While Malaysia expect contraction in its economic growth in the second half of 2010 as announced by the Prime Minister our neighbour across the causeway upgraded its growth rate to an explosive 13 to 15 per cent for the year.Singapore's economy in the first quarter was 16.9 per cent and estimated a massive 19.6 per cent in the second quarter.
Singapore's economy will be the strongest growing in Asia and the world in 2010.
Now, if Singapore without any natural resources and a land the size of a needle head can pulled itself out of a recession as fast as a Formula 1 car why are we still in thermal inertia in the paddock.Instead of picking up the pieces and restore it back to normalcy we just throw in the towel and admit defeat because some smart economists say so.
During the US and European financial meltdown where most developed economies predicted an ensuing global recession Malaysia with its bunch of inward looking economic experts which include the second Minister of Finance then and the Governor of Bank Negara were insistence that Malaysia would not be in a recession.
While the government institutions lumbered in making final adjustment to the growth rate my adjusted forecast was strong likelihood of negative growth for 2009. The GDP in 2009 was -1.17 percent. It was a mild downturn but long enough to be called a recession and we are still feeling the side effect.
As anticipated, all export dependent economies in the region showed negative growth except for China and Indonesia.As they say, when America sneezes you catch the flu.
Some economists came up with a silly new theory "decoupling" of major markets meaning you would not catch the flu if that market is sick.Decoupling is farcical as long as there are voluminous cross border transactions in whatever form, financial or commodity, markets contagion would continue to exist.
We seem to be doing thing in reverse order.Can't tell the difference between good and bad times.
Just because of slow recovery in the US and some Western economists predictions of slowing down of the European economy in the second half this year and a potential financial meltdown in Europe, particularly the PIGS (Portugal,Ireland,Greece and Spain) somebody rings the alarm bell.
Even if those EC countries struggling with unproductive economies and fast-mounting deficits go down it doesn't mean we should pull down the flaps and slow down our economic outputs.
A financial meltdown in the European Union is possible as some of the countries continue to weaken and drag down the financial system.Banks in Europe are in precarious position because of their exposure to those countries.Some French and German banks, already weakened by the last crisis, hold some $640 billion in Spanish government bonds.Spain bill of health ain't that good. A default will likely create a domino effect.All said and done even the U.K economy is not on strong foothold yet.
Will Malaysia suffer the contagion?
How much trades and financial papers do we have with Europe?
Our top 10 trading partners in order of volume/value in 2009 were China, Singapore, US, Japan,Thailand, Republic of Korea,Indonesia,Hong Kong,Germany,Taiwan.
The top 5 trading partners for 2009 are shown below.
Country Value(RM Billion) Our Export (RM Billion)
China............ 127.90 ...................67.24 (2)
Singapore..... 125.30 ................... 77.20 (1)
US................. 109.20 ................. 60.58 (3)
Japan............ 108.71 ...................54.42 (4)
Thailand......... 56.16 ...................29.85 (5)
Our largest export was with Singapore followed by China.Singapore re-exported most imports from Malaysia.
If Singapore and China's economy can continue to be robust for the rest of the year why not us? On what basis our economy is slowing down? Can someone tell me?
Somebody in the Ministry of Finance and Bank Negara should explain instead of just telling the Prime Minister to go out and tell the people the economy will be slowing down for the rest of the year.