GLOOMY Malaysia’s Economic Outlook
Malaysia's gross domestic product (GDP) growth rate was forecasted to drop to zero percent as the global financial crisis evolved into a deepening sub-regional industrial crisis in Southeast Asia, according to the United Nations' regional arm, the Economic and Social Commission for Asia and the Pacific (Escap).
Escap observed that the crisis has moved rapidly from its first stage of a financial crisis emanating from developed countries and causing contagion in Asia and the Pacific, to a second stage of crisis for the real economy in the region based on plummeting exports and curtailed domestic demand.
The organisation believed that Southeast Asia could be among the most affected by the crisis, given its integrated industrial production base and linkages to the global supply chain, thus deepening unemployment. It expected an overall economic growth rate of 1.2 percent for Southeast Asia this year, the lowest among the developing Asia Pacific sub-regions.
This situation does not augur well for the country. Based on several observations, the unemployment rate is expected to climb to more than 5% by the end of this year. The economy is heavily dependent on FDIs and exports to support growth. Both of them have plummeted this year. A number of companies I have spoken too are taking precautions by averting financial and investment risks. Most of them will not make any new investment this year.
