Malaysia, on the other hand has been sending out euphonious messages to its citizens not to worry about the impending economics gloom.The leaders say they have everything under control without spelling out the measures taken or to be taken in the event of a precipitous decline in the economy.The first-half of 2009 would be crucial for Malaysia if the export market continue to shrink and prices of its primary products and manufactured goods declined drastically.
I anticipate export receipts to decline at least by 20 to 30 % in the 1st-quarter of 2009 as demands for electronic products,palm oil,wood-based products and crude oil declined due to poor demand in the importing countries.Falling prices would further contribute to lowering of the GDP.
That's what I wrote in December 2008 in this article.
KUALA LUMPUR, March 6 — The country recorded RM8.83 billion in trade surplus in January, making it the 135th consecutive month of trade surplus since November 1997, but total volume declined by 29.7 per cent from a year ago.
Total trade value for the month was RM67.77 billion.
Exports in January 2009 were valued at RM38.3 billion, a drop of 27.8 per cent from January 2008, the Statistics Department said in a statement today. Full story here.
Total imports fell by 32 per cent to RM29.47 billion from a year ago.
"Month-on-month, exports fell by 16.9 per cent from December 2008, while imports were lower by 14.7 per cent. The performance in January was in tandem with countries that have announced their January trade figures," it said. Full story here.
The public and private sector foreign debts would become more expensive to service if the ringgit continue to depreciate against other major currencies. The ringgit may breach the RM4.00 to the US$ during the 2nd half of this year if the economy doesn't pick up.
Holders of private foreign debts in foreign currencies should consider retiring their foreign debts or part of their foreign debts by borrowing ringgit from the domestic market and pay off their foreign debts. The myopic management of Tenaga have incurred foreign exchange loss of RM1.2 billion on their US$ and Yen debts.Obviously, they are confident the ringgit would appreciate against these currencies or at least stay at comfortable level.
They were wrong.