and commodities; Total exports was declined to RM53.46bn ($14.69bn) from RM62.31 in Sep; Imports (RM43.84) also fell 5.3% from a year ago; Trade Surplus in Oct was RM9.62bn
  
• Govt. unveiled its RM7Bn stimulus package to boost domestic economy; revised down forecast GDP growth in 2009 to 3.5%; fiscal deficit at 4.8%;
• Growing concerns that economy will slump to below 3.5% growth in 2009 or even slip into a recession as US and global slump intensify starting late 2008; govt planning for fiscal stabilization program
• Industrial production grew only 0.9% y/y in Aug (weakest in a yr), Manufacturing production rose 0.8% (14-month low); Inflation, high production cost, subsidy bill may also impact consumption; investor sentiment weakening amid high inflation, political uncertainty
• Risks: slowing oil and commodity prices, global slowdown, slowdown in global (China) construction will impact commodity exports, the already slowing industrial production, pose risk to current a/c surplus; inflation and tax increases will impact consumer spending; depreciation of Asian currencies relative to ringgit
• Bank Negara: Growth will be affected in H2 2008 on slowing exports and inflation risk from food and energy prices; but domestic demand and energy/resource exports may lend support to growth; might use interest rates and fiscal stimulus to boost consumption and investment
• Morgan Stanley:Growth would slump to an eight-year low in 2009 as narrowed trade surplus amid slowing export demand and lower commodity price
  
• Mohamed Ariff: electrical and electronic sector is very vulnerable; to avoid recession, Malaysia has to support service sector, expected main engine for economic growth in 2009
• EIU: Growth will be hit by slowdown in fixed investment, consumption (unemployment in export sector)
• UBS: 0% GDP growth in 2009 due to weak exports to G7 countries, but weak global demand and easing energy and food price would lower inflation pressure at 1%
• Stan Chart: current account surplus to narrow in 2008 due to declining exports of Palm oil and electronics to U.S., EU, and Japan
• DBS: Growth will moderate as consumption, investment are slowing in spite of fiscal spending
• Citi: Growth to slow in spite of fiscal spending due to significant slowdown in manufacturing exports and domestic demand on global slowdown, fuel price hike
• MIERS: in spite of declining exports and manufacturing sector, fiscal stimulus and service sector will support domestic demand
• JP Morgan: fiscal spending, food subsidies, cash transfers for poor will support domestic demand
• ADB:GDP growth revised up due to temporary fiscal stimulus, accommodative monetary policy, support from commodity exports. Inflation is expected to remain elevated due to high food, oil prices and reduction in fuel subsidies
• World Bank: Downward revision to growth as political uncertainty hurts domestic/foreign investment and deep global slowdown impact exports

p/s photo: Vivian Hsu