Author: Shankaran Nambiar, MIER

China has come to occupy a prominent position on Malaysia’s trade agenda over the past few years and is now Malaysia’s fourth largest trading partner. China currently accounts for about 11 per cent of Malaysia’s global trade, lagging behind the likes of the US, Japan and Singapore.

This was not always the case. Between 1995 and 1999, only about three per cent of Malaysia’s exports moved towards China. Today, about ten per cent of Malaysia’s exports are destined for China. Only about two per cent of imports came from China in 1995, but more recently they have shot up to close to 13 per cent. Read the rest of this entry »

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 the rest of this entry »

Author: Mohamed Ariff, MIER

There are signs that the global economic crisis is abating and a recovery is dawning. Economic data and earnings have surprised on the upside. While this seems reassuring, there are nagging doubts about the sustainability of the anticipated recovery.

Second-quarter numbers relating to private consumption, manufacturing production, exports and imports and gross domestic product have been encouraging, in that they have not been as bad as initially feared.

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Author: Mohamed Ariff

The global economic crisis has brought East Asia to a crossroads. It now has three options: one, continue as before with no change; two, take a U-turn and look inward; and three, stay outward-looking but with a distinct difference.

One must, however, acknowledge that the export-led growth strategy has paid handsome dividends for the East Asian economies, enabling them to fly high. No wonder, Japan and South Korea were able to climb the development ladder rapidly through exports, especially to the United States.

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Author: Mohamed Ariff, MIER

Since opening up in a big way in the early 1990s, China has made amazing progress on the economic front, thanks mainly to its highly pragmatic, market-friendly policies.

China has emerged as the manufacturing warehouse for the whole world, facilitated by massive inflows of foreign investment into the country. China has moved up the development ladder rapidly, fuelled by blazing double-digit growth rates.

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Author: Mohamed Ariff, Executive Director, MIER

The media everywhere are abuzz with talk of an impending, if not imminent, recovery for the ailing world economy in general and emerging economies in particular. This is based on signs of improvement in industrial production, corporate profits, stock market performance, etc.

Increased industrial production in the emerging Asian economies, including South Korea, Singapore and Thailand in recent months, equity market vibrancy in Japan, China, India and Vietnam, and improved profit figures from Goldman Sachs, JP Morgan Chase and the Citigroup Inc in the United States are among the beacons of the much anticipated recovery.

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Author: Mohamed Ariff

Recently, the StarBizWeek in Malaysia convened a roundtable discussion to gauge the impact of the global crisis on Malaysia, best and worst-case scenarios, and how the country can mitigate the effects of a protracted downturn while keeping an eye on addressing several structural shortfalls to ensure long-term sustainability.

The panellists are former Bank Negara deputy governor Tan Sri Dr Lin See Yan, Meridian Asset Management Sdn Bhd chief investment officer Tan Beng Ling and Malaysian Institute of Economic Research executive director Prof Datuk Mohamed Ariff Abdul Kareem. The discussion was moderated by P. Gunasegaram, managing editor of The Star.

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Author: Mohamed Ariff, MIER

A common currency for East Asia has been bandied about as a long-term goal, which may take many decades to materialise. No doubt, a common currency would be a great boon to intra-regional movement of goods and services and factors of production. But this proposition would make sense only if East Asian economies are successfully integrated and the thorny issue of national sovereignty can be sidestepped. A currency union for East Asia would represent the highest form of regional integration. It is important that this goal is not lost sight of, although it is extremely difficult to draw a timeline for it. It is best achieved through evolution, not decree.

While the common currency idea is kept on the back-burner, it will be in the interest of East Asian economies, in the interim, to cooperate and coordinate with one another in their exchange rate management.

It will not be difficult to put in place a coordinated basket peg so that there can be flexible, but stable, exchange rates in the region.

This will facilitate increased intra-regional economic transactions and render the region financially resilient.

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Special Author: Quah Boon Huat, MIER, Malaysia

The economy in reverse

The Malaysian economy was not spared any damage in 2008, a year that will be remembered as a period of turbulence, when a deadly cocktail of bad US sub-prime loans, the financial-liquidity crisis, high commodity prices and soaring inflation buffeted the global economy.

Against a backdrop of quarter-by-quarter falls in the country’s economic growth rate, 2008 was more about rare economic highlights than milestones.

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