Good times ahead for M'sia but caution must continue
CONFIRMATION that Malaysia will pull itself out of a recession will come some time next week when Bank Negara releases economic data for the fourth quarter of 2009.
Judging by comments from economists after the industrial output data for December were released, growth is expected in the fourth quarter albeit a modest one.
That, however, should not come as a surprise. Economies in the region and globally have managed to not only pull themselves from their recessions but have demonstrated a strong bounce as cheap money, a return of confidence and fiscal spending, all help economic and business activities.
In Malaysia, the bounce has already taken place in the stock market and the rally on Bursa Malaysia last year has built up quite a wealth effect.
Looking at the list of the richest Malaysians in 2009, their wealth gained from the stock market alone raised their total assets by around 63% between surveys.
Another indicator of the good times returning is reflected in corporate earnings.
Banks have posted big jumps in earnings so far and they have been joined by resource companies. The general trend is that earnings are up, largely thanks to a low-base effect and a terrible time at the end of 2008, but also to the more organic factors as mentioned earlier.
But while optimism returns, people too should keep an eye on the risks that still linger.
News flow still indicates that while times are better, it’s not to everyone’s liking.
Joblessness is still a major concern in the developed world. Persistent high unemployment would act as a brake on future growth, and Greece’s debt problems, and asset bubbles that are building up would be a reminder of the weaknesses and excesses still prevalent in the global economy.
Inflation will be another issue that will bear watching as the consumer price index, although not everyone agrees with it, will be under pressure in the coming months.
The price of fuel is set to rise once the subsidy is tweaked and the global increase in commodity prices will eventually filter its way through everyone’s live.
Stronger economic growth, higher inflation and maybe an interest rate regime that has been loose for too long would see the benchmark interest rates rising. That would affect borrowing costs and eat away at disposable incomes of people who might have leveraged themselves too much in the recent past.
While 2010 would be a time when the recent problems are put behind us, the constantly changing dynamics would see the creation of more challenges in the future. The question is whether we have learnt enough to avoid repeating the same mistakes of the past.
Making a Point - By Jagdev Singh Sidhu
● Deputy News Editor Jagdev Singh Sidhu should have paid proper attention to his posture while spending too many hours at a stretch watching what critics have described as the greatest TV drama of all time
Judging by comments from economists after the industrial output data for December were released, growth is expected in the fourth quarter albeit a modest one.
That, however, should not come as a surprise. Economies in the region and globally have managed to not only pull themselves from their recessions but have demonstrated a strong bounce as cheap money, a return of confidence and fiscal spending, all help economic and business activities.
In Malaysia, the bounce has already taken place in the stock market and the rally on Bursa Malaysia last year has built up quite a wealth effect.
Looking at the list of the richest Malaysians in 2009, their wealth gained from the stock market alone raised their total assets by around 63% between surveys.
Another indicator of the good times returning is reflected in corporate earnings.
Banks have posted big jumps in earnings so far and they have been joined by resource companies. The general trend is that earnings are up, largely thanks to a low-base effect and a terrible time at the end of 2008, but also to the more organic factors as mentioned earlier.
But while optimism returns, people too should keep an eye on the risks that still linger.
News flow still indicates that while times are better, it’s not to everyone’s liking.
Joblessness is still a major concern in the developed world. Persistent high unemployment would act as a brake on future growth, and Greece’s debt problems, and asset bubbles that are building up would be a reminder of the weaknesses and excesses still prevalent in the global economy.
Inflation will be another issue that will bear watching as the consumer price index, although not everyone agrees with it, will be under pressure in the coming months.
The price of fuel is set to rise once the subsidy is tweaked and the global increase in commodity prices will eventually filter its way through everyone’s live.
Stronger economic growth, higher inflation and maybe an interest rate regime that has been loose for too long would see the benchmark interest rates rising. That would affect borrowing costs and eat away at disposable incomes of people who might have leveraged themselves too much in the recent past.
While 2010 would be a time when the recent problems are put behind us, the constantly changing dynamics would see the creation of more challenges in the future. The question is whether we have learnt enough to avoid repeating the same mistakes of the past.
Making a Point - By Jagdev Singh Sidhu
● Deputy News Editor Jagdev Singh Sidhu should have paid proper attention to his posture while spending too many hours at a stretch watching what critics have described as the greatest TV drama of all time
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