Malaysia's macroeconomics is still looking fairly healthy in spite of all the lies and bullshits coming from the oppositions?
Macroeconomics are key indicators of economic performance.
Economic output, unemployment, inflation, saving and investment are factors that we should look at in order to determine the health of a nation and with it comes other monitoring mechanisms (debt to GDP ratio, budget deficit/surplus,etc).These are closely monitored by government and the business sector.Only if essential parts of the fundamentals have gone wrong would the country be in deep trouble.
The financial health of a nation is no different from that of a company and debt is a matter of perspective.Just like a company that borrow to expand its business if a nation borrow to build its infrastructure that will pay off in the future than borrowing a lot isn't necessary bad.If the country borrows for recurring expenditure and to fill the hole in the pocket than that would surely be recipe for disaster.Malaysia certainly has some leakages, mostly through corruptions, but they are still manageable.
Greece, is an example, an epigram of Murphy's Law, everything has gone wrong, declining economy and overspending........(2010 figures)) GDP -4.5%,..... budget deficit 10.5%,.... debt to GDP ratio 143%,..... unemployment 12.5% .....and inflation 4.7%.The situation had become worse in 2011, triggering panic in the eurozone countries.Four other members of the eurozone namely, Italy,Spain,Portugal and Ireland are also in dire straits.Italy, is the next victim of fiscal crisis and with much bigger debt than Greece.
The PIGS as they are known are not even big spenders in Europe, the honour should go to Denmark,France and Sweden where government spending is about 52% of GDP.
Malaysia was not even in the top 20 most indebted country by GDP.In term of public debt Singapore stood at No.9 with 105.8% of GDP which means Singapore borrowed as much as its GDP.
CIA Factbook's Public Debt % 0f GDP 2009/2010:
1. Zimbabwe 234.10%
2. Japan 197.50%
3. Saint Kitts and Nevis 185.00%
4. Greece 142.80%
5. Lebanon 133.80%
6. Jamaica 126.50%
7. Iceland 126.10%
8. Italy 119.10%
9. Singapore 105.80%
10. Barbados 102.10%
Why is Singapore still a very prosperous nation and one of the leading and healthiest economies in Asia?
When it comes to the list below Singapore has completely disappeared from the scene.
CIA Factbook's External Debt 2009-2010:
1. United States $13,980 billion
2. European Union $13,720 billion
3. United Kingdom $8,981 billion
4. Germany $4,713 billion
5. France $4,698 billion
6. Japan $2,441 billion
7. Ireland $2,253 billion
8. Norway $2,232 billion
9. Italy $2,223 billion
10. Spain $2,166 billion
There are many different ways to measure debt as a factor in a nation's economic health.
Public debt is the total of domestic and external debts. Singapore's public debt is 105.8% of GDP but most of it is in domestic market and less than 10% external debt.Singapore also has very impressive sovereign funds invested in both domestic and foreign markets.Its per capita of $62,100 is one of the highest in the world, higher than the US, purportedly the richest country in the world.Singapore's sovereign fund, one of the largest in the world, and her reserve gave her contingency against prolonged recession.
Last year Singapore overtook Malaysia's GDP.It can only mean Singaporeans are much more productive than Malaysians. An amazing feat for a nation with small population, small land mass and zero natural resources.
In 2010, Singapore GDP grew by 14.5%, Taiwan 10.8% and China 10.3%.Maybe, it has something to do with being Chinese.
Malaysians spent more time politicking and "omong-omong kosong". You can see it everywhere, both in the public and private sector. Go to any government office or department store in KL and you will not fail to see the staffs chatting among themselves instead of attending to costumers.The biggest predators of Malaysia's budget are Malaysians themselves, the inextricable subsidy mentality, which they now see as of right rather than a privilege.It is the subsidies that will bankrupt the country.
Malaysians themselves are equally to be blamed for their poor attitude toward work.Politicians can make policies but they can't police every sectors of the economy, and of course bad policies, which Malaysia is not short of too, would also have dire consequence on the economy.
Japan, another big borrower with debt almost touching 200% of GDP should have folded, but did not.Less than 50% of its debt is external, the rest is held domestically.Japan has a number of years of negative growth and only in 2010 she managed a growth of 3.9% .Yet Japan can repay its debt.
The big risk of having huge foreign debt is the volatility of currency exchange which can increase the debt if the borrower's currency weakened but can also augers well if the borrower's currency gained strength against the borrowed currency.
So borrowing more is not necessary bad if you have healthy economic growth, good fiscal policy and sustainable budget deficit.
Malaysia's GDP growth in 2010 was 7.2%, the debt to GDP was 52.4% out of which about 35% was external debt, the budget deficit was 5.6% of GDP and the debt per capita $2,570 (external).The deficit and public debt have increased in 2011 and expected to increase further in 2012.
