Can’t Ignore Economic Challenges – Is there a Bipartisan hope?


Although the Rakyat in Malaysia has been feeling the strain from the inflationary pressures largely impacted by the global financial challenges as well as the unnecessary large fuel price hike in June, our cost of living has skyrocketed and our standard of living has plummeted.

We feel the pinch (correction: punch) of the economic contraction on the street first and this is certain in everybody’s daily lives.  Everything edible or inedible has gone up except salaries.  Even of late, housing loan repayments have gone up too.  Our propensity to spend has diminished.  That also means the propensity to save has diminished too.  And this time round, it is significant.

However the Government tries to persuade the Rakyat the opposite will not work because the stark reality has set in to all walks of life.  Inflation is nothing racial or religious or political.  What we face in economic and financial challenges has no color or creed.  But how we are equipped to face up to it should not either and our economic policies and execution should be for all Malaysians.

The Economist Intelligence Unit has published another wake up call.  Carried by TheMalaysianInsider (read here), this report pointedly tells us Malaysians that what we are told by the Government is just not true.  Here is a summary:

  1. real GDP to grow by 1.5%, not 3.9% growth as claimed by the Government.
  2. world trade to shrink by 0.5 per cent in 2009.
  3. The merchandise trade surplus will fall to US$22.9 billion (RM82.4 billion) in 2009, from an estimated US$35.3 billion in 2008.
  4. Domestic demand growth will be sluggish.
  5. Merchandise exports grew by 15.1 per cent year on year in September, bolstered by still high global prices for oil, palm oil and liquefied natural gas. But prices for all three commodities have declined sharply during the fourth quarter.

What does this mean to us all?  It means we have to brace ourselves for a very bumpy ride in 2009 through 2010.  It means our Government has to come out with complementary and supplementary programs to match the rest of the world so that we can leverage our strengths of the country.  But soon our strengths are negated fast.

The overly optimistic announcement of GDP growth is highest in the region.  It sends the wrong signals to the people as well as investors.  They can’t believe that Malaysia is little affected by the global financial problems especially reading the current GDP slide as well as commodities price drops that we are heavily dependent on.

Our oil power is no more as the price of oil has come down sharply and expected to stay there.  Palm oil price has also decayed tremendously.  LPG is heading south.  What else is there for us?  The Government has little leverage for shoring up the economy and whatever little we have must be used very wisely for the country’s defense.

It’s good that actions are taken to prepare companies to do all they can to prevent any massive retrenchment but the situation in Singapore may not be quite the same.  It is expected that many Malaysians in Singapore might face employment challenges and if that be the case, they will return to join the already growing unemployment numbers.

It’s really the time to have the best brains to sit and work out the best strategies for Malaysia in a bipartisan way.  So far, Malaysians is hoping against hope that BN and Pakatan Rakyat can somehow get together to address the people’s concerns.

Is this going to happen soon?  We all pray so!  It will be a FIRST for Malaysia.

After all, this will show that Malaysia Boleh! And this is no burger eating contest either.


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2 Comments to “Can’t Ignore Economic Challenges – Is there a Bipartisan hope?”

  1. The Spirit of God is angry
    He stirs the hearts of men
    Those who hear Him bend
    Who do not, in disarray.

  2. You write that propensity to save and propensity to consume are both diminished. This is simply not possible, at least in the way economists use those terms. The meaning of the expression “propensity to consume” simply means the amount of your available income that is being used for consumption. This is inverse to the “propensity to save”. All the money you have available will either go to spending or saving. If one goes up, the other goes down.

    I assume you mean that when incomes go down, both actual spending and actual savings go down. But even if both go down, the propensity of one of them might change if it makes people spend a larger or smaller portion of their diminished income right away in the face of a crisis. Either is possible.

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