Author: Foong Kee Kuan, MIER

In Malaysia the doom and gloom of the global financial crisis was pervasive at the start of this year, but gradually gave way to increasing optimism following the leadership change in April. Currently, various economic indicators forecast continued improvement for Malaysia, albeit subject to occasional pullbacks, and this economic progress is due to the efforts of the Malaysian government’s introduction of policies aimed to stabilise the economy.

Economic activity rebounded in the second quarter of 2009, after bottoming out in the first quarter, with stabilising domestic and external conditions leading to further improvement in the third quarter. Sentiments among businesses and consumers also recovered, leading to more private investment and consumption along the way, with the rate of decline in inflation also slowing in October.

The Malaysia government’s response to the global downturn has been to introduce a raft of national stabilisation measures, to varying degrees of effectiveness. Read more…

Author: Aaron Batten, Ministry of Finance, Malawi

The PNG economy continued to perform well in 2009. Despite declines in the oil and gas sector, lower commodity prices, and reduced international demand because of the global financial crisis, real GDP grew by a solid 4.5 per cent. This growth was also relatively diversified with a 4 per cent increase in formal non-mining sector jobs adding further to the large employment gains made since 2005.

The government’s management of the economic expansion has been mixed, however. The fiscal surpluses of previous years have eroded, with this year’s budget recording a 0.4 per cent of GDP deficit after a 2.2 per cent of GDP deficit in 2008. Read more…

Author: Nicholas Farrelly, New Mandala, ANU

In Thailand the number ‘nine’ is usually considered the most auspicious. It is associated with the reigning monarch, King Bhumibol Adulyadej, the ninth king of the Chakri dynasty. Spoken in Thai, it also sounds like a word for ‘progress’ (kaew). 9, 99, 999, et cetera, are regarded with special reverence: luck and good fortune are denominated in 9s.

So the year 2009 was, for that simple reason, greeted with a modest degree of optimism by many Thais. Of course, in their Buddhist calendar, it is merely 2552. Indeed, it has, in the final reckoning, proven an inauspicious time. Read more…

Author: Tobias Harris, MIT

As expected, Fujii Hirohisa announced his resignation as finance minister on Wednesday. Hatoyama Yukio wasted no time naming his replacement: Kan Naoto will shift over to the finance ministry, and Sengoku Yoshito will take over for Kan as head of the national strategy bureau while continuing to run the government revitalization unit.

Kan’s appointment was to a certain extent obvious. Having been deeply involved in the budgetary process, he is better able than most to defend the budget in Diet debates in the months to come. While Sankei — who else? — sees this move as the latest battle in the struggle between Hatoyama and Ozawa Ichiro for power, moving Kan to the finance ministry will not hurt Hatoyama politically. Read more…

Author: Andrew Elek

The intense climate change negotiations in Copenhagen are over. The outcome is a useful step forward, but many difficult issues still need to be agreed upon among global governments, with no international framework for enforcing any binding agreement on who will bear the many, unknown costs of adjustment.

The messy UN process, involving over 190 governments, is not likely to agree on what needs to be done. Eyes are turning to the G20, with some expecting G20 leaders to negotiate the next steps.

The G20 can contribute to the task of limiting global warming. But G20 leaders should look before they leap into negotiation over climate change or anything else. They might well pause to think of the future of the new forum – and the many other issues to address in the years immediately ahead. Read more…

Author: Ishrat Husain, Institute of Business Administration, Karachi

Pakistan’s critical political and security problems intensified in 2009 as militants captured some of the settled districts of the North West Frontier Province, also known as Swat. The Army launched a successful campaign to oust the militants from their strongholds, restoring peace and normalcy in those areas. The exodus of more than 2 million families from their homes and then their subsequent return created enormous logistical problems but this was managed reasonably well. This success prompted the Army to launch a similar assault on South Waziristan – a no man’s land on the border between Afghanistan and Pakistan which serves as the headquarters of Al-Qaeda and Taliban. Public opinion had turned against the militants after Swat, which helped the Army to neutralise some of the population in the target area.

The early success of the Army in displacing the militants from their training camps, supply routes and command and control structures was retaliated against by fierce suicide bomb attacks on the Army headquarters in Rawalpindi, Police and Intelligence agency offices in Lahore and other sensitive points in Peshawar. Read more…

Author: Tobias Harris, MIT

On Tuesday, Fujii Hirohisa, the seventy-seven year old finance minister who was hospitalised late last year, indicated that he will in all likelihood resign his post sometime soon. While he is officially waiting for his doctor’s advice on his health, Fujii seems determined to resign.

