The GDP contracted 6.2 percent in the first quarter of this year.With two consecutive quarters in decline the country is positively in recession, a scenario refuted by those in government just two months ago, a chink in the armour of the economic intelligentsia, saying what the leaders wanted them to say. Export plummeted 25 percent and private investment declined 26 percent. A hard biting recession is on the horizon.
Malaysia is in the top 20 trading nations, an enviable position for a small nation but could be a huge problem in bad times. A global recession would seriously affect Malaysia's exports.The picture is going to get worse before it gets better.In my December 2008 article here I predicted 2009 GDP of 2 percent and possibly into negative territory.At that time the government was still insistent on growth of 5.3 percent.
The government stimulus package announced earlier seems not to have kicked in making it appears that it has not been implemented as vigorously as promised.In my article here I predicted export would decline by 20 to 30 percent in the first quarter of this year.
It looks like Malaysia is not going to be spared the hard-hitting recession, wrongly predicted by the Governor of Bank Negara and previous second Finance Minister Nor Mohamed Yakcop who predicted recession will not come our way.
If the economy doesn't pick up during the second half of this year there would be a new gloom on the horizon, the banking system may be in for rough weather.The current good liquidity may evanescent quickly if the economy continued with its downward spiral.