In trying to dissuade Fujii from leaving, Prime Minister Hatoyama said that since Fujii ‘gave birth to a child’ (the budget), he should stay on ‘to raise it.’ Fujii, however, insists that he will not be able to handle the strain of budgetary debates, suggesting that he will likely be gone before the ordinary Diet session opens on 18 January. Read more…

Author: Peter Van Ness, ANU

On Christmas Day, Liu Xiaobo, China’s most prominent political activist, was sentenced to 11 years in prison for ‘incitement to subvert state power.’ A former professor of literature at Beijing Normal University, Liu was jailed for 21 months after the June 1989 Tiananmen massacre and, in 1996, sentenced to reform through labour for an additional three years. He was detained again last year until his current conviction. Liu Xiaobo and Zhang Zhuhua are two of the main authors of Charter 08, published last year on December 10, on the sixtieth anniversary of the Universal Declaration of Human Rights.

China’s Charter 08 is a detailed statement of principle, inspired by Czechoslovakia’s Charter 77. Charter 08 calls for China to endorse the ‘basic universal values’ of freedom, human rights, equality, republicanism, democracy, and constitutional rule.  Read more…

Author: K. Kesavapany, ISEAS, Singapore

Singapore was the first East Asian casualty of last year’s Global Financial Crisis. Its growth rate plunged from 7.8 per cent in 2007 to 1.1 per cent in 2008. The trade ministry said Singapore’s economy would see a contraction between 2.5 and 2 per cent in 2009 before recovering in 2010.

The manufacturing sector was the worst hit due to fall in global demand for its non-oil exports. Read more…

Author: Tobias Harris, MIT

In the Wall Street Journal, Ian Bremmer and Nouriel Roubini recently warned of the dangers of the Hatoyama government’s ‘unrealistic’ policies and advising Prime Minister Hatoyama Yukio to follow Barack Obama’s lead.

Hatoyama, they tell us, needs to face up to reality. He ‘needs to become ‘Hatobama’, a pragmatist ready to disappoint ideological allies and assuage centrist fears of a policy agenda his country simply can’t afford.’ Read more…

Author: Reinhard Drifte

After the Koizumi era, particularly since the beginning of the Hatoyama cabinet, Japan’s relations with China seem to be improving, and both sides have made encouraging statements. Nevertheless, there are many contrasting developments that demonstrate the continuing fragility of the relationship.

For the Japanese, there is a feeling that somehow bilateral problems will be resolved because both sides agree about the importance of a good relationship for their own national interests, Read more…

Author: M. Govinda Rao, NIPFP, New Delhi

The Indian economy has emerged relatively unscathed from the impact of global financial meltdown and recession in advanced economies to grow at an impressive 6.7 per cent in 2008-09. Although this was much lower than the 9 per cent registered during the immediately preceding three years, it is impressive in comparison with many other countries and ranks next only to China’s growth rate.

The growth rate of GDP for the current year (2009-10) is estimated at around 6.5 to 7 per cent. In fact, the better than expected growth of 7.9 per cent during the July-September quarter of 2009 has raised expectations of even higher growth during the year. Read more…

Author: Yoon Young-kwan, Seoul National University, Korea

With the backdrop of global economic crisis, the Korean economy also experienced serious decline. In the fourth quarter of 2008, the economic growth rate fell by 5.1 per cent compared to the previous quarter. However, the economy returned to positive growth in the first quarter of 2009 and recovered to pre-crisis rates of 2.6 percent and 3.2 per cent in the second and third quarters. The Korean economy is recuperating faster than any other OECD country, except Australia, and the IMF expects 4.5 per cent growth in 2010. Though there were some discussions recently inside the government about the exit strategy, President Lee Myung-bak opted for a cautious approach.

In contrast to a positive economic performance, domestic politics in South Korea remained turbulent in 2009 if not more so than in the previous year. Read more…

Author: Razeen Sally, ECIPE

It is perhaps time to revive the idea of a transatlantic free trade area (TAFTA). This is the gist of two papers, one by ECIPE’s Fredrik Erixon and Gernot Pehnelt, the other by GEM-Sciences Po’s Patrick Messerlin and Erik van der Marel. A TAFTA initiative was floated in the 1990s, only to sink; and the Transatlantic Economic Council (TEC), established at the initiative of Chancellor Merkel to tackle regulatory barriers, has become bogged down in micro-detail and hardly made progress. Sure, political obstacles are great, but it is worth stepping back to coolly assess costs and benefits, and then decide whether to go ahead with a new initiative.

First, consider the context of US and EU trade policy, especially in light of the global economic crisis. Read more…

Author: Sandra Tarte, University of the South Pacific

In 2009, the political realities in Fiji became more clearly defined, but increasingly perplexing for its regional neighbors and development partners.

The moment of truth for the country, and for Commodore Frank Bainimarama’s military-backed government, came on 9 April when Fiji’s Court of Appeal ruled that the December 2006 coup and the interim administration it installed were illegal. This ruling removed the already somewhat tenuous constitutional basis upon which the interim government had previously claimed its political mandate. It was also the catalyst for the abrogation, one day later, of the Constitution by the President, and the declaration of a ‘new legal order’ under which the Bainimarama-led administration was reappointed. This development clearly indicated to all that there would be no turning back to the pre-December 2006 order. It also marked the further consolidation and entrenchment of the military-backed regime – a process that is likely to continue throughout 2010. Read more